CONDENSEDTable CONSOLIDATEDof STATEMENTS OF OPERATIONS Contents

CONDENSEDTable CONSOLIDATEDof STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Contents

CONDENSEDTable CONSOLIDATEDof STATEMENTS OF CASH FLOWS Contents

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Contents

recordedTable at fair value on the balance sheet regardless of the likelihood of success of the related product or technology. In connection with the acquisition, the Company recorded $190.4 million in IPR&D, $6.7 million in prepaid R&D and contingent consideration of $144.8 million. Contents

-Table 7of - Contents

-Table 8of - Contents

Share-BasedTable Compensationof Contents

NOTETable 2of – ACQUISITIONS AND DIVESTITURES Contents

AdditionalTable consideration is due to the seller conditional upon the achievement of certain milestones in respect to the development and commercialization of the products as well as reaching certain sales targets. The Company estimated the fair value of the contingent consideration to be $43.4 million using a probability weighting approach that considered the possible outcomes based on assumptions related to the timing and probability of the product launch date, discount rates matched to the timing of first payment, and probability of success rates and discount adjustments on the related cash flows. Contents

TheTable following table summarizes the preliminary fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at acquisition date, with the excess being allocated to goodwill. Contents

ContingentTable Considerationof Contents

NOTETable 3of – REPORTABLE SEGMENTS Contents

InventoriesTable consist of finished goods held for sale and distribution, raw materials and work-in-process. Included in inventory at June 30, 2013 and December 31, 2012 is approximately $89.2 million and $49.7 million, respectively, of inventory that is pending approval by the U.S. Food and Drug Administration (“FDA”), by other regulatory agencies or has not been launched due to contractual restrictions. The increase was primarily due to additional lidocaine inventories. This inventory consists of generic pharmaceutical products that are capitalized only when the bioequivalence of the product is demonstrated or the product has already received regulatory approval and is awaiting a contractual triggering event to enter the marketplace. Contents

WeTable test goodwill for impairment annually at the end of the second quarter and when events occur that could potentially reduce the fair value of a reporting unit below its carrying amount. Goodwill is considered impaired if the carrying amount of the reporting unit’s net assets exceeds the fair value of the reporting unit. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company determines the fair value of its reporting units using the income approach, which is based on estimated future cash flows. The aggregate fair value for all reporting units is reconciled to the Company’s market capitalization. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then the Company performs step two of the impairment test, which allocates the fair value of the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value being allocated to goodwill. If the carrying value of a reporting unit’s goodwill exceeds the implied goodwill, then an impairment of goodwill has occurred for such difference. Contents

SeniorTable Notesof Issued in 2012 Contents

BorrowingsTable under the Term Loan Credit Agreement will bear interest at the Company’s choice of a per annum rate equal to either a base rate or Eurodollar rate, plus an applicable margin. The base rate is the higher of (a) the Federal Funds Rate plus 0.50%, (b) the prime rate as publicly announced by the Administrative Agent or (c) the one-month London Interbank Offered Rate plus 1.00%. The applicable margin is a percentage determined in accordance with a pricing grid based on the Company’s credit rating and is currently set at 0.50% for base rate loans and 1.50% for Eurodollar rate loans. Contents

-Table 20of - Contents

TheTable Company’s revenue, earnings, cash flows and fair value of its assets and liabilities can be impacted by fluctuations in foreign exchange risks and interest rates, as applicable. The Company manages the impact of foreign exchange risk and interest rate movements through operational means and through the use of various financial instruments, including derivative instruments such as foreign currency contracts. Contents

DuringTable the six months ended June 30, 2013, the Company recorded contingent consideration of $43.4 million and $144.8 million in connection with the Uteron acquisition and the license agreement entered into with Medicines360, respectively. During the six months ended June 30, 2012, the Company recorded contingent payments made to the Arrow Group selling shareholders based on the after-tax gross profits on sales of atorvastatin within the U.S. of $4.8 million. For addition information on the Medicines360 and Uteron transactions, refer to “Note 1 – General” and “Note 2 – Acquisitions and Divestitures,” respectively. Contents

LegalTable Mattersof Contents

PursuantTable to the agreement, the Company hired an independent expert to conduct inspections of the Corona facility at least once each year. In each year from 2002 through 2012, the independent expert has reported its opinion to the FDA that, based on the findings of the audit of the facility, the FDA’s applicable cGMP requirements, applicable FDA regulatory guidance, and the collective knowledge, education, qualifications and experience of the expert’s auditors and reviewers, the systems at the Corona facility audited and evaluated by the expert are in compliance with the FDA’s cGMP regulations. However, the FDA is not required to accept or agree with the independent expert’s opinion. The FDA has conducted periodic inspections of the Corona facility since the entry of the consent decree, and concluded its most recent general cGMP inspection in November 2012. At the conclusion of the inspection, the FDA inspectors issued a Form 483 to the facility identifying certain observations concerning the instances where the facility failed to follow cGMP regulations. The facility has responded to the Form 483 observations and has provided the FDA with a corrective action plan to address the observations noted in the Form 483. On April 19, 2013, the independent expert concluded its annual inspection of the Corona, California facility. The independent expert confirmed the types of observations identified by the FDA during its November 2012 inspection, and reported its observations to the FDA in May 2013. During the inspection, the independent expert verified that certain actions in the corrective action plan had been made. The independent expert has agreed to continue to evaluate the corrective actions being taken and to re-inspect the facility during the second half of 2013, and to further evaluate at that time the facility’s compliance with FDA’s cGMP regulations. If in the future, the FDA determines that, with respect to its Corona facility, the Company has failed to comply with the consent decree or FDA regulations, including cGMPs, or has failed to adequately address the FDA’s inspectional observations, the consent decree allows the FDA to order a variety of actions to remedy the deficiencies. These actions could include ceasing manufacturing and related operations at the Corona facility, and recalling affected products. Such actions, if taken by the FDA, could have a material adverse effect on the Company, its results of operations, financial position and cash flows. Contents

HormoneTable Replacement Therapy Litigation. Beginning in early 2004, a number of product liability suits were filed against the Company and certain Company affiliates, as well as numerous other pharmaceutical companies, for personal injuries allegedly arising out of the use of hormone replacement therapy products, including but not limited to estropipate and estradiol. Many of the cases originally filed against the Company and its affiliates have been dismissed. Approximately 13 cases remain pending against the Company and/or its affiliates in state and federal courts, representing claims by 13 plaintiffs. Breast cancer is the alleged injury in the remaining cases. The majority of the cases have been transferred to and consolidated in the United States District Court for the Eastern District of Arkansas (In re: Prempro Products Liability Litigation, MDL Docket No. 1507). Discovery in the individual cases has not been completed. The Company believes it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Contents

OnTable May 1, 2012, an additional action under the TCPA was filed by Physicians Healthsource, Inc., purportedly on behalf of the “end users of the fax numbers in the United States but outside Missouri to which faxes advertising pharmaceutical products for sale by Anda were sent.” (Physicians Healthsource Inc. v. Anda Inc. United States District Court for the Southern District of Florida, 12 CV 60798). On July 10, 2012, Anda filed its answer and affirmative defenses. The matter is in its preliminary stages and no trial date has been set. Contents

andTable also requested temporary injunctive relief during the pendency of its appeal (Duramed v. Watson Laboratories, Case No. 3011-1438). On July 27, 2011, the U.S. Court of Appeals for the Federal Circuit denied Duramed’s request for temporary relief. Actavis launched its generic product on July 28, 2011. On November 10, 2011, the U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s denial of Duramed’s preliminary injunction motion. On August 5, 2011, Duramed filed a motion in the District Court to amend its complaint to add a claim for damages as a result of the Company’s launch of its generic product. On November 18, 2011, the Company moved for summary judgment. On June 29, 2012, in a litigation involving the same patent, the United States District Court for the District of New Jersey held that the asserted claims of the patent are invalid. On May 21, 2013 the United States Court of Appeals for the Federal Circuit affirmed the New Jersey District Court’s judgment that the asserted claims of the patent are invalid. On July 9, 2012, the Company filed a motion for judgment based on the collateral estoppel effect of the New Jersey decision. In response, on July 20, 2012, Duramed filed a motion to stay the litigation pending the Federal Circuit’s decision in the appeal of the New Jersey decision. On July 25, 2012, the Court granted Duramed’s motion to stay and denied without prejudice the Company‘s motion for summary judgment and judgment based on collateral estoppels. On July 8, 2013, Duramed informed the Nevada District Court that it did not intend to pursue further appeals of the Federal Circuit’s finding that the ‘969 Patent is invalid. Duramed and the Company are in discussions concerning the appropriate resolution of the Nevada action. No trial date has been set. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell its generic version of Seasonique®. Therefore, an adverse ruling in the case or a subsequent final appellate determination that the patent in suit is valid, and that the Company has infringed the patent in suit, could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Contents

AlendronateTable Litigation. Beginning in 2010, a number of product liability suits were filed against the Company and certain Company affiliates, as well as other manufacturers and distributors of alendronate, for personal injuries including femur fractures and osteonecrosis of the jaw allegedly arising out of the use of alendronate. Approximately 405 cases are pending against the Company and/or its affiliates in various state and federal courts, representing claims by approximately 515 plaintiffs. These cases are generally at their preliminary stages. The Company believes that it will be defended in, and indemnified for, the majority of these claims by Merck & Co., the New Drug Application holder and manufacturer of the product sold by the Company during most of 2008. In addition, there are 123 lawsuits that name as a defendant Cobalt Laboratories, which the Company acquired in 2009 as part of its acquisition of the Arrow Group, in connection with Cobalt’s manufacture and sale of alendronate. Nineteen of the cases naming the Company and/or Cobalt were consolidated for pre-trial proceedings as part of a multi-district litigation (MDL) matter pending in the United States District Court for the District of New Jersey (In re: Fosamax (Alendronate Sodium) Products Liability Litigation, MDL No. 2243). In 2012, the United States District Court for the District of New Jersey granted the Company’s motion to dismiss all of the cases then pending against the Company in the New Jersey MDL matter. Several of the plaintiffs appealed the dismissal to the United States Court of Appeals for the Third Circuit and that appeal remains pending. Any cases filed against the Company in the District of New Jersey MDL after the Court’s January 2012 dismissal are subject to a case management order that calls for their dismissal unless plaintiffs can establish that their claims should be exempted from the 2012 dismissal order. To date, no plaintiff with a post-January 2012 complaint in the District of New Jersey against the Company has moved for such exemption have been or are expected to be dismissed. Several other cases are part of an MDL in the United States District Court for the Southern District of New York, where the Company has filed a similar motion to dismiss. That motion is pending. Seven additional cases are part of consolidated litigation in the California Superior Court (Orange County). Additional individual cases are pending in state court in Missouri. Approximately 385 cases are pending as part of a mass tort coordinated proceeding in the Superior Court of New Jersey, Atlantic County. In that state court proceeding, responsive pleadings and discovery have been suspended with respect to the Company pending the court’s decision on a motion to dismiss, which the Company filed in March 2012. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if our indemnification arrangements or insurance do not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Contents

Generess®Table Fe – On November 22, 2011, Warner Chilcott Company sued Mylan Inc., Mylan Pharmaceuticals Inc. and Famy Care Ltd. in the United States District Court for the District of New Jersey, alleging that sales of norethindrone and ethinyl estradiol and ferrous fumarate tablets, a generic version of Warner Chilcott’s Generess ® Fe tablets (which is exclusively licensed by the Company), would infringe U.S. Patent No. 6,667,050 (the ‘050 patent) (Warner Chilcott Company LLC v. Mylan Inc., et al., Case No. 11cv6844). The complaint seeks injunctive relief. On December 12, 2011 Warner Chilcott sued Lupin Ltd. and Lupin Pharmaceuticals, Inc. in the United States District Court for the District of New Jersey, alleging that sales of Lupin’s generic version of Generess ® Fe would infringe the ‘050 patent. (Warner Chilcott Company LLC v. Lupin Ltd., et al., Case No. 11cv7228). The complaint seeks injunctive relief. Warner Chilcott’s lawsuits against Mylan and Lupin have been consolidated and remain pending. Pursuant to the provisions of the Hatch-Waxman Act, the FDA is precluded from granting final approval to the generic applicants until the earlier of thirty months after the generic applicant provided Warner Chilcott with notice of its abbreviated new drug application filing or the generic applicant prevails in the pending litigation. The court has instructed the parties to be ready for trial by December 2, 2013. The Company believes Warner Chilcott has meritorious claims to prevent the generic applicants from launching a generic version of Generess Fe. However, if a generic applicant prevails in the pending litigation or launches a generic version of Generess Fe before the pending litigation is finally resolved, it could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows. Contents

ITEM 2.Table MANAGEMENT’Sof DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Contents

UnderTable the terms of the definitive agreement, at closing Warner Chilcott shareholders will receive 0.160 shares of New Actavis for each Warner Chilcott share they own. The transaction is expected to be tax-free, for U.S. federal income tax purposes, to Warner Chilcott shareholders. Actavis shareholders will receive one share of New Actavis for each Actavis share they own upon closing. The transaction will be taxable, for U.S. federal income tax purposes, to Actavis shareholders. Contents

OnTable October 31, 2012, Watson Pharmaceuticals, Inc. completed the acquisition of the Actavis Group. The acquisition was consummated for a cash payment of €4.2 billion, or approximately $5.5 billion, and a contingent consideration payment of 5.5 million newly issued shares of Actavis, Inc. common stock. Actavis Group was a privately held generic pharmaceutical company specializing in the development, manufacture and sale of generic pharmaceuticals. Contents

ThreeTable Monthsof Ended June 30, 2013 Compared to Three Months Ended June 30, 2012 Contents

ActavisTable Pharmaof Segment Contents

R&DTable expensesof within our Actavis Pharma segment increased 92.8% or $49.9 million to $103.7 million for the three months ended June 30, 2013 compared to $53.8 million in the prior year period primarily attributable to the Actavis Group acquisition. Contents

-Table 38of - Contents

OurTable Anda Distribution segment distributes generic and brand pharmaceutical products manufactured by third parties, as well as by Actavis, primarily to independent pharmacies, pharmacy chains, pharmacy buying groups and physicians’ offices. Sales are principally generated through an in-house telemarketing staff and through internally developed ordering systems. The Anda Distribution segment operating results exclude sales by Anda of products developed, acquired, or licensed by Pharma and Specialty Brand segments. Contents

SellingTable and marketing expenses consist mainly of personnel costs, facilities costs, insurance and freight costs, which support the Anda Distribution segment sales and marketing functions. Contents

Table of Contents

Table of Contents

Table of Contents

CONDENSEDTable CONSOLIDATEDof STATEMENTS OF OPERATIONS Contents

CONDENSEDTable CONSOLIDATEDof STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Contents

CONDENSEDTable CONSOLIDATEDof STATEMENTS OF CASH FLOWS Contents

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Contents

Table of Contents

recordedTable at fair value on the balance sheet regardless of the likelihood of success of the related product or technology. In connection with the acquisition, the Company recorded $190.4 million in IPR&D, $6.7 million in prepaid R&D and contingent consideration of $144.8 million. Contents

-Table 7of - Contents

-Table 8of - Contents

Share-BasedTable Compensationof Contents

NOTETable 2of – ACQUISITIONS AND DIVESTITURES Contents

TheTable following table summarizes the preliminary fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at acquisition date, with the excess being allocated to goodwill. Contents

ContingentTable Considerationof Contents

NOTETable 3of – REPORTABLE SEGMENTS Contents

Table of Contents

Table of Contents

SeniorTable Notesof Issued in 2012 Contents

Table of Contents

-Table 20of - Contents

Table of Contents

Table of Contents

LegalTable Mattersof Contents

Table of Contents

Table of Contents

Table of Contents

ITEM 2.Table MANAGEMENT’Sof DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Contents

ThreeTable Monthsof Ended June 30, 2013 Compared to Three Months Ended June 30, 2012 Contents

ActavisTable Pharmaof Segment Contents

Table of Contents

R&DTable expensesof within our Actavis Pharma segment increased 92.8% or $49.9 million to $103.7 million for the three months ended June 30, 2013 compared to $53.8 million in the prior year period primarily attributable to the Actavis Group acquisition. Contents

-Table 38of - Contents

SellingTable and marketing expenses consist mainly of personnel costs, facilities costs, insurance and freight costs, which support the Anda Distribution segment sales and marketing functions. Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-13305

ACTAVIS, INC.

(Exact name of registrant as specified in its charter)

Nevada

95-3872914

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Morris Corporate Center III

400 Interpace Parkway

Parsippany, New Jersey 07054

(Address of principal executive offices, including zip code)

(862) 261-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the Registrant’s only class of common stock as of ~~July~~October 1917, 2013 was approximately ~~133,152,384~~100.

ACTAVIS, INC.

TABLE OF CONTENTS

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2013

	PAGE
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012		1
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012		2
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2013 and 2012		3
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012		4
Notes to Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 3. Quantitative and Qualitative Disclosure about Market Risk		49
Item 4. Controls and Procedures		51
Part II. OTHER INFORMATION
Item 1. Legal Proceedings		52
Item 1A. Risk Factors		52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		54
Item 6. Exhibits		55
Signatures		56

Part I. FINANCIAL INFORMATION


			PAGE

Item 1.	Condensed Consolidated Financial Statements (Unaudited):

		Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012		1

		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012		2

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2013 and 2012		3

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012		4

		Notes to Condensed Consolidated Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			41

Item 3.	Quantitative and Qualitative Disclosure about Market Risk			58

Item 4.	Controls and Procedures			60

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings			61

Item 1A.	Risk Factors			61

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			61

Item 6.	Exhibits			62

Signatures				63

~~ACTAVIS,~~PART ~~INC~~I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED ~~BALANCE~~FINANCIAL ~~SHEETS~~ STATEMENTS

~~(Unaudited;~~ACTAVIS, inINC. ~~millions)~~

	June 30,			December 31,
	2013			2012
				(Revised)
				See Note 1
ASSETS
Current Assets:
Cash and cash equivalents	$	226.9		$	319.0
Marketable securities		8.0			9.0
Accounts receivable, net		1,372.3			1,330.9
Inventories, net		1,601.9			1,546.5
Prepaid expenses and other current assets		365.9			323.6
Deferred tax assets		341.0			309.3
Total current assets		3,916.0			3,838.3
Property and equipment, net		1,417.7			1,485.0
Investments and other assets		98.4			91.2
Deferred tax assets		79.4			61.8
Product rights and other intangibles, net		3,856.6			3,784.3
Goodwill		4,192.5			4,854.2
Total assets	$	13,560.6		$	14,114.8
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,104.5		$	2,467.9
Income taxes payable		46.1			68.1
Current portion of long-term debt and capital leases		177.2			176.2
Deferred revenue		32.2			32.3
Deferred tax liabilities		29.0			4.8
Total current liabilities		2,389.0			2,749.3
Long-term debt and capital leases		6,173.9			6,257.1
Deferred revenue		30.7			11.3
Other long-term liabilities		355.0			162.6
Other taxes payable		84.7			70.3
Deferred tax liabilities		986.3			1,007.8
Total liabilities		10,019.6			10,258.4
Commitments and contingencies
Equity:
Common stock		0.5			0.4
Additional paid-in capital		2,470.1			1,956.7
Retained earnings		1,515.1			2,182.7
Accumulated other comprehensive income (loss)		(84.3	)		36.8
Treasury stock, at cost		(365.3	)		(342.8	)
Total stockholders’ equity		3,536.1			3,833.8
Noncontrolling interests		4.9			22.6
Total equity		3,541.0			3,856.4
Total liabilities and equity	$	13,560.6		$	14,114.8

CONDENSED CONSOLIDATED BALANCE SHEETS

~~See~~(Unaudited; ~~accompanying~~in ~~Notes~~millions) ~~to Condensed Consolidated Financial Statements.~~

- 1 -


	September 30,			December 31,
	2013			2012
				(Revised)
				See Note 1
ASSETS
Current Assets:
Cash and cash equivalents	$	368.0		$	319.0
Marketable securities		5.5			9.0
Accounts receivable, net		1,366.2			1,330.9
Inventories, net		1,658.9			1,546.5
Prepaid expenses and other current assets		382.3			323.6
Deferred tax assets		292.5			309.3

Total current assets		4,073.4			3,838.3
Property and equipment, net		1,415.5			1,485.0
Investments and other assets		95.7			91.2
Deferred tax assets		81.3			61.8
Product rights and other intangibles, net		3,775.5			3,784.3
Goodwill		4,202.7			4,854.2

Total assets	$	13,644.1		$	14,114.8

LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,131.4		$	2,467.9
Income taxes payable		17.0			68.1
Current portion of long-term debt and capital leases		627.1			176.2
Deferred revenue		30.8			32.3
Deferred tax liabilities		0.9			4.8

Total current liabilities		2,807.2			2,749.3
Long-term debt and capital leases		5,683.3			6,257.1
Deferred revenue		34.3			11.3
Other long-term liabilities		342.3			162.6
Other taxes payable		71.1			70.3
Deferred tax liabilities		957.9			1,007.8

Total liabilities		9,896.1			10,258.4

Commitments and contingencies
Equity:
Common stock		0.5			0.4
Additional paid-in capital		2,626.5			1,956.7
Retained earnings		1,580.7			2,182.7
Accumulated other comprehensive income		43.5			36.8
Treasury stock, at cost		(508.2	)		(342.8	)

Total stockholders’ equity		3,743.0			3,833.8
Noncontrolling interests		5.0			22.6

Total equity		3,748.0			3,856.4

Total liabilities and equity	$	13,644.1		$	14,114.8

~~Table~~See ofaccompanying ~~Contents~~Notes to Condensed Consolidated Financial Statements.

~~ACTAVIS,~~- ~~INC.~~1 -

~~(Unaudited; in millions~~ACTAVIS, ~~except~~INC. ~~per share amounts)~~

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net revenues	$	1,989.8		$	1,355.2		$	3,885.3		$	2,879.5
Operating expenses:
Cost of sales (excludes amortization, presented below)		1,050.0			754.0			2,136.2			1,658.3
Research and development		135.6			79.7			267.7			168.2
Selling and marketing		235.6			117.9			462.8			236.0
General and administrative		225.8			121.8			411.6			286.2
Amortization		149.6			105.8			308.0			237.7
Loss on asset sales, impairments, and contingent consideration adjustment, net		655.3			79.8			803.3			80.0
Total operating expenses		2,451.9			1,259.0			4,389.6			2,666.4
Operating income (loss)		(462.1	)		96.2			(504.3	)		213.1
Non-operating income (expense):
Interest income		1.2			0.5			2.0			0.9
Interest expense		(56.1	)		(21.0	)		(110.6	)		(42.7	)
Other (expense), net		3.8			(156.6	)		24.4			(155.1	)
Total other income (expense), net		(51.1	)		(177.1	)		(84.2	)		(196.9	)
Income (loss) before income taxes		(513.2	)		(80.9	)		(588.5	)		16.2
Provision (benefit) for income taxes		51.4			(18.7	)		79.6			23.6
Net income (loss)		(564.6	)		(62.2	)		(668.1	)		(7.4	)
Net income (loss) attributable to noncontrolling interests		0.2			—			(0.5	)		—
Net income (loss) attributable to common shareholders	$	(564.8	)	$	(62.2	)	$	(667.6	)	$	(7.4	)
Earnings (loss) per share attributable to common shareholders:
Basic	$	(4.27	)	$	(0.49	)	$	(5.09	)	$	(0.06	)
Diluted	$	(4.27	)	$	(0.49	)	$	(5.09	)	$	(0.06	)
Weighted average shares outstanding:
Basic		132.2			125.8			131.2			125.5
Diluted		132.2			125.8			131.2			125.5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

~~See~~(Unaudited; ~~accompanying~~in ~~Notes~~millions, toexcept ~~Condensed~~per ~~Consolidated~~share ~~Financial~~amounts) ~~Statements.~~

- 2 -


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net revenues	$	2,013.0		$	1,285.2		$	5,898.3		$	4,164.7

Operating expenses:
Cost of sales (excludes amortization, presented below)		1,082.9			724.1			3,219.1			2,382.4
Research and development		158.8			112.5			426.5			280.7
Selling and marketing		223.6			114.7			686.4			350.7
General and administrative		232.1			110.1			643.7			396.3
Amortization		146.3			95.2			454.3			332.9
Loss on asset sales, impairments, and contingent consideration adjustment, net		13.6			39.6			816.9			119.6

Total operating expenses		1,857.3			1,196.2			6,246.9			3,862.6

Operating income (loss)		155.7			89.0			(348.6	)		302.1

Non-operating income (expense):
Interest income		1.4			0.4			3.4			1.3
Interest (expense)		(58.1	)		(19.4	)		(168.7	)		(62.1	)
Other income (expense), net		(2.1	)		41.7			22.3			(113.4	)

Total other income (expense), net		(58.8	)		22.7			(143.0	)		(174.2	)

Income (loss) before income taxes		96.9			111.7			(491.6	)		127.9
Provision for income taxes		31.4			35.0			111.0			58.6

Net income (loss)		65.5			76.7			(602.6	)		69.3
Net (loss) attributable to noncontrolling interests		(0.1	)		—			(0.6	)		—

Net income (loss) attributable to common shareholders	$	65.6		$	76.7		$	(602.0	)	$	69.3

Earnings (loss) per share attributable to common shareholders:
Basic	$	0.50		$	0.61		$	(4.57	)	$	0.55

Diluted	$	0.49		$	0.60		$	(4.57	)	$	0.54

Weighted average shares outstanding:
Basic		132.5			126.0			131.7			125.7

Diluted		134.4			128.0			131.7			127.6

~~Table~~See ofaccompanying ~~Contents~~Notes to Condensed Consolidated Financial Statements.

~~ACTAVIS,~~- ~~INC.~~2 -

~~(Unaudited;~~ACTAVIS, inINC. ~~millions)~~

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss)	$	(564.6	)	$	(62.2	)	$	(668.1	)	$	(7.4	)
Other comprehensive income (loss):
Foreign currency translation gains (losses)		7.4			(59.1	)		(121.1	)		(21.6	)
Total other comprehensive income (loss), net of tax		7.4			(59.1	)		(121.1	)		(21.6	)
Comprehensive income (loss)		(557.2	)		(121.3	)		(789.2	)		(29.0	)
Comprehensive income (loss) attributable to noncontrolling interests		0.2			—			(0.5	)		—
Comprehensive income (loss) attributable to common shareholders	$	(557.4	)	$	(121.3	)	$	(788.7	)	$	(29.0	)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

~~See~~(Unaudited; ~~accompanying~~in ~~Notes~~millions) ~~to Condensed Consolidated Financial Statements.~~

- 3 -


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013			2012
Net income (loss) attributable to common shareholders	$	65.6		$	76.7	$	(602.0	)	$	69.3
Other comprehensive income:
Foreign currency translation gains		127.8			35.8		6.7			14.2

Total other comprehensive income, net of tax		127.8			35.8		6.7			14.2

Comprehensive income (loss)		193.4			112.5		(595.3	)		83.5
Comprehensive (loss) attributable to noncontrolling interests		(0.1	)		—		(0.6	)		—

Comprehensive income (loss) attributable to common shareholders	$	193.5		$	112.5	$	(594.7	)	$	83.5

~~Table~~See ofaccompanying ~~Contents~~Notes to Condensed Consolidated Financial Statements.

~~ACTAVIS,~~- ~~INC.~~3 -

~~(Unaudited;~~ACTAVIS, inINC. ~~millions)~~

	Six Months Ended
	June 30,
	2013			2012
Cash Flows From Operating Activities:
Net income (loss)	$	(668.1	)	$	(7.4	)
Reconciliation to net cash provided by operating activities:
Depreciation		97.6			40.5
Amortization		308.0			237.7
Provision for inventory reserve		29.5			26.9
Share-based compensation		26.3			23.9
Deferred income tax benefit		(137.5	)		(108.4	)
Earnings on equity method investments		(1.7	)		(1.1	)
Loss on asset sales and impairments, net		653.0			101.3
Amortization of inventory step up		93.5			—
Loss on foreign exchange derivatives		—			142.7
Amortization of deferred financing costs		3.8			13.3
Increase (decrease) in allowance for doubtful accounts		(1.0	)		1.6
Accretion of preferred stock and contingent consideration obligations		1.4			14.9
Contingent consideration fair value adjustment		150.3			(21.3	)
Excess tax benefit from stock-based compensation		(14.2	)		(9.9	)
Other, net		1.2			2.5
Changes in assets and liabilities (net of effects of acquisitions):
Accounts receivable, net		(46.1	)		310.9
Inventories		(215.0	)		14.7
Prepaid expenses and other current assets		21.2			(25.9	)
Accounts payable and accrued expenses		(18.5	)		(355.4	)
Deferred revenue		22.8			(5.4	)
Income and other taxes payable		(19.8	)		(98.4	)
Other assets and liabilities		4.3			2.4
Total adjustments		959.1			307.5
Net cash provided by operating activities		291.0			300.1
Cash Flows From Investing Activities:
Additions to property and equipment		(73.8	)		(53.3	)
Additions to product rights and other intangibles		(2.4	)		(3.6	)
Proceeds from sales of property and equipment		5.9			7.4
Proceeds from sales of marketable securities and other investments		11.9			8.9
Additions to marketable securities and other investments		—			(0.2	)
Acquisition of businesses, net of cash acquired		(194.6	)		(383.5	)
Net cash used in investing activities		(253.0	)		(424.3	)
Cash Flows From Financing Activities:
Proceeds from borrowings on credit facility		125.0			375.0
Debt issuance costs		—			(25.5	)
Principal payments on debt		(216.7	)		(125.3	)
Proceeds from stock plans		5.5			10.9
Payment of contingent consideration		(2.2	)		(90.1	)
Repurchase of common stock		(22.5	)		(13.7	)
Acquisition of noncontrolling interests		(10.4	)		(4.7	)
Excess tax benefit from stock-based compensation		14.2			9.9
Net cash (used in) provided by financing activities		(107.1	)		136.5
Effect of currency exchange rate changes on cash and cash equivalents		(23.0	)		(4.0	)
Net increase (decrease) in cash and cash equivalents		(92.1	)		8.3
Cash and cash equivalents at beginning of period		319.0			209.3
Cash and cash equivalents at end of period	$	226.9		$	217.6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~See~~(Unaudited; ~~accompanying~~in ~~Notes~~millions) ~~to Condensed Consolidated Financial Statements.~~

- 4 -


	Nine Months Ended September 30,
	2013			2012
Cash Flows From Operating Activities:
Net income (loss)	$	(602.6	)	$	69.3

Reconciliation to net cash provided by operating activities:
Depreciation		147.7			60.7
Amortization		454.3			333.0
Provision for inventory reserve		50.5			37.1
Share-based compensation		75.8			34.6
Deferred income tax benefit		(170.0	)		(124.1	)
(Earnings) loss on equity method investments		(3.3	)		0.2
Goodwill impairment		647.5			—
Loss on asset sales and impairments, net		28.5			141.0
Amortization of inventory step up		93.5			—
Loss on foreign exchange derivatives		—			90.0
Amortization of deferred financing costs		5.7			24.3
Increase (decrease) in allowance for doubtful accounts		(0.5	)		2.4
Accretion of preferred stock and contingent consideration obligations		6.5			20.3
Contingent consideration fair value adjustment		156.2			(21.3	)
Excess tax benefit from stock-based compensation		(69.2	)		(12.6	)
Other, net		2.3			2.5
Changes in assets and liabilities (net of effects of acquisitions):
Accounts receivable, net		(28.7	)		265.0
Inventories		(266.5	)		(4.3	)
Prepaid expenses and other current assets		62.0			(19.9	)
Accounts payable and accrued expenses		19.5			(303.0	)
Deferred revenue		23.7			(7.7	)
Income and other taxes payable		(71.9	)		(143.6	)
Other assets and liabilities		0.8			2.1

Total adjustments		1,164.4			376.7

Net cash provided by operating activities		561.8			446.0

Cash Flows From Investing Activities:
Additions to property and equipment		(117.4	)		(93.3	)
Additions to product rights and other intangibles		(5.0	)		(5.9	)
Proceeds from sales of property and equipment		5.9			7.7
Proceeds from sales of marketable securities and other investments		25.0			8.8
Additions to marketable securities and other investments		—			(5.3	)
Acquisition of businesses, net of cash acquired		(194.6	)		(383.5	)

Net cash (used in) investing activities		(286.1	)		(471.5	)

Cash Flows From Financing Activities:
Proceeds from borrowings on credit facility		125.0			375.0
Debt issuance costs		(0.5	)		(34.1	)
Principal payments on debt		(260.6	)		(201.7	)
Proceeds from stock plans		44.0			17.1
Payment of contingent consideration		(3.1	)		(107.2	)
Repurchase of common stock		(165.4	)		(15.4	)
Acquisition of noncontrolling interests		(10.4	)		(4.5	)
Excess tax benefit from stock-based compensation		69.2			12.6

Net cash (used in) provided by financing activities		(201.8	)		41.8

Effect of currency exchange rate changes on cash and cash equivalents		(24.9	)		(3.6	)

Net increase in cash and cash equivalents		49.0			12.7
Cash and cash equivalents at beginning of period		319.0			209.3

Cash and cash equivalents at end of period	$	368.0		$	222.0

~~Table~~See ofaccompanying ~~Contents~~Notes to Condensed Consolidated Financial Statements.

~~ACTAVIS,~~- ~~INC.~~4 -

~~NOTE~~ACTAVIS, 1INC. ~~– GENERAL~~

OnNOTES ~~the~~TO ~~close~~CONDENSED ofCONSOLIDATED ~~business~~FINANCIAL ~~January 24,~~STATEMENTS ~~2013, the Company was renamed to Actavis, Inc. and began trading under its new symbol – ACT – on the New York Stock Exchange.~~

~~Actavis,~~NOTE ~~Inc.~~1 ~~(“Actavis,”~~– ~~“Company,”~~GENERAL or “We”) is an integrated global specialty pharmaceutical company engaged in the development, manufacturing, marketing, sale and distribution of generic and brand pharmaceutical products. Through its third-party business within the Actavis Pharma segment, Actavis out-licenses generic pharmaceutical products rights developed or acquired by the Company, primarily in Europe. Actavis is also developing biosimilar products within the Actavis Specialty Brands segment. Additionally, we distribute generic and certain select brand pharmaceutical products manufactured by third parties through our Anda Distribution segment. Our largest market is the United States of America (“U.S.”), followed by our key international markets including Europe, Canada, Australia, Southeast Asia, South America and South Africa.

~~The~~Actavis, ~~accompanying~~Inc. ~~condensed~~(“Actavis,” ~~consolidated financial statements should be read in conjunction with the~~ “Company~~’s Annual Report on Form 10-K for the year ended December 31~~,” ~~2012~~“Our,” asor ~~revised~~“We”) byis ~~Form~~an ~~8-K~~integrated ~~filed~~global specialty onpharmaceutical ~~June 18,~~company ~~2013~~engaged ~~to reflect adjustments made to the preliminary amounts recorded~~ in ~~connection with~~ the ~~Actavis~~development, ~~Group~~manufacturing, ~~Acquisition primarily related to working capital~~marketing, ~~intangible~~sale ~~assets~~ and ~~deferred~~distribution ~~taxes balance sheet financial data as~~ of ~~December 31,~~generic ~~2012. Certain information~~ and ~~footnote~~brand ~~disclosures normally~~pharmaceutical ~~included~~products. inThrough ~~annual~~its ~~financial~~third-party ~~statements~~business ~~prepared~~within inthe ~~accordance~~Actavis ~~with~~Pharma ~~generally~~segment, ~~accepted~~Actavis ~~accounting~~out-licenses generic ~~principles~~pharmaceutical ~~(“GAAP”)~~products ~~have~~rights ~~been~~developed ~~condensed~~ or ~~omitted~~acquired ~~from~~by the ~~accompanying~~Company, ~~condensed~~primarily ~~consolidated~~in ~~financial statements~~Europe. ~~The accompanying~~Actavis ~~year~~is ~~end~~also ~~condensed~~developing ~~consolidated~~biosimilar ~~balance~~products ~~sheet~~within ~~was derived from~~ the ~~audited~~Actavis ~~financial~~Specialty ~~statements~~Brands segment. ~~The accompanying interim financial statements are unaudited~~Additionally, ~~but~~we ~~reflect~~distribute ~~all~~generic ~~adjustments~~and ~~which~~certain ~~are, in the opinion of management, necessary~~select ~~for~~brand apharmaceutical ~~fair~~products ~~statement~~manufactured ofby ~~Actavis’~~third ~~consolidated~~parties ~~financial~~through ~~position,~~our ~~results~~Anda ofDistribution ~~operations,~~segment. ~~comprehensive~~Our ~~income~~largest ~~and~~market ~~cash~~is ~~flows for~~ the ~~periods~~United ~~presented.~~States ~~Unless otherwise noted, all such adjustments are~~ of aAmerica ~~normal, recurring nature~~(“U. ~~The Company’s results of operations~~S.”), ~~comprehensive~~followed ~~income~~by ~~and~~our ~~cash~~key ~~flows~~international ~~for~~markets ~~the~~including ~~interim~~Europe, ~~periods are not necessarily indicative of the results of operations~~Canada, ~~comprehensive income~~ Australia, and ~~cash~~Southeast ~~flows that it may achieve in future periods~~Asia.

~~Acquisitions~~The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as revised by Form 8-K filed on June 18, 2013 to reflect adjustments made to the preliminary amounts recorded in connection with the Actavis Group Acquisition primarily related to working capital, intangible assets and deferred taxes balance sheet financial data as of December 31, 2012. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted from the accompanying condensed consolidated financial statements. The accompanying year end condensed consolidated balance sheet was derived from the audited financial statements. The accompanying interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, necessary for a fair statement of Actavis’ consolidated financial position, results of operations, comprehensive income and cash flows for the periods presented. Unless otherwise noted, all such adjustments are of a normal, recurring nature. The Company’s results of operations, comprehensive income and cash flows for the interim periods are not necessarily indicative of the results of operations, comprehensive income and cash flows that it may achieve in future periods.

~~Acquisition~~Business ofDevelopment ~~Warner Chilcott~~

OnAcquisition May 19, 2013, the Company entered into a definitive agreement (the “Transaction Agreement”) under which the Company will acquire Warner Chilcott plc (“Warner Chilcott”) in a stock-for-stock transaction valued at approximately $8.5 billion. The proposed transaction has been unanimously approved by the Boards of ~~Directors of Actavis and~~ Warner Chilcott, and is supported by the management teams of both companies. At the close of the transaction, which is expected by year end 2013, the Company and Warner Chilcott will be combined under a new company incorporated in Ireland, where Warner Chilcott is currently incorporated. The newly created company, which is expected to be called Actavis plc, or a variant thereof (“New Actavis”), will be led by the current Actavis leadership team. Under the terms of the definitive agreement, at closing Warner Chilcott shareholders will receive 0.160 shares of New Actavis for each Warner Chilcott share they own.

~~The~~On ~~transaction~~May 19, is2013, ~~expected~~the Company entered into a definitive agreement to beacquire ~~tax-free,~~Warner Chilcott plc (“Warner Chilcott”) in a stock-for-stock Utransaction.S. ~~federal~~At ~~income~~the ~~tax~~close ~~purposes~~of the transaction, towhich occurred on October 1, 2013, the Company and Warner Chilcott ~~shareholders. Actavis~~were ~~shareholders~~combined ~~will~~under ~~receive~~a ~~one~~new ~~share~~company ofincorporated ~~New~~in Ireland, Actavis ~~for~~plc. ~~each~~Under ~~Actavis~~the ~~share~~terms of the transaction, ~~they~~Warner ~~own~~Chilcott ~~upon~~shareholders ~~closing~~received 0.160 ~~The~~shares ~~transaction~~of ~~will~~Actavis ~~be taxable~~plc, for Ueach Warner Chilcott share they owned.S. ~~federal~~At ~~income~~closing, ~~tax~~the ~~purposes~~transaction value, toincluding ~~Actavis~~assumed ~~shareholders~~debt was approximately $9.1 billion.

~~Acquisition~~In ~~costs~~order ~~incurred~~to ~~during~~obtain regulatory approval under the ~~second~~Hart-Scott-Rodino ~~quarter~~Antitrust Improvements Act of 1976, as amended, in connection with the Warner Chilcott acquisition, Actavis was required to divest certain assets. On October 1, 2013, four generic pharmaceutical products were sold to Amneal Pharmaceuticals for ~~advisory~~consideration of $10.0 million, ~~legal~~subject to certain refunds of purchase price provisions. The divested products consisted of both commercial and ~~other~~development ~~costs~~stage ~~incurred~~products in ~~connection~~both ~~with~~oral ~~the~~contraceptive ~~Warner Chilcott~~and ~~transaction~~osteoporosis ~~totaled~~treatment. Net sales of divested products were $222.65 million and $2.7 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.

- 5 -

~~Acquisition~~Palau ~~of Uteron~~ Pharma, SAS.A.

On ~~January~~August 231, 2013, the Company ~~completed~~entered ~~the~~into ~~acquisition~~a ofpurchase ~~Belgium-based~~agreement ~~Uteron~~with Palau Pharma, SAS.A. ~~The~~(“Palau”) ~~acquisition~~to ~~was~~acquire ~~consummated~~worldwide ~~for a~~product ~~cash~~rights ~~payment~~to ofdevelop ~~$142.0~~and ~~million,~~commercialize ~~plus~~albaconazole ~~assumption~~for ofthe ~~debt~~treatment ~~and~~of ~~other~~candidiasis. ~~liabilities~~The ofCompany ~~$7.7~~simultaneously ~~million,~~entered ~~and~~into upa tomanufacturing ~~$155.0~~and ~~million~~supply inagreement ~~potential~~with ~~milestone~~Palau ~~payments.~~for ~~The~~the ~~acquisition~~supply ~~expands~~of ~~our~~clinical ~~Specialty~~and ~~Brands’~~commercial ~~pipeline~~quantities of ~~Women’s~~the ~~Health~~ products. In ~~including~~connection ~~two~~with ~~potential~~the ~~near~~execution ~~term~~of ~~commercial~~the ~~opportunities~~agreements, inthe ~~contraception~~Company ~~and~~paid ~~infertility,~~an ~~and~~upfront ~~one~~non-refundable ~~oral~~payment ~~contraceptive~~of ~~project~~€10.0 million, ~~expected~~or $13.4 million to ~~launch~~Palau, bywhich ~~2018.~~was ~~Several~~recorded ~~additional~~as ~~products~~research and development expense in ~~earlier~~the ~~stages~~third quarter of ~~development~~2013. ~~are~~The agreement also ~~included~~provides infor ~~the acquisition.~~certain ~~For~~future ~~additional~~milestone ~~information~~payments onup to €18.0 million in aggregate upon the ~~Uteron~~successful ~~acquisition,~~completion ~~refer~~of toPhase ~~“Note~~III 2trials –of ~~Acquisitions~~the products, and ~~Divestitures~~regulatory approvals.”

~~Acquisition~~Valeant ofPharmaceuticals ~~Actavis~~International, ~~Group~~Inc.

On ~~October~~May 311, ~~2012~~2013, the Company ~~completed~~entered ~~the~~into ~~acquisition~~an ofagreement ~~the~~to ~~Actavis~~acquire ~~Group.~~the ~~The~~worldwide ~~acquisition~~rights ~~was~~to ~~consummated~~Valeant ~~for~~Pharmaceuticals aInternational, ~~cash~~Inc. (“Valeant”) ~~payment~~metronidazole ~~of €4~~1.23% ~~billion,~~vaginal orgel ~~approximately~~antibiotic ~~$5.5~~development ~~billion~~product, ~~and~~ a ~~contingent~~ ~~consideration~~topical ~~payment~~antibiotic infor the ~~form~~treatment of 5bacterial vaginosis.~~5 million~~ ~~newly~~Under ~~issued~~the ~~shares~~terms of ~~Actavis~~the agreement, ~~Inc.~~the ~~common~~Company ~~stock.~~will ~~Actavis~~acquire ~~Group~~the ~~was~~product aupon ~~privately~~FDA ~~held~~approval ~~generic~~for approximately ~~pharmaceutical~~$57.0 ~~company~~million ~~specializing~~which inincludes ~~the~~upfront ~~development,~~and ~~manufacture~~certain milestone payments, and ~~sale~~guaranteed royalties for the first three years of ~~generic pharmaceuticals~~commercialization. ~~Actavis~~Upon ~~Group’s~~Food ~~results~~and ~~are~~Drug ~~included~~Administration in(“FDA”) ~~the~~approval ~~Actavis~~or ~~Pharma~~receipt ~~and~~of ~~Actavis~~product ~~Specialty~~launch quantity, ~~Brands~~the ~~segments~~Company aswill ofaccount for this transaction using the acquisition ~~date~~method of accounting. ~~For~~In ~~additional~~the ~~information~~event of generic competition on ~~the~~metronidazole ~~Actavis~~1.3% ~~Group~~and ~~acquisition,~~should ~~refer~~the Company choose to ~~“Note~~launch 2an –authorized ~~Acquisitions~~generic product, the Company would ~~and~~share ~~Divestitures~~the gross profits of the authorized generic with Valeant.”

~~Business~~On ~~Developments~~April 5, 2013, the Company and Valeant entered into an agreement for Actavis to be the exclusive marketer and distributor of the authorized generic version of Valeant’s Zovirax® ointment (acyclovir 5%) product. Under the terms of the agreement, Valeant will supply the Company with a generic version of Valeant’s Zovirax® ointment product and the Company will market and distribute the product in the U.S. Additionally, Valeant granted the Company the exclusive right to co-promote Zovirax® cream (acyclovir 5%) to obstetricians and gynecologists in the U.S. and the Company granted Valeant the exclusive right to co-promote Actavis Specialty Brands’ Cordran® Tape (flurandrenolide) product in the U.S. Under terms of the agreement related to the co-promotion of Zovirax® cream, the Company will utilize its existing Specialty Brands sales and marketing structure to promote the product and will receive a co-promotion fee from sales generated by prescriptions written by its defined targeted physician group. The fees earned by Actavis under the Zovirax cream co-promotion arrangement will be recognized in other revenues in the period earned. Under the terms of the Cordran® Tape co-promotion agreement, Valeant will utilize its existing Dermatology sales and marketing structure to promote the product, and will receive a co-promotion fee on sales. The fees paid by Actavis under the Cordran Tape arrangement will be recognized in the period incurred as selling and marketing expenses.

OnAgreements April 5, 2013, the Company and Valeant Pharmaceuticals International, Inc. (“Valeant”) entered into an agreement for Actavis to be the exclusive marketer and distributor of the authorized generic version of Valeant’s Zovirax® ointment (acyclovir 5%) product. Under the terms of the agreement, Valeant will supply the Company with a generic version of Valeant’s Zovirax® ointment product and the Company will market and distribute the product in the United States. Additionally, Valeant granted the Company the exclusive right to co-promote Zovirax® cream (acyclovir 5%) to obstetricians and gynecologists in the U.S. and the Company granted Valeant the exclusive right to co-promote Actavis Specialty Brands’ Cordran® Tape (flurandrenolide) product in the U.S. Under terms of the agreement related to the co-promotion of Zovirax® cream, the Company will utilize its existing Specialty Brands sales and marketing structure to promote the product and will receive a co-promotion fee from sales generated by prescriptions written by its defined targeted physician group. The fees earned by Actavis under the Zovirax cream co-promotion arrangement will be recognized in other revenues in the period earned. Under the terms of the Cordran® Tape co-promotion agreement, Valeant will utilize its existing Dermatology sales and marketing structure to promote the product, and will receive a co-promotion fee on sales. The fees paid by Actavis under the Cordran Tape arrangement will be recognized in the period incurred as selling and marketing expenses.

OnThe ~~May 1, 2013, the~~ Company entered into an agreement towith ~~acquire~~Endo ~~the~~Pharmaceuticals ~~worldwide~~Inc. ~~rights~~(“Endo”) toand ~~Valeant’s~~Teikoku ~~metronidazole~~Seiyaku 1Co.3%, ~~vaginal gel~~Ltd ~~antibiotic~~to ~~development~~settle ~~product,~~all aoutstanding patent ~~topical~~litigation ~~antibiotic~~related ~~for~~to ~~the~~Actavis’ ~~treatment~~generic version of ~~bacterial vaginosis~~Lidoderm®. ~~Under~~Per the terms of the agreement, ~~the~~on ~~Company~~September 15, ~~will~~2013, ~~acquire~~ the ~~product~~Company ~~upon~~launched ~~FDA~~its ~~approval~~generic ~~for~~version ~~approximately~~of ~~$57.0~~Lidoderm® ~~million~~(lidocaine ~~which~~topical ~~includes~~patch ~~upfront~~5%) ~~and certain~~to ~~milestone~~customers ~~payments,~~in ~~and~~the ~~guaranteed~~U.S. ~~royalties~~more ~~for~~than ~~the~~two ~~first three~~ years ofbefore ~~commercialization.~~the ~~Upon~~product’s ~~FDA~~patents ~~approval~~expire. orUnder ~~receipt~~applicable ofHatch ~~product~~Waxman ~~launch quantity~~rules, the Company ~~will~~believes ~~account~~it ~~for~~is ~~this~~entitled ~~transaction~~to 180 ~~using~~days ~~the~~of ~~acquisition~~marketing ~~method~~exclusivity. ofLidoderm® ~~accounting. In~~is ~~the~~a ~~event~~local ofanesthetic ~~generic~~indicated ~~competition~~to onrelieve ~~metronidazole~~post-shingles 1pain.3% Additionally, ~~should~~under the ~~Company~~terms ~~choose~~of tothe ~~launch~~agreement, anthe ~~authorized~~Company ~~generic~~has ~~product,~~received ~~the~~and distributed ~~Company~~branded ~~would~~Lidoderm® ~~share~~prior to the ~~gross~~launch ~~profits~~ of the ~~authorized~~ generic ~~with~~version ~~Valeant~~of Lidoderm®.

OnIn ~~June 11,~~November ~~2013~~2010, the Company entered into an exclusive ~~license~~ agreement with ~~Medicines360~~Ortho-McNeil-Janssen ~~to market~~Pharmaceuticals, ~~sell~~Inc. ~~and distribute Medicines360 LNG20 intrauterine device~~ (“~~LNG 20~~OMJPI”) ~~in the U.S and in Canada for a payment of approximately $52.3 million. The Company will also pay Medicines360 certain regulatory and sales based milestone payments totaling up~~ to ~~nearly~~ ~~$125.0 million plus royalties. Medicines360 retains the rights to~~ market the ~~product~~authorized ingeneric ~~the~~version ~~U.S.~~of ~~public~~Concerta® ~~sector,~~(methylphenidate ~~including family planning clinics that provide services to low-income women~~ER). ~~LNG20,~~Under ~~originally~~the ~~developed~~terms ~~by Uteron Pharma S.P.R.L. in Belgium, is designed to initially deliver 20 mcg~~ of ~~levonorgestrel per day for~~ the ~~indication of long term contraception~~agreement, ~~and~~OMJPI issupplies ~~currently~~Actavis inwith ~~Phase III clinical trials in the United States~~product. ~~Pending~~Actavis ~~FDA~~launched ~~approval,~~its ~~the~~authorized ~~LNG20~~generic ~~product could be launched~~of inConcerta® ~~the~~on ~~U.S. as early as 2014.~~May ~~The~~1, ~~transaction has been accounted for using the acquisition method of accounting~~2011. This method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their respective fair values as of the acquisition date and that in-process research and development (“IPR&D”) be

-Under 6the -terms of its agreement with OMJPI, the Company pays a royalty to OMJPI based on the gross profit of product revenues as defined in the agreement. During 2012, the royalty payable to OMJPI ranged from 50% to 55% of sales. This royalty includes the cost of the product supplied by OMJPI. Our royalty payable on sales of

~~Table~~- of6 ~~Contents~~-

~~Agreements~~ methylphenidate ER declined when a third party competitor launched a competing bioequivalent product. The change in royalty was a one-time event and was applied on a strength-by-strength basis following the launch of the first third-party generic competitor. A generic version was launched by a third-party competitor triggering a decline in royalty for this product to 30%. The agreement with OMJPI expires on December 31, 2014 and is subject to normal and customary early termination provisions. The agreement with OMJPI has been accounted for as a distribution arrangement. Accordingly, Actavis has recorded the net sales of the authorized generic product in the period earned and reflected the cost of product sold and the royalty payments to OMJPI in costs of goods sold in the period incurred.

InCommon ~~November~~Stock 2012, the Company entered into an exclusive agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc. (“OMJPI”) to market the authorized generic version of Concerta® (methylphenidate ER). Under the terms of the agreement, OMJPI supplies Actavis with product. Actavis launched its authorized generic of Concerta® on May 1, 2011.

~~Under~~As ~~the terms~~ of ~~its~~September 30, ~~agreement~~2013 ~~with~~and ~~OMJPI~~December 31, ~~the Company pays a royalty to OMJPI based on the gross profit of product revenues as defined in the agreement. During~~ 2012, ~~the~~there ~~royalty~~were ~~payable to OMJPI ranged from 50% to 55% of sales~~500.0 ~~This~~million ~~royalty~~shares ~~includes the cost~~ of ~~the product supplied by OMJPI~~$0.0033 ~~Our~~par ~~royalty~~value ~~payable~~per oncommon ~~sales of methylphenidate ER~~stock ~~declines~~authorized, ~~when a third party competitor launches a competing bioequivalent product~~145.1 ~~The~~million ~~change in royalty is a one-time event~~ and ~~is applied on a strength-by-strength basis following the launch of the first third-party generic competitor~~138.0 ~~A generic~~million ~~version~~shares ofissued ~~the 27mg strength was launched by a third-party competitor in January 2013~~ and of133.6 million ~~the 36mg~~ and ~~54mg strengths in March 2013, triggering a decline in royalty on these strengths~~127.7 ~~Accordingly,~~million ~~for~~shares ~~the 27mg and the 36mg and 54mg strengths~~outstanding, ~~commencing in January 2013 and March 2013,~~ respectively~~, the royalty payable to OMJPI is approximately 30% of sales, which includes the cost of the product supplied by OMJPI~~. ~~The~~Of ~~royalty on~~ the ~~18mg~~issued ~~strength~~shares, ~~will be 30% of sales commencing upon launch of a third party competing product~~11. ~~The agreement with OMJPI expires on December~~5 ~~31,~~million ~~2014~~ and ~~is subject to normal and customary early termination provisions~~10.3 million ~~The~~shares ~~agreement~~were ~~with~~held ~~OMJI~~as ~~has~~treasury ~~been~~shares ~~accounted for~~ as a ~~distribution~~of ~~arrangement. Accordingly~~September 30, ~~Actavis~~2013 ~~has recorded the net sales of the authorized generic product in the period earned~~ and ~~reflected~~December 31, ~~the~~2012, ~~cost of product sold and the royalty payments to OMJPI in costs of goods sold in the period incurred~~respectively.

~~Common~~As ~~Stock~~of October 1, 2013, in connection with the Warner Chilcott acquisition previously described, each Warner Chilcott ordinary share was converted into 0.160 of an Actavis plc ordinary share, and each Actavis, Inc.’s common share was converted into one Actavis plc ordinary share. At October 1, 2013, Actavis plc had 1.0 billion shares of $0.0001 par value per common stock authorized and 174.0 million shares issued and outstanding and 10.0 million shares $0.0001 par value of serial preferred shares authorized and no serial preferred shares issued.

AsRevenue ofRecognition June 30, 2013 and December 31, 2012, there were 500.0 million shares of $0.0033 par value per common stock authorized, 143.7 million and 138.0 million shares issued and 133.2 million and 127.7 million shares outstanding, respectively. Of the issued shares, 10.5 million and 10.3 million shares were held as treasury shares as of June 30, 2013 and December 31, 2012, respectively.

Revenue ~~Recognition~~is generally realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured. The Company records revenue from product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery to the customer. Revenues recognized from research, development and licensing agreements (including milestone payments) are recorded on the “contingency-adjusted performance model” which requires deferral of revenue until such time as contract milestone requirements, as specified in the individual agreements, have been met. Under this model, revenue related to each payment is recognized over the entire contract performance period, starting with the contract’s commencement, but not prior to earning and/or receiving the milestone payment (i.e., removal of any contingency). The amount of revenue recognized is based on the ratio of costs incurred to date to total estimated cost to be incurred. In certain circumstances, it may be appropriate to recognize consideration that is contingent upon achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. In order to recognize milestone consideration as revenue in the period in which the milestone is achieved, there needs to be “substantive” certainty that the milestone will be achieved, relate solely to past performance and the consideration needs to be commensurate with the Company’s performance. Factors the Company considers in determining whether a milestone is substantive at the inception of an arrangement include: whether substantive effort will be required to achieve the milestone; what labor, skill, other costs will be incurred to achieve the milestone; how certain the achievement of the milestone is; whether a reasonable amount of time will elapse between any upfront payment and the first milestone as well as between each successive milestone; and, whether the milestone is nonrefundable or contain clawback provisions. Royalty and commission revenue is recognized in accordance with the terms of their respective contractual agreements when collectability is reasonably assured and revenue can be reasonably measured.

Revenue ~~is generally realized or realizable~~ and ~~earned~~Provision ~~when~~for ~~persuasive~~Sales ~~evidence~~Returns ~~of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable,~~ and ~~collectability~~Allowances is reasonably assured. The Company records revenue from product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery to the customer. Revenues recognized from research, development and licensing agreements (including milestone payments) are recorded on the “contingency-adjusted performance model” which requires deferral of revenue until such time as contract milestone requirements, as specified in the individual agreements, have been met. Under this model, revenue related to each payment is recognized over the entire contract performance period, starting with the contract’s commencement, but not prior to earning and/or receiving the milestone payment (i.e., removal of any contingency). The amount of revenue recognized is based on the ratio of costs incurred to date to total estimated cost to be incurred. In certain circumstances, it may be appropriate to recognize consideration that is contingent upon achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. Royalty and commission revenue is recognized in accordance with the terms of their respective contractual agreements when collectability is reasonably assured and revenue can be reasonably measured.

~~Revenue~~As ~~and~~customary ~~Provision~~in ~~for~~the ~~Sales~~pharmaceutical ~~Returns~~industry, the Company’s gross product sales are subject to a variety of deductions in arriving at reported net product sales, most significantly in the U.S. When the Company recognizes revenue from the sale of products, an estimate of sales returns and ~~Allowances~~allowances (“SRA”) is recorded, which reduces

As- ~~customary~~7 in- the pharmaceutical industry, the Company’s gross product sales are subject to a variety of deductions in arriving at reported net product sales, most significantly in the U.S. When the Company recognizes revenue from the sale of products, an estimate of sales returns and allowances (“SRA”) is recorded, which reduces

~~Table~~ product sales. Accounts receivable and/or accrued expenses are also reduced and/or increased by the SRA amount. These adjustments include estimates for chargebacks, rebates, cash discounts and returns and other allowances. These provisions are estimated based on historical payment experience, historical relationship to revenues, government regulations, estimated customer inventory levels and current contract sales terms with direct and indirect customers. The estimation process used to determine our SRA provision has been applied on a consistent basis and no material adjustments have been necessary to increase or decrease our reserves for SRA as a result of ~~Contents~~a significant change in underlying estimates. The Company uses a variety of methods to assess the adequacy of our SRA reserves to ensure that our financial statements are fairly stated. This includes periodic reviews of customer inventory data, customer contract programs and product pricing trends to analyze and validate the SRA reserves.

~~product~~The provision for chargebacks is our most significant sales allowance. ~~Accounts~~A ~~receivable~~chargeback ~~and/or~~represents ~~accrued~~an ~~expenses~~amount ~~are~~payable ~~also~~in ~~reduced~~the ~~and/or~~future ~~increased~~to bya wholesaler for the ~~SRA~~difference ~~amount.~~between ~~These~~the ~~adjustments~~invoice ~~include~~price ~~estimates~~paid ~~for~~to ~~chargebacks,~~the ~~rebates,~~Company ~~cash~~by ~~discounts~~our ~~and returns~~wholesale ~~and~~customer ~~other~~for ~~allowances.~~a ~~These~~particular ~~provisions~~product ~~are~~and ~~estimated~~the ~~based~~negotiated oncontract ~~historical~~price ~~payment~~that ~~experience,~~the wholesaler’s ~~historical~~customer ~~relationship~~pays tofor ~~revenues,~~that ~~estimated~~product. ~~customer~~The ~~inventory~~Company’s ~~levels~~chargeback provision and ~~current~~related ~~contract~~reserve ~~sales~~vary ~~terms~~ with ~~direct~~changes ~~and~~in ~~indirect~~product ~~customers.~~mix, ~~The estimation~~changes ~~process~~in ~~used~~customer pricing and changes to ~~determine~~estimated ~~our~~wholesaler ~~SRA~~inventories. The provision ~~has~~for chargebacks ~~been~~also ~~applied~~takes oninto aaccount ~~consistent~~an ~~basis~~estimate ~~and~~of nothe ~~material~~expected ~~adjustments~~wholesaler ~~have~~sell-through ~~been~~levels ~~necessary~~ to ~~increase~~indirect orcustomers ~~decrease~~at ~~our~~contract ~~reserves~~prices. ~~for~~The ~~SRA~~Company asvalidates the chargeback accrual quarterly through a ~~result~~review of athe ~~significant~~inventory ~~change~~reports inobtained ~~underlying~~from our ~~estimates~~largest wholesale customers. ~~The~~ ~~Company~~This ~~uses~~customer ainventory ~~variety~~information ofis ~~methods~~used to ~~assess~~verify the ~~adequacy~~estimated ofliability ~~our~~for ~~SRA~~future ~~reserves~~chargeback toclaims ~~ensure~~based ~~that~~on ~~our~~historical ~~financial~~chargeback ~~statements~~and ~~are~~contract ~~fairly stated~~rates. ~~This~~These ~~includes~~large ~~periodic~~wholesalers ~~reviews~~represent 85%—90% of ~~customer~~the Company’s ~~inventory~~chargeback ~~data,~~payments. ~~customer~~The ~~contract~~Company ~~programs~~continually ~~and~~monitors ~~product~~current pricing trends toand ~~analyze~~wholesaler ~~and~~inventory ~~validate~~levels to ensure the ~~SRA~~liability ~~reserves~~for future chargebacks is fairly stated.

~~The~~Net ~~provision~~revenues ~~for~~and ~~chargebacks~~accounts isreceivable ~~our~~balances ~~most~~in ~~significant~~the ~~sales~~Company’s ~~allowance.~~condensed ~~A chargeback~~consolidated ~~represents~~financial anstatements ~~amount~~are ~~payable~~presented innet ~~the~~of ~~future~~SRA estimates. toCertain aSRA ~~wholesaler~~balances ~~for~~are ~~the~~included ~~difference~~in ~~between~~accounts ~~the~~payable ~~invoice~~and ~~price~~accrued ~~paid~~expenses. toAccounts ~~the~~receivable ~~Company~~are bypresented ~~our~~net ~~wholesale~~of ~~customer~~SRA ~~for~~balances aof ~~particular~~$949.3 ~~product~~million and ~~the~~$814.3 ~~negotiated~~million ~~contract~~at ~~price~~September ~~that~~30, ~~the~~2013 ~~wholesaler’s customer~~and ~~pays~~December ~~for~~31, ~~that~~2012, ~~product~~respectively. ~~The~~SRA ~~Company’s~~balances in ~~chargeback~~accounts ~~provision~~receivable ~~and~~at ~~related~~September ~~reserve~~30, ~~vary~~2013 ~~with~~increased ~~changes~~$135.0 inmillion ~~product~~compared ~~mix~~to December 31, ~~changes~~2012 primarily due to an increase in ~~customer~~shelf ~~pricing~~stock, promotions and ~~changes~~other toallowances ~~estimated~~mainly ~~wholesaler~~resulting ~~inventories.~~from ~~The~~higher ~~provision~~sales ~~for~~volumes ~~chargebacks~~of ~~also~~certain ~~takes~~products ~~into~~($87.2 ~~account~~million), an ~~estimate~~increase ofin ~~the~~international ~~expected~~rebates ~~wholesaler~~primarily ~~sell-through~~due ~~levels~~ to ~~indirect~~an ~~customers~~increase atin ~~contract~~sales ~~prices~~volume ($29.4 ~~The~~million), ~~Company~~an ~~validates~~increase ~~the~~in ~~chargeback~~sales ~~accrual~~returns ~~quarterly~~accruals ~~through~~primarily aresulting ~~review~~from the launch of ~~the~~new ~~inventory~~products ~~reports~~($9.2 ~~obtained~~million) ~~from~~and ~~our~~an ~~largest~~increase ~~wholesale~~for expected ~~customers~~returns on a discontinued product ($4.0 ~~This~~million). ~~customer~~SRA ~~inventory~~balances ~~information~~in isaccounts ~~used~~payable toand ~~verify~~accrued ~~the~~expenses ~~estimated~~were ~~liability~~$542.1 ~~for~~million ~~future~~and ~~chargeback~~$634.4 ~~claims~~million ~~based~~at onSeptember ~~historical~~30, ~~chargeback~~2013 and ~~contract~~December ~~rates~~31, 2012, respectively. ~~These~~SRA ~~large~~balances ~~wholesalers~~in ~~represent~~accounts ~~85%~~payable –and ~~90%~~accrued expenses ofat ~~the~~September ~~Company’s chargeback~~30, ~~payments~~2013 decreased $92.3 ~~The~~million ~~Company~~compared ~~continually~~to ~~monitors~~December ~~current~~31, ~~pricing~~2012 ~~trends~~due ~~and~~to ~~wholesaler~~a ~~inventory~~measurement ~~levels~~period adjustment to ~~ensure~~reduce the estimated liability originally recorded in the Actavis Group acquisition accounting for ~~future~~certain ~~chargebacks~~Medicaid isprice submissions, ~~fairly~~refer ~~stated~~to “Note 2 — Acquisitions,” ($31.0 million), lower Medicaid rebates primarily from declining Methylphenidate AG sales volume ($33.7 million) and lower U.S. indirect rebates ($26.6 million).

~~Net~~Comprehensive ~~revenues~~Income and accounts receivable balances in the Company’s condensed consolidated financial statements are presented net of SRA estimates. Certain SRA balances are included in accounts payable and accrued expenses. Accounts receivable are presented net of SRA balances of $1,016.2 million and $814.3 million at June 30, 2013 and December 31, 2012, respectively. SRA balances in accounts receivable at June 30, 2013 increased $201.9 million compared to December 31, 2012 primarily due to an increase in shelf stock, promotions and other allowances mainly resulting from higher sales volumes of certain products (~~$78.8 million~~Loss), an increase in chargebacks primarily due to increased purchases by wholesalers ($33.4 million), an increase in sales returns accruals primarily resulting from the launch of new products ($10.6 million) and higher rebates accruals on certain large wholesale customer accounts ($79.0 million). SRA balances in accounts payable and accrued expenses were $586.0 million and $634.4 million at June 30, 2013 and December 31, 2012, respectively. SRA balances in accounts payable and accrued expenses at June 30, 2013 decreased $48.4 million compared to December 31, 2012 due to lower Medicaid rebates ($20.0 million) primarily from declining Methylphenidate AG sales volume and a greater percentage of processed claims than prior year coupled with lower U.S. indirect rebates ($16.1 million) and lower international rebates ($12.9 million) primarily due to timing of payments.

Comprehensive ~~Income~~income (~~Loss~~loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss), but excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Actavis’ other comprehensive income (loss) is composed of unrealized gains (losses) on certain holdings of publicly traded equity securities and investments in U.S. Treasury and agency securities, net of realized gains (losses) included in net income, net of tax and foreign currency translation adjustments.

~~Comprehensive~~Goodwill income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to revenues, expenses, gains and ~~losses~~Intangible ~~that,~~Assets ~~under GAAP, are included in~~with ~~comprehensive~~Indefinite-Lives income (loss), but excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Actavis’ other comprehensive income (loss) is composed of unrealized gains (losses) on certain holdings of publicly traded equity securities and investments in U.S. Treasury and agency securities, net of realized gains (losses) included in net income, net of tax and foreign currency translation adjustments.

During the second quarter of 2013, the Company performed its annual impairment assessment of goodwill, IPR&D intangibles and trade name intangible assets with indefinite-lives. The Company determined there was no impairment associated with trade name intangibles. The Company recognized impairment losses during the second quarter of 2013 relating to goodwill in the Actavis Pharma — Europe reporting unit ($647.5 million) and IPR&D intangible assets associated with the Arrow acquisition ($4.4 million). During the third quarter of 2013, the Company finalized its annual impairment assessment of goodwill in the Actavis Pharma — Europe reporting unit and determined no further adjustment to the amount recorded in the second quarter was required. For additional information regarding the impairment losses recognized related to goodwill and IPR&D intangible assets, refer to “Note 5 — Goodwill and Intangible Assets.” ~~with~~In ~~Indefinite-Lives~~the third quarter of 2013, the Company recognized an impairment charge for a product right intangible asset acquired as part of the Specifar acquisition ($13.9 million).

~~During~~- ~~the~~8 ~~second quarter of 2013, the Company performed its annual impairment assessment of goodwill, IPR&D intangibles and trade name intangible assets with indefinite~~-~~lives.~~ The Company has determined there was no impairment associated with trade name intangibles. The Company recognized an impairment loss related to the goodwill in the Actavis Pharma – Europe reporting unit ($647.5 million) and IPR&D intangible assets associated with the Arrow acquisition ($4.4 million). For additional information on the impairment loss related to goodwill and IPR&D intangible assets, refer to “Note 5 – Goodwill and Intangible Assets.”

~~Table~~Earnings ofPer ~~Contents~~Share (“EPS”)

~~Earnings~~Basic ~~Per~~EPS ~~Share~~is computed by dividing net income (~~“EPS”~~loss) attributable to common shareholders by the weighted average common shares outstanding during a period. Diluted EPS is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options, and restricted stock units. Common share equivalents have been excluded where their inclusion would be anti-dilutive.

~~Basic EPS is computed by dividing net income (loss) attributable to common shareholders by the weighted average common shares outstanding~~A ~~during~~reconciliation aof ~~period. Diluted EPS is based on~~ the ~~treasury~~numerators ~~stock method~~ and ~~includes~~denominators ~~the effect from potential issuance~~ of ~~common~~basic ~~stock,~~and ~~such~~diluted asEPS ~~shares~~consisted ~~issuable pursuant to the exercise~~ of ~~stock options, assuming~~ the ~~exercise~~following ~~of all~~ (in~~-the-money~~ ~~stock options~~millions, ~~and~~except ~~restricted~~per ~~stock units. Common~~ share ~~equivalents~~amounts): ~~have been excluded where their inclusion would be anti-dilutive.~~

A reconciliation of the numerators and denominators of basic and diluted EPS consisted of the following (in millions, except per share amounts):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013			2012
EPS - basic
Net income (loss) attributable to common shareholders	$	65.6	$	76.7	$	(602.0	)	$	69.3

Basic weighted average common shares outstanding		132.5		126.0		131.7			125.7

EPS - basic	$	0.50	$	0.61	$	(4.57	)	$	0.55

EPS - diluted
Net income (loss) attributable to common shareholders	$	65.6	$	76.7	$	(602.0	)	$	69.3

Basic weighted average common shares outstanding		132.5		126.0		131.7			125.7
Effect of dilutive securities:
Dilutive stock awards		1.9		2.0		—			1.9

Diluted weighted average common shares outstanding		134.4		128.0		131.7			127.6

EPS - diluted	$	0.49	$	0.60	$	(4.57	)	$	0.54

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
EPS - basic
Net income (loss) attributable to common shareholders	$	(564.8	)	$	(62.2	)	$	(667.6	)	$	(7.4	)
Basic weighted average common shares outstanding		132.2			125.8			131.2			125.5
EPS - basic	$	(4.27	)	$	(0.49	)	$	(5.09	)	$	(0.06	)
EPS - diluted
Net income (loss) attributable to common shareholders	$	(564.8	)	$	(62.2	)	$	(667.6	)	$	(7.4	)
Basic weighted average common shares outstanding		132.2			125.8			131.2			125.5
Effect of dilutive securities:
Dilutive stock awards		—			—			—			—
Diluted weighted average common shares outstanding		132.2			125.8			131.2			125.5
EPS - diluted	$	(4.27	)	$	(0.49	)	$	(5.09	)	$	(0.06	)

Awards to purchase 2.0 million common shares for the nine month period ended September 30, 2013 were outstanding but were not included in the computation of diluted earnings per share because they were anti-dilutive. There were no anti-dilutive shares for the three month period ended September 30, 2013 and the three and nine month periods ended September 30, 2012.

~~Awards~~As toof ~~purchase 2.0~~December ~~million~~31, ~~and~~2012, ~~1.8 million~~the ~~common~~estimated number of shares ~~for~~contingently ~~the~~issuable ~~three~~in ~~month~~connection ~~periods~~with ~~ended~~the ~~June 30,~~Actavis ~~2013~~Group ~~and~~earn-out ~~2012,~~was ~~respectively,~~calculated ~~were~~to ~~outstanding~~be ~~but~~3,850,000 ~~were~~shares, ~~not~~which are included in the ~~computation~~basic ofweighted ~~diluted~~average ~~earnings~~common ~~per~~shares ~~share~~outstanding ~~because~~for ~~they~~the ~~were~~three ~~anti-dilutive.~~month ~~Awards~~and tonine ~~purchase~~month ~~2.2 million~~periods ~~and~~ended ~~1.9~~September ~~million~~30, ~~common~~2013. ~~shares~~On ~~for~~March 28, 2013, the ~~six~~decision ~~month~~was ~~periods~~made ~~ended~~to ~~June 30,~~award ~~2013~~the ~~and~~remaining ~~2012~~1, ~~respectively~~650,000 ~~were~~shares. ~~outstanding~~The ~~but~~1,650,000 ~~were~~additional ~~not~~shares are included in the ~~computation~~basic ofweighted ~~diluted~~average ~~earnings~~common ~~per~~shares ~~share~~outstanding ~~because~~for ~~they~~the ~~were~~three ~~anti-dilutive~~month and nine month period ended September 30, 2013 beginning on March 28, 2013.

As- of9 ~~December 31, 2012, the estimated number of shares contingently issuable in connection with the Actavis Group earn~~-~~out~~ was calculated to be 3,850,000 shares, which are included in the basic weighted average common shares outstanding for the three month and six month periods ended June 30, 2013. On March 28, 2013, the decision was made to award the remaining 1,650,000 shares. The 1,650,000 additional shares are included in the basic weighted average common shares outstanding for the three and six month period ended June 30, 2013 beginning on March 28, 2013.

~~The Company recognizes compensation expense for all share-based compensation awards made to employees and directors based on estimated fair values.~~ Share-~~based~~Based ~~compensation~~Compensation expense recognized during a period is based on the value of the portion of share-based awards that are expected to vest with employees. Accordingly, the recognition of share-based compensation expense has been reduced for estimated future forfeitures. These estimates will be revised in future periods if actual forfeitures differ from the estimates. Changes in forfeiture estimates impact compensation expense in the period in which the change in estimate occurs.

The Company recognizes compensation expense for all share-based 9compensation awards made to employees and directors based on estimated fair values. Share-based compensation expense recognized during a period is based on the value of the portion of share-based awards that are expected to vest with employees. Accordingly, the recognition of share-based compensation expense has been reduced for estimated future forfeitures. These estimates will be revised in future periods if actual forfeitures differ from the estimates. Changes in forfeiture estimates impact compensation expense in the period in which the change in estimate occurs.

~~Table~~As of ~~Contents~~September 30, 2013, the Company had $52.7 million of total unrecognized compensation expense, net of estimated forfeitures, which will be recognized over the remaining weighted average period of 1.7 years. During the nine months ended September 30, 2013, the Company issued approximately 798,300 restricted stock grants and performance awards with an aggregate fair value of $71.6 million. Certain restricted awards are performance-based awards issued at a target number, subject to adjustments up or down based upon achievement of certain financial targets. During the nine months ended September 30, 2013, the Company also issued 225,000 stock option grants with an aggregate fair value of $4.9 million.

AsIn ofconnection with ~~June 30,~~the ~~2013~~Warner Chilcott Transaction Agreement, the ~~Company~~Actavis ~~had~~Board ~~$83.6 million~~ of ~~total~~Directors ~~unrecognized compensation~~modified ~~expense,~~the ~~net~~existing ofawards ~~estimated~~for ~~forfeitures,~~its ~~which~~directors ~~will~~and beexecutive ~~recognized~~officers ~~over~~during the ~~remaining~~second ~~weighted~~quarter ~~average~~of ~~period~~2013 ofsuch ~~2.8~~that ~~years.~~immediately ~~During~~prior ~~the~~to ~~six~~closing ~~months~~of ~~ended~~the ~~June 30,~~Warner ~~2013~~Chilcott transaction, ~~the~~each ~~Company~~stock ~~issued~~option, ~~approximately~~share ~~765,000~~of restricted stock ~~grants~~ and ~~performance~~restricted ~~awards~~stock ~~with~~unit anheld ~~aggregate~~became ~~fair~~fully ~~value~~vested ofand ~~$67.1~~exercisable ~~million.~~and ~~Certain~~converted ~~restricted~~into ~~awards are performance-based awards issued at~~ a ~~target~~right ~~number, subject~~ to ~~adjustments~~receive upan orActavis ~~down~~plc ~~based~~ordinary ~~upon~~share ~~achievement~~net of ~~certain~~applicable ~~financial~~tax ~~targets~~withholding. ~~During~~The effect of the ~~six~~modification ~~months~~resulted ~~ended~~in ~~June 30,~~an ~~2013,~~increase ~~the~~of ~~Company~~$38.3 ~~also~~million ~~issued~~in ~~225,000~~ stock ~~option~~compensation ~~grants~~expense ~~with~~in anthe ~~aggregate~~third ~~fair~~quarter ~~value~~ of $42013.9 ~~million.~~

InRecent ~~connection~~Accounting ~~with the Warner Chilcott Transaction Agreement, the Actavis Board of Directors modified the existing awards for its directors and executive officers such that immediately prior to closing~~Pronouncements each stock option, share of restricted stock and restricted stock unit held will become fully vested and exercisable and converted into a right to receive a New Actavis ordinary share net of applicable tax withholding. The effect of the modification did not have a material effect on the second quarter of 2013 given the modification is contingent upon the transaction closing.

~~Recent~~ In July 2013, the Financial Accounting ~~Pronouncements~~Standards Board (“FASB”) issued guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits as either a reduction of a deferred tax asset or a liability when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company’s financial statement presentation is in accordance with this guidance; therefore the above pronouncement is not expected to have an impact on the Company’s consolidated financial statements.

In ~~February~~March 2013, the FASB issued clarifying guidance ~~that~~for ~~supersedes~~ the ~~presentation~~release ~~requirements for reclassifications out~~ of ~~accumulated other comprehensive income. The new guidance requires entities to separately provide information about~~ the ~~effects~~cumulative ontranslation ~~net~~adjustment ~~income~~in ~~of significant amounts reclassified out of each component of~~ accumulated other comprehensive income ifwhen ~~those~~an ~~amounts~~entity ~~are~~either ~~required~~sells toa bepart ~~reclassified~~or toall ~~net~~of ~~income~~its ininvestment ~~their entirety~~ in ~~the~~a ~~same~~foreign ~~reporting~~entity ~~period.~~or ~~This~~ceases ~~information is~~ to behave ~~provided,~~a incontrolling ~~one~~financial ~~location,~~interest in ~~either~~ the subsidiary ~~face~~or group of ~~the~~assets ~~statement~~that ~~where~~is ~~net~~a ~~income~~nonprofit ~~is presented~~activity or as a ~~separate~~business ~~disclosure~~within ina ~~the~~foreign ~~notes to the financial statements~~entity. This guidance is effective prospectively for fiscal years, ~~beginning~~and ~~after~~interim ~~December 15,~~reporting ~~2012~~periods ~~and~~within ~~interim~~those ~~and~~years, ~~annual~~beginning ~~periods~~after ~~thereafter~~December 15, 2013. The adoption of this guidance ~~did~~is not expected to have any impact on the Company’s condensed consolidated financial statements.

In ~~March~~February 2013, the FASB issued ~~clarifying~~ guidance that supersedes the presentation requirements for reclassifications out of accumulated other comprehensive income. The new guidance requires entities to separately provide information about the ~~release~~effects on net income of ~~the~~significant ~~cumulative~~amounts ~~translation~~reclassified ~~adjustment~~out inof each component of accumulated other comprehensive income ~~when~~if anthose ~~entity~~amounts ~~either~~are required ~~sells~~to abe ~~part~~reclassified orto ~~all~~net ofincome ~~its~~in ~~investment~~their entirety in athe ~~foreign~~same ~~entity~~reporting orperiod. ~~ceases~~This information is to ~~have~~be aprovided, ~~controlling~~in ~~financial~~one ~~interest~~location, in either the ~~subsidiary~~face ~~or group~~ of ~~assets~~the ~~that~~statement iswhere anet ~~nonprofit~~income ~~activity~~is presented or as a ~~business~~separate ~~within~~disclosure ain ~~foreign~~the ~~entity~~notes to the financial statements. This guidance is effective ~~prospectively~~ for fiscal years, ~~and interim reporting periods within those years,~~ beginning after December 15, ~~2013~~2012 and interim and annual periods thereafter. The adoption of this guidance isdid not ~~expected to~~ have ~~any~~a material impact on the Company’s condensed consolidated financial statements.

In- ~~July 2013,~~10 ~~the~~- FASB issued guidance to address the diversity in practice related to the financial statement presentation of unrecognized tax benefits as either a reduction of a deferred tax asset or a liability when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

~~Business~~NOTE ~~acquisitions~~2 ~~occurring~~– ~~during~~ACQUISITIONS ~~2013 and updates to 2012 business acquisitions were as follows:~~

~~Acquisition~~Business ofacquisitions ~~the~~occurring ~~Uteron~~during ~~Pharma,~~2013 SAand updates to 2012 business acquisitions were as follows:

OnAcquisition ~~January 23, 2013, the Company completed the acquisition~~ of ~~Uteron~~Medicines360 Pharma, SA for approximately $142.0 million in cash, plus assumption of debt and other liabilities of $7.7 million and up to $155.0 million in potential future milestone payments. The acquisition expands our Specialty Brands’ pipeline of Women’s Health products including two potential near term commercial opportunities in contraception and infertility, and one oral contraceptive project projected to launch by 2018. Several additional products in earlier stages of development are also included in the acquisition.

~~Recognition~~On June 11, 2013, the Company entered into an exclusive license agreement with Medicines360 to market, sell and ~~Measurement~~distribute Medicines360 LNG20 intrauterine device (“LNG 20”) in the U.S. and in Canada for a payment of ~~Assets~~approximately ~~Acquired~~$52.3 million. The Company will also pay Medicines360 certain regulatory and ~~Liabilities~~sales ~~Assumed~~based milestone payments totaling up to nearly $125.0 million plus royalties. Medicines360 retains the rights to market the product in the U.S. public sector, including family planning clinics that provide services to low-income women. LNG20, originally developed by Uteron Pharma S.P.R.L. in Belgium, is designed to deliver 20 mcg of levonorgestrel per day for the indication of long term contraception, and is currently in Phase III clinical trials in the U.S. Pending FDA approval, the LNG20 product could be launched in the U.S. as early as 2014. The transaction has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at ~~Fair~~their ~~Value~~respective fair values as of the acquisition date and that IPR&D be recorded at fair value on the balance sheet. In connection with the acquisition, the Company recorded $191.7 million in IPR&D, $6.7 million in prepaid R&D and contingent consideration of $146.1 million.

~~The~~Acquisition ~~transaction has been accounted for using the acquisition method~~ of Uteron ~~accounting. This method requires~~Pharma, ~~among~~SA other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date and that IPR&D be recorded at fair value on the balance sheet regardless of the likelihood of success of the related product or technology.

-On 10January 23, -2013, the Company completed the acquisition of Uteron Pharma, SA for approximately $142.0 million in cash, plus assumption of debt and other liabilities of $7.7 million and up to $155.0 million in potential future milestone payments. The acquisition expanded our Specialty Brands’ pipeline of Women’s Health products including two potential near term commercial opportunities in contraception and infertility, and one oral contraceptive project projected to launch by 2018. Several additional products in earlier stages of development are also included in the acquisition.

~~Table~~Recognition and Measurement of ~~Contents~~Assets Acquired and Liabilities Assumed at Fair Value

The ~~following~~transaction ~~table~~has ~~summarizes~~been ~~the~~accounted ~~preliminary~~for ~~fair~~using ~~values~~the acquisition method of ~~the~~accounting. ~~tangible and identifiable~~This ~~intangible~~method requires that assets acquired and liabilities assumed atin ~~acquisition~~a ~~date,~~business ~~with~~combination ~~the~~be ~~excess~~recognized ~~being~~at ~~allocated~~their tofair ~~goodwill. At June 30, 2013, certain amounts have not been finalized including intangible asset~~ values, ~~uncertain tax positions,~~ as ~~well as evaluation~~ of ~~contingencies. The finalization of these matters may result in changes to~~ the ~~goodwill~~acquisition date and ~~the~~that ~~Company~~IPR&D ~~expects~~be torecorded ~~finalize~~at ~~such~~fair ~~matters~~value inon the ~~second~~balance ~~half of 2013~~sheet.

(in millions)	Amount
Accounts receivable	$	1.6
Other current assets		1.2
Property, plant & equipment		5.7
Other long term assets		0.5
IPR&D intangible assets		250.0
Goodwill		26.4
Current liabilities, excluding current portion of debt		(8.0	)
Long-term deferred tax and other tax liabilities		(82.5	)
Contingent consideration		(43.4	)
Debt		(5.2	)
Other long-term liabilities		(4.3	)
Net assets acquired	$	145.0

The following table summarizes the final fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date:

IPR&D


(in millions)	Amount
Accounts receivable	$	1.6
Other current assets		1.2
Property, plant & equipment		5.7
Other long-term assets		0.5
IPR&D intangible assets		250.0
Goodwill		26.4
Current liabilities, excluding current portion of debt		(8.0	)
Long-term deferred tax and other tax liabilities		(82.5	)
Contingent consideration		(43.4	)
Debt		(5.2	)
Other long-term liabilities		(4.3	)

Net assets acquired	$	142.0

IPR&D intangible assets represent the value assigned to product acquired R&D projects that, as of the acquisition date, had not established technological feasibility and had no alternative future use. The IPR&D intangible assets are capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and launch of the product, the Company will make a separate determination of the estimated useful life of the IPR&D intangible assets and the related amortization will be recorded as an expense over the estimated useful life.

~~The fair value of the~~ IPR&D intangible assets ~~was~~represent ~~determined using~~ the ~~“income approach,” which is a valuation technique that provides an estimate of the fair~~ value ofassigned anto asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product ~~(including~~acquired net revenues, cost of sales, research and development costs, selling and marketing costs and working capital/asset contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream as well as other factors. The discount rates used to arrive at the present value of IPRR&D ~~intangible~~projects ~~assets~~that, as of the acquisition date, ~~was~~had ~~22%~~not established totechnological ~~reflect~~feasibility ~~the internal rate of return~~ and ~~incremental~~had ~~commercial~~no ~~uncertainty~~alternative infuture ~~the cash flow projections~~use. NoThe ~~assurances~~IPR&D can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.

~~Contingent~~- ~~Consideration~~11 -

~~Long~~ intangible assets are capitalized and accounted for as indefinite-~~Term~~lived ~~Deferred~~intangible ~~Tax~~assets ~~Liabilities~~and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and ~~Other~~launch ~~Tax~~of ~~Liabilities~~the product, the Company will make a separate determination of the estimated useful life of the IPR&D intangible assets and the related amortization will be recorded as an expense over the estimated useful life.

~~Long-term deferred~~The ~~tax~~fair ~~liabilities~~value ~~and~~of ~~other~~the ~~tax~~IPR&D ~~liabilities~~intangible ~~result~~assets ~~from~~were ~~identifiable~~determined ~~intangible~~using ~~assets~~the “income approach,” which is a valuation technique that provides an estimate of the fair value ~~adjustments.~~of ~~These~~an ~~adjustments~~asset ~~create~~based ~~excess~~on ~~book~~market ~~basis~~participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the ~~tax~~more ~~basis~~significant ~~which~~assumptions isinherent ~~multiplied~~in bythe development of those asset valuations include the ~~statutory~~estimated ~~tax~~net ~~rate~~cash flows for each year for each asset or product (including net revenues, cost of sales, research and development costs, selling and marketing costs and working capital/asset contributory asset charges), the ~~jurisdiction~~appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow ~~which~~stream as well as other factors. The discount rate used to arrive at the ~~deferred~~present ~~taxes~~value ~~exist~~of IPR&D intangible assets as of the acquisition date was 22% to reflect the internal rate of return and incremental commercial uncertainty in the cash flow projections. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results.

-Contingent 11Consideration -

~~Table~~Additional consideration is due to the seller conditional upon the achievement of ~~Contents~~certain milestones in respect to the development and commercialization of the products as well as reaching certain sales targets. The Company estimated the fair value of the contingent consideration to be $43.4 million using a probability weighting approach that considered the possible outcomes based on assumptions related to the timing and probability of the product launch date, discount rates matched to the timing of first payment, and probability of success rates and discount adjustments on the related cash flows.

~~Unaudited~~Long-Term ~~Pro~~Deferred ~~Forma~~Tax ~~Results~~Liabilities ofand ~~Operations~~Other Tax Liabilities

~~Pro~~Long-term ~~forma~~deferred ~~results~~tax ofliabilities ~~operations~~and ~~have~~other ~~not~~tax ~~been~~liabilities ~~presented~~result ~~because~~from identifiable intangible assets fair value adjustments. These adjustments create excess book basis over the ~~effect~~tax ofbasis which is multiplied by the ~~acquisition~~statutory ~~was~~tax ~~not~~rate ~~material~~for the jurisdiction in which the deferred taxes exist.

~~Acquisition~~Unaudited ofPro ~~Actavis~~Forma ~~Group~~Results of Operations

OnPro ~~October 31,~~forma ~~2012,~~results ~~the~~of ~~Company~~operations ~~acquired~~have ~~the~~not ~~Actavis~~been ~~Group,~~presented inbecause ~~exchange~~the ~~for~~effect of the ~~following~~acquisition ~~consideration:~~was not material.

•Acquisition ~~A cash payment~~ of ~~€4,219.7~~Actavis ~~million,~~Group ~~or approximately $5,469.8 million;~~

~~• Contingent consideration of 5.5 million newly issued shares of Common Stock~~On October 31, ~~$0.0033 par value per share~~2012, of the Company ~~stock~~acquired ~~(“Common~~the ~~Shares”) based on~~ Actavis Group’s, ~~financial performance~~ in ~~2012~~exchange asfor ~~described in~~ the ~~purchase~~following ~~agreement.~~consideration:

~~The~~• ~~Actavis~~A ~~Group~~cash ~~was~~payment ~~a privately held generic pharmaceutical company specializing in the development, manufacture and sale~~ of ~~generic pharmaceuticals. With the acquisition~~€4, Actavis significantly expands its international market presence in established markets including Europe (Europe, Russia, Commonwealth of Independent States (CIS) and Turkey), and MEAAP (Middle East, Africa, Australia and Asia Pacific)219.7 ~~In addition~~million, ~~the~~or ~~acquisition~~approximately ~~expands the Company’s product portfolio and pipeline in modified release~~$5, ~~solid oral dosage and transdermal products into semi-solids, liquids and injectables~~469.8 ~~Actavis’ results are included in the Actavis Pharma and Actavis Specialty Brands segments as of the acquisition date.~~ million;

~~The~~• ~~Company~~Contingent ~~funded~~consideration ~~the~~of ~~cash~~5.5 ~~portion~~million newly issued shares of ~~the~~Common ~~transaction~~Stock, ~~through~~$0.0033 apar ~~combination~~value per share, of ~~term~~the ~~loan borrowings~~Company ~~and~~stock ~~senior~~(“Common ~~unsecured~~Shares”) ~~notes.~~based ~~For~~on ~~additional~~Actavis ~~information,~~Group’s ~~refer~~financial toperformance ~~“Note~~in 62012 –as ~~Debt.”~~described in the purchase agreement.

~~Recognition~~The Actavis Group was a privately held generic pharmaceutical company specializing in the development, manufacture and ~~Measurement~~sale of ~~Assets~~generic ~~Acquired~~pharmaceuticals. With the acquisition, Actavis significantly expanded its international market presence in established markets including Europe (Europe, Russia, Commonwealth of Independent States (CIS) and ~~Liabilities~~Turkey), ~~Assumed~~and atMEAAP ~~Fair~~(Middle ~~Value~~East, Africa, Australia and Asia Pacific). In addition, the acquisition expanded the Company’s product portfolio and pipeline in modified release, solid oral dosage and transdermal products into semi-solids, liquids and injectables. Actavis Group results are included in the Actavis Pharma and Actavis Specialty Brands segments as of the acquisition date.

~~The~~- ~~transaction~~12 ~~has~~- been accounted for using the acquisition method of accounting. This method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date and that IPR&D be recorded at fair value on the balance sheet regardless of the likelihood of success of the related product or technology.

AtThe ~~June 30,~~Company ~~2013,~~funded ~~certain~~the ~~amounts~~cash ~~have~~portion ~~not been finalized including intangible asset values, uncertain tax positions as well as evaluation~~ of ~~contingencies pending~~ the ~~finalization~~transaction ofthrough ~~the~~a ~~Company’s~~combination ~~evaluation~~ of ~~certain~~term ~~matters~~loan borrowings inand ~~connection~~senior ~~with~~unsecured ~~historical rebate programs~~notes. ~~The~~For ~~finalization~~additional ofinformation, ~~these~~refer ~~matters may result in changes~~ to ~~the~~“Note ~~goodwill~~6 ~~and~~— ~~the Company expects to finalize such matters in the second half of 2013~~Debt.”

(in millions)	Amount
Cash and cash equivalents	$	110.5
Accounts receivable		527.9
Inventories		680.1
Other current assets		286.2
Property and equipment		763.0
Other long term assets		16.9
IPR&D intangible assets		272.9
Intangible assets		2,268.0
Goodwill		2,895.2
Current liabilities		(1,396.5	)
Long-term deferred tax and other tax liabilities		(742.4	)
Other long term liabilities		(176.0	)
Long-term debt		(14.1	)
Noncontrolling interests		(21.9	)
Net assets acquired	$	5,469.8

Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value

-The 12transaction -has been accounted for using the acquisition method of accounting. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date and that IPR&D be recorded at fair value on the balance sheet.

~~Table~~The following table summarizes the final fair values of ~~Contents~~the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date:

Inventories


(in millions)	Amount
Cash and cash equivalents	$	110.5
Accounts receivable		527.9
Inventories		680.1
Other current assets		274.7
Property and equipment		763.0
Other long term assets		16.9
IPR&D intangible assets		272.9
Intangible assets		2,268.0
Goodwill		2,868.8
Current liabilities		(1,365.5	)
Long-term deferred tax and other tax liabilities		(735.5	)
Other long term liabilities		(176.0	)
Long-term debt		(14.1	)
Noncontrolling interests		(21.9	)

Net assets acquired	$	5,469.8

~~The~~Inventories fair value of inventories acquired included a step-up in the value of inventories of approximately $137.3 million. Approximately $44.1 million was amortized to cost of sales during 2012, and the remaining $93.5 million was amortized to cost of sales during the first quarter of 2013. Amounts amortized to cost of sales during 2012 and the first quarter of 2013 includes the effects of foreign currency translation.

~~IPR&D~~The fair value of inventories acquired included a step-up in the value of inventories of approximately $137.3 million. Approximately $44.1 million was amortized to cost of sales during 2012, and ~~Intangible~~the ~~Assets~~remaining $93.5 million was amortized to cost of sales during the first quarter of 2013.

IPR&D intangible assets represent the value assigned to product acquired R&D projects that, as of the acquisition date, were expected to be approved for marketing over the next one to two years, had not established technological feasibility and had no alternative future use. The IPR&D intangible assets are capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and launch of the product, the Company will make a separate determination of the estimated useful life of the IPR&D intangible assets and the related amortization will be recorded as an expense over the estimated useful life. Intangible ~~assets~~Assets ~~represent product rights, trademarks, customer relationships and technology rights and have an estimated weighted average useful life of 8.7 years.~~

~~The fair value of the~~ IPR&D ~~and identifiable~~ intangible assets ~~was~~represent ~~determined using~~ the ~~“income~~value ~~approach,”~~assigned ~~which~~to isproduct ~~a valuation~~acquired ~~technique~~R&D projects that, ~~provides~~as ~~an estimate~~ of the ~~fair~~acquisition ~~value~~date, ofwere anexpected to ~~asset~~be ~~based~~approved onfor ~~market~~marketing ~~participant expectations of the cash flows an asset would generate~~ over ~~its remaining useful life. Some of~~ the ~~more~~next ~~significant~~one ~~assumptions~~to ~~inherent~~two inyears, ~~the development~~had ofnot ~~those~~established ~~asset~~technological ~~valuations~~feasibility ~~include~~and ~~the~~had ~~estimated~~no ~~net~~alternative ~~cash~~future ~~flows~~use. ~~for~~The ~~each~~IPR&D ~~year~~intangible ~~for~~assets ~~each~~are ~~asset~~capitalized ~~or product (including net revenues, cost of sales, research~~ and ~~development~~accounted ~~costs,~~for ~~selling~~as ~~and~~indefinite-lived ~~marketing~~intangible ~~costs~~assets and ~~working capital/asset~~ ~~contributory~~will ~~asset~~be ~~charges),~~subject ~~the~~to ~~appropriate~~impairment ~~discount~~testing ~~rate~~until tocompletion ~~select~~or inabandonment ~~order~~of ~~to measure~~ the ~~risk~~projects. ~~inherent~~Upon insuccessful ~~each~~completion ~~future cash flow stream, the assessment~~ of each ~~asset’s~~project ~~life~~and ~~cycle,~~launch ~~competitive~~of ~~trends impacting~~ the ~~asset~~product, ~~and each cash flow stream as well as other factors. The discount rates used to arrive at~~ the ~~present~~Company ~~value~~will ofmake ~~product~~a ~~right~~separate ~~intangible~~determination ~~assets as~~ of the ~~acquisition~~estimated ~~date~~useful ~~ranged~~life ~~from~~of ~~8.8% to 11.5% to reflect~~ the ~~internal~~IPR&D intangible ~~rate~~assets ~~of return~~ and ~~incremental commercial uncertainty in~~ the ~~cash~~related ~~flow~~amortization ~~projections.~~will Nobe ~~assurances~~recorded ~~can~~as bean ~~given~~expense ~~that~~over the ~~underlying~~estimated ~~assumptions~~useful ~~used~~life. toIntangible ~~prepare~~assets ~~the~~represent ~~discounted~~product ~~cash~~rights, ~~flow~~trademarks, ~~analysis~~customer ~~will~~relationships ~~not~~and ~~change.~~technology ~~For~~rights ~~these~~ and ~~other~~have ~~reasons,~~an ~~actual~~estimated ~~results~~weighted ~~may~~average useful ~~vary~~life ~~significantly~~of ~~from~~10.8 ~~estimated results~~years.

~~Goodwill~~The fair value of the IPR&D and identifiable intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, research and development costs, selling and marketing costs and working capital/asset contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle,

~~Among~~- ~~the~~13 primary reasons the Company acquired the Actavis Group and factors that contributed to the preliminary recognition of goodwill were a strong commercial presence on an expanded global basis. In addition, the acquisition expands the Company’s product portfolio and pipeline in modified release, solid oral dosage and transdermal products into semi-~~solids,~~ liquids and injectables. The goodwill recognized from the Actavis Group acquisition is not deductible for tax purposes. Goodwill from the Actavis Group acquisition was assigned to the Actavis Pharma and Actavis Specialty Brands segments.

At competitive ~~December 31,~~trends ~~2012,~~impacting the ~~Company~~asset ~~estimated the~~and ~~Actavis~~each ~~Group~~cash ~~earn-out~~flow tostream beas ~~3,850,000~~well ~~shares~~as other factors. OnThe ~~March 28,~~discount ~~2013,~~rates ~~based~~used onto ~~further~~arrive ~~evaluation,~~at the ~~decision~~present ~~was~~value ~~made~~of toproduct ~~award~~right intangible assets as of the acquisition ~~remaining~~date ~~1,650,000~~ranged ~~contingent~~from ~~shares~~8.8% ~~Accordingly,~~to ~~during~~11.5% to reflect the ~~first~~internal ~~quarter,~~rate of return and incremental commercial uncertainty in the ~~Company~~cash ~~recorded~~flow ~~expense~~projections. ofNo assurances can be given that the underlying assumptions used to prepare the discounted cash ~~approximately~~flow ~~$150~~analysis will not change.3 ~~million~~For ~~for~~these ~~contingent~~and ~~consideration~~other asreasons, aactual ~~result~~results ofmay vary significantly from estimated results. The following table identifies the ~~decision~~summarized toamounts ~~award~~recognized ~~all~~and ~~remaining~~the ~~contingent~~weighted ~~shares.~~average useful lives of intangible assets.

Long-Term Deferred Tax Liabilities and Other Tax Liabilities


Commercially marketed products (“CMP”):
Top 6 Global CMP	$	570.3	6.5
Americas		505.1	7.0
Europe
Western Europe, excluding U.K.		116.7	7.0
U.K.		103.7	6.9
Central Eastern Europe (“CEE”), excluding Russia		194.4	9.0
Russia		25.9	9.0

Total Europe		440.7	8.0
MEAAP¹
MEAAP, excluding Indonesia		155.6	8.0
Indonesia		25.9	8.0

Total MEAAP		181.5	8.0

Total CMP		1,697.6	7.2
In-process research and development (“IPR&D”):
Americas		246.9
Europe
Western Europe, excluding U.K.		13.0
CEE, excluding Russia		13.0
Total Europe		26.0

Total IPR&D		272.9
Other finite lived intangible assets:
Trademarks		427.8	23.9
Customer relationships		103.7	15.0
Technology rights		38.9	15.0

Total Other finite lived intangible assets		570.4	21.7

Total identifiable intangible assets	$	2,540.9	10.8

~~Long-term~~(1) ~~deferred~~MEAAP ~~tax~~includes ~~liabilities~~Middle ~~and~~East, ~~other~~Africa, ~~tax~~Australia, ~~liabilities~~and ~~result~~Asia ~~from identifiable intangible assets fair value adjustments~~Pacific. ~~These adjustments create excess book basis over the tax basis which is multiplied by the statutory tax rate for the jurisdiction in which the deferred taxes exist.~~

-Goodwill ~~13 -~~

~~Table~~Among the primary reasons the Company acquired the Actavis Group and factors that contributed to the preliminary recognition of ~~Contents~~goodwill were a strong commercial presence on an expanded global basis. In addition, the acquisition expanded the Company’s product portfolio and pipeline in modified release, solid oral dosage and transdermal products into semi-solids, liquids and injectables. The goodwill recognized from the Actavis Group acquisition is not deductible for tax purposes. Goodwill from the Actavis Group acquisition was assigned to the Actavis Pharma and Actavis Specialty Brands segments.

~~Unaudited~~Contingent ~~Pro~~Consideration ~~Forma Results of Operations~~

~~The~~At ~~following~~December 31, ~~table~~2012, ~~presents~~ the ~~unaudited pro forma consolidated operating results for the~~ Company, asestimated ~~though~~ the Actavis Group ~~acquisition~~ ~~had~~earn-out ~~occurred~~to asbe of3,850,000 ~~the beginning of the prior annual reporting period~~shares. ~~The~~On ~~unaudited pro forma results reflect certain adjustments related to past operating performance~~March 28, ~~acquisition costs and acquisition accounting adjustments~~2013, ~~such as increased depreciation and amortization expense~~ based on ~~the fair valuation of assets acquired~~further evaluation, the ~~impact~~decision ofwas ~~acquisition~~made ~~financing~~to inaward ~~place~~the atremaining ~~January~~ 1,650,000 ~~2012~~contingent ~~and the related tax effects~~shares. ~~The pro forma results do not include any anticipated synergies which may be achievable subsequent to the acquisition date.~~ Accordingly, ~~such~~during ~~pro~~the ~~forma~~first ~~amounts~~quarter ~~are not necessarily indicative~~ of ~~the~~2013, ~~results that actually would have occurred had~~ the ~~acquisition~~Company ~~been~~recorded ~~completed~~expense onof ~~the~~approximately ~~dates~~$150.3 ~~indicated,~~million ~~nor are~~for ~~they~~contingent ~~indicative~~consideration ofas ~~the~~a ~~future~~result ~~operating results~~ of the decision ~~combined~~to ~~company~~award ~~(in~~all ~~millions;~~remaining ~~except~~contingent ~~per~~shares. ~~share amounts):~~

	Three Months Ended			Six Months Ended
	June 30, 2012			June 30, 2012
Net revenues	$	2,003.3		$	4,150.6
Net income attributable to common shareholders	$	(78.8	)	$	(73.5	)
Earnings (loss) per share:
Basic	$	(0.60	)	$	(0.56	)
Diluted	$	(0.60	)	$	(0.56	)

- 14 -

~~Actavis has three reportable segments: Actavis Pharma, Actavis Specialty Brands and Anda Distribution. The Actavis Pharma segment includes off~~Long-~~patent~~Term ~~pharmaceutical~~Deferred ~~products~~Tax ~~that~~Liabilities ~~are therapeutically equivalent to proprietary products. The Actavis Specialty Brands segment includes patent-protected products~~ and ~~certain~~Other ~~trademarked~~Tax ~~off-patent~~Liabilities products that Actavis sells and markets as brand pharmaceutical products. The Anda Distribution segment mainly distributes generic pharmaceutical products manufactured by third parties, as well as by Actavis, primarily to independent pharmacies, pharmacy chains, pharmacy buying groups and physicians’ offices. The Anda Distribution segment operating results exclude sales of products developed, acquired, or licensed by the Actavis Pharma and Actavis Specialty Brands segments.

~~The~~Long-term ~~Company~~deferred ~~evaluates~~tax ~~segment~~liabilities ~~performance based on segment contribution. Segment contribution represents segment net revenues less cost of sales (excluding amortization), R&D expenses~~ and ~~selling~~other ~~and~~tax ~~marketing~~liabilities ~~expenses.~~result ~~The~~from ~~Company~~identifiable ~~does~~intangible ~~not report total~~ assets, ~~capital~~fair ~~expenditures,~~value ~~general~~adjustments. ~~and~~These adjustments ~~administrative~~create ~~expenses,~~excess ~~amortization,~~book ~~gains~~basis orover ~~losses~~the ontax ~~asset~~basis ~~sales~~which oris ~~disposals and~~multiplied ~~impairments~~ by ~~segment~~the asstatutory ~~not~~tax ~~all~~rate ~~such information has been accounted~~ for at the ~~segment~~jurisdiction ~~level,~~in ~~nor~~which isthe ~~such~~deferred ~~information~~taxes ~~used by all segments~~exist.

-Unaudited 14Pro - Forma Results of Operations

~~Table~~The following table presents the unaudited pro forma consolidated operating results for the Company, as though the Actavis Group acquisition had occurred as of ~~Contents~~the beginning of the prior annual reporting period. The unaudited pro forma results reflect certain adjustments related to past operating performance, acquisition costs and acquisition accounting adjustments, such as increased depreciation and amortization expense based on the fair valuation of assets acquired, the impact of acquisition financing in place at January 1, 2012 and the related tax effects. The pro forma results do not include any anticipated synergies which may be achievable subsequent to the acquisition date. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the dates indicated, nor are they indicative of the future operating results of the combined company (in millions; except per share amounts):

Segment net revenues, segment operating expenses and segment contribution information for the Company’s Actavis Pharma, Actavis Specialty Brands and Anda Distribution segments consisted of the following (in millions):


	Three Months Ended		Nine Months Ended
	September 30, 2012		September 30, 2012
Net revenues	$	1,950.9	$	6,101.5
Net income attributable to common shareholders	$	91.2	$	17.1
Earnings per share:
Basic	$	0.69	$	0.13
Diluted	$	0.68	$	0.13

	Three Months Ended June 30, 2013												Three Months Ended June 30, 2012
	ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total			ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total
Product sales	$	1,525.5		$	126.9		$	275.8		$	1,928.2		$	976.0		$	100.9		$	240.9		$	1,317.8
Other		43.7			17.9			—			61.6			19.0			18.4			—			37.4
Net revenues		1,569.2			144.8			275.8			1,989.8			995.0			119.3			240.9			1,355.2
Operating expenses:
Cost of sales (1)		776.8			34.4			238.8			1,050.0			517.4			28.7			207.9			754.0
Research and development		103.7			31.9			—			135.6			53.8			25.9			—			79.7
Selling and marketing		160.9			47.0			27.7			235.6			52.6			42.5			22.8			117.9
Contribution	$	527.8		$	31.5		$	9.3		$	568.6		$	371.2		$	22.2		$	10.2		$	403.6
Contibution margin		33.6	%		21.8	%		3.4	%		28.6	%		37.3	%		18.6	%		4.2	%		29.8	%
General and administrative											225.8												121.8
Amortization											149.6												105.8
Loss on asset sales, impairments, and contingent consideration adjustment, net											655.3												79.8
Operating income (loss)										$	(462.1	)										$	96.2
Operating margin											(23.2	%)											7.1	%

Divested Products

(In order to obtain regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the Actavis Group acquisition, Actavis was required to divest certain assets. On October 31, 2012, a total of 22 generic pharmaceutical products owned by either Actavis Group or Watson Pharmaceuticals, Inc. were sold to Par Pharmaceuticals Companies, Inc. and Sandoz, Inc., which resulted in a gain of $24.0 million in the fourth quarter of 2012. The divested products consisted of both commercial and development stage products in a number of therapeutic categories where the two companies owned overlapping products. Legacy Watson’s net sales of divested products were $4.1) ~~Excludes~~million ~~amortization~~and $16.1 million for the three and nine months ended September 30, 2012, respectively. Actavis Group’s net sales of ~~acquired~~divested products ~~intangibles~~were $15.0 million and $49.2 million for the three and nine months ended September 30, ~~including~~2012, respectively. For the three and nine months ended September 30, 2012, no one product ~~rights~~accounted for more than one percent of the Company’s consolidated net revenues.

	Six Months Ended June 30, 2013												Six Months Ended June 30, 2012
	ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total			ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total
Product sales	$	3,049.6		$	243.1		$	506.8		$	3,799.5		$	2,084.0		$	193.8		$	539.5		$	2,817.3
Other		53.4			32.4			—			85.8			27.1			35.1			—			62.2
Net revenues		3,103.0			275.5			506.8			3,885.3			2,111.1			228.9			539.5			2,879.5
Operating expenses:
Cost of sales (1)		1,638.7			64.2			433.3			2,136.2			1,131.6			54.5			472.2			1,658.3
Research and development		202.5			65.2			—			267.7			109.9			58.3			—			168.2
Selling and marketing		320.2			90.6			52.0			462.8			100.1			90.2			45.7			236.0
Contribution	$	941.6		$	55.5		$	21.5		$	1,018.6		$	769.5		$	25.9		$	21.6		$	817.0
Contibution margin		30.3	%		20.1	%		4.2	%		26.2	%		36.5	%		11.3	%		4.0	%		28.4	%
General and administrative											411.6												286.2
Amortization											308.0												237.7
Loss on asset sales, impairments, and contingent consideration adjustment, net											803.3												80.0
Operating income (loss)										$	(504.3	)										$	213.1
Operating margin											(13.0	)%											7.4	%

Measurement Period Adjustments

In connection with the Actavis transaction, the Company has notified the Centers for Medicare and Medicaid Services (1“CMS”) ~~Excludes~~that certain ~~amortization~~Medicaid price submissions require adjustment for the period 2007 through 2012. The Company is in the process of ~~acquired~~completing ~~intangibles,~~that ~~including~~resubmission. ~~product~~The ~~rights~~Company has proposed to CMS that periods prior to 2007 not be recalculated and as a result no amounts have been estimated for those periods. The Company recorded a measurement period adjustment of $31.0 million to reduce the estimated liability originally recorded in the acquisition accounting.

~~NOTE~~- 415 –- ~~INVENTORIES~~

-NOTE 153 - – REPORTABLE SEGMENTS

~~Table~~Actavis has three reportable segments: Actavis Pharma, Actavis Specialty Brands and Anda Distribution. The Actavis Pharma segment includes off-patent pharmaceutical products that are therapeutically equivalent to proprietary products. The Actavis Specialty Brands segment includes patent-protected products and certain trademarked off-patent products that Actavis sells and markets as brand pharmaceutical products. The Anda Distribution segment distributes generic and brand pharmaceutical products manufactured by third parties, as well as by Actavis, primarily to independent pharmacies, pharmacy chains, pharmacy buying groups and physicians’ offices. The Anda Distribution segment operating results exclude sales of ~~Contents~~products developed, acquired, or licensed by the Actavis Pharma and Actavis Specialty Brands segments.

~~Inventories~~The ~~are~~Company ~~stated~~evaluates atsegment ~~the~~performance ~~lower~~based ofon ~~cost~~segment ~~(first-in,~~contribution. ~~first-out~~Segment ~~method)~~contribution orrepresents ~~market~~segment (net revenues less cost of ~~realizable~~sales ~~value~~(excluding amortization), R&D expenses and selling and marketing expenses. The Company ~~writes~~does ~~down~~not ~~inventories~~report tototal ~~net~~assets, ~~realizable~~capital ~~value~~expenditures, ~~based~~general and administrative expenses, amortization, gains or losses on ~~forecasted~~asset ~~demand~~sales or disposals and impairments ~~market~~by ~~conditions,~~segment ~~which~~as ~~may~~not ~~differ~~all ~~from~~such ~~actual~~information ~~results.~~has ~~Inventory~~been ~~consisted~~accounted offor at the ~~following~~segment ~~(in~~level, ~~millions):~~nor is such information used by all segments.

	June 30,			December 31,
	2013			2012
				(Revised)
Inventories:
Raw materials	$	453.6		$	426.9
Work-in-process		132.4			126.2
Finished goods		1,138.5			1,104.6
		1,724.5			1,657.7
Less: Inventory reserves		(122.6	)		(111.2	)
	$	1,601.9		$	1,546.5

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS


	Three Months Ended September 30, 2013												Three Months Ended September 30, 2012
	Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total			Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total

Product sales	$	1,527.2		$	137.7		$	307.1		$	1,972.0		$	912.5		$	105.2		$	243.0		$	1,260.7
Other		24.9			16.1			—			41.0			8.4			16.1			—			24.5

Net revenues		1,552.1			153.8			307.1			2,013.0			920.9			121.3			243.0			1,285.2
Operating expenses:
Cost of sales (1)		774.3			41.4			267.2			1,082.9			487.5			30.3			206.3			724.1
Research and development		111.1			47.7			—			158.8			55.3			57.2			—			112.5
Selling and marketing		148.6			46.1			28.9			223.6			51.9			40.0			22.8			114.7

Contribution	$	518.1		$	18.6		$	11.0		$	547.7		$	326.2		$	(6.2	)	$	13.9		$	333.9

Contribution margin		33.4	%		12.1	%		3.6	%		27.2	%		35.4	%		(5.1	)%		5.7	%		26.0	%
General and administrative											232.1												110.1
Amortization											146.3												95.2
Loss on asset sales, impairments, and contingent consideration adjustment, net											13.6												39.6

Operating income (loss)										$	155.7											$	89.0

Operating margin											7.7	%											6.9	%

~~Goodwill~~(1) ~~consisted~~Excludes amortization of ~~the~~acquired ~~following~~intangibles, ~~(in~~including ~~millions):~~product rights.

	June 30,		December 31,
	2013		2012
			(Revised)
Actavis Pharma segment	$	3,606.1	$	4,293.2
Actavis Specialty Brands segment		500.1		474.7
Anda Distribution segment		86.3		86.3
Total goodwill	$	4,192.5	$	4,854.2

- 16 -

During the 2013 integration of the Actavis Group with the Legacy Watson business, the Company reorganized its organizational structure and management performance reporting. Consequently, the reporting units within the Actavis Pharma operating segment were organized as follows: Americas; Europe; MEAAP; and, Third-Party Business. These reporting units combine the legacy Watson and Actavis Group businesses. Previously, goodwill for the legacy Watson’s Global Generics operating segment was tested as one unit.


	Nine Months Ended September 30, 2013												Nine Months Ended September 30, 2012
	Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total			Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total

Product sales	$	4,576.8		$	380.8		$	813.9		$	5,771.5		$	2,996.5		$	299.0		$	782.5		$	4,078.0
Other		78.3			48.5			—			126.8			35.5			51.2			—			86.7

Net revenues		4,655.1			429.3			813.9			5,898.3			3,032.0			350.2			782.5			4,164.7
Operating expenses:
Cost of sales (1)		2,413.0			105.6			700.5			3,219.1			1,619.1			84.8			678.5			2,382.4
Research and development		313.6			112.9			—			426.5			165.2			115.5			—			280.7
Selling and marketing		468.8			136.7			80.9			686.4			152.0			130.2			68.5 3			50.7

Contribution	$	1,459.7		$	74.1		$	32.5		$	1,566.3		$	1,095.7		$	19.7		$	35.5		$	1,150.9

Contribution margin		31.4	%		17.3	%		4.0	%		26.6	%		36.1	%		5.6	%		4.5	%		27.6	%
General and administrative											643.7												396.3
Amortization											454.3												332.9
Loss on asset sales, goodwill and other impairments, and contingent consideration adjustment, net											816.9												119.6

Operating income (loss)										$	(348.6	)										$	302.1

Operating margin											(5.9%	)											7.3	%

~~During~~(1) ~~the~~Excludes ~~second~~amortization ~~quarter~~ of ~~2013,~~acquired ~~concurrent with the availability of discrete financial information for the Company’s new reporting units~~intangibles, ~~the Company completed an extensive review of its operating businesses,~~ including ~~exploring~~product ~~options for addressing overall profitability of seven Western European commercial operations~~rights. This process is expected to continue during the third quarter of this year and may include restructuring our Western European operations, refocusing their activities on specific sub-markets as well as potential divestitures to other third parties. The potential impact of these conditions were considered in our projections and the indicated fair value of our reporting units for the impairment test performed during the second quarter of this year. The Company completed step one of the impairment analysis and concluded the fair value of the Actavis Pharma – Europe reporting unit was below its carrying value including goodwill. This was primarily related to the integration of our legacy Arrow Group with the newly acquired Actavis Group in Europe. The fair value of the Company’s reporting units is estimated based on a discounted cash flow model using management’s business plans and projections as the basis for expected future cash flows for approximately five years and residual growth rates ranging from 2% to 4% thereafter. Management believes the assumptions used for the impairment test are consistent with those utilized by a market participant in performing similar valuations of our reporting units. A separate discount rate was utilized for each reporting unit derived from published sources, and, on a weighted average basis, the discount rate of 8% used was estimated using weighted average cost of capital, which considered the overall inherent risk of the reporting unit and the rate of

-NOTE 164 - – INVENTORIES

~~Table~~Inventories consist of ~~Contents~~finished goods held for sale and distribution, raw materials and work-in-process. Included in inventory at September 30, 2013 and December 31, 2012 is approximately $21.4 million and $49.7 million, respectively, of inventory that is pending approval by the U.S. Food and Drug Administration (“FDA”), by other regulatory agencies or has not been launched due to contractual restrictions. The decrease was primarily due to lidocaine inventories. This inventory consists of generic pharmaceutical products that are capitalized only when the bioequivalence of the product is demonstrated or the product has already received regulatory approval and is awaiting a contractual triggering event to enter the marketplace.

~~return~~Inventories aare ~~market~~stated ~~participant~~at ~~would~~the ~~expect.~~lower ~~Step two~~ of ~~the~~cost ~~impairment was initiated but~~(first-in, ~~due~~first-out tomethod) ~~the~~or ~~time~~market ~~necessary~~(net torealizable ~~complete the analysis, has not been completed~~value). The Company ~~recorded,~~writes ondown ainventories ~~preliminary~~to ~~basis,~~net anrealizable ~~estimate~~value ofbased ~~the~~on ~~impairment~~forecasted todemand beand ~~$647.5~~market ~~million~~conditions, ~~representing~~which ~~primarily~~may ~~all~~differ ~~the~~from ~~goodwill~~actual ~~allocated~~results. toInventory ~~this~~consisted ~~reporting unit The Company expects to finalize the step two analysis in the third quarter~~ of ~~2013. Any material adjustments to~~ the ~~impairment~~following ~~charge will be recorded~~ (in ~~our~~millions): ~~Condensed Consolidated Statement of Operations in that period.~~

During the second quarter the Company has also tested its other reporting units for impairment for which all others, except Actavis Pharma – Europe, did not yield impairment in step one. The Company will continue to monitor the carrying value of goodwill, particularly with respect to our Actavis Pharma – MEAAP and Actavis Pharma – Third Party reporting units. Actavis Pharma – Third Party has $125 million of goodwill and Actavis Pharma – MEAAP has $178 million of goodwill as of June 30, 2013. As of the second quarter, these two reporting units had fair values that exceeded carrying values by at least 23%. However, because some of the inherent assumptions and estimates used in determining fair value of these reporting units are outside the control of management, including interest rates, the cost of capital, and tax rates, changes in these underlying assumptions can also adversely impact the business units’ fair value. The amount of any impairment is dependent on all these factors, which cannot be predicted with certainty, and may result in impairment for a portion or all of the goodwill amounts noted previously. Holding all other assumptions constant at the test date, a 100 basis point increase in the discount rate would reduce the fair values that exceeded carrying values from the 23% to as low as 6%. If economic and market conditions deteriorate or do not perform as forecasted in these reporting units, this could increase the likelihood of future non-cash impairment charges related to our goodwill. The Company also reconciled the fair value of its aggregated reporting units to its market capitalization as of June 30, 2013 with a reasonable implied control premium.


	September 30,			December 31,
	2013			2012
				(Revised)
Inventories:
Raw materials	$	445.5		$	426.9
Work-in-process		138.6			126.2
Finished goods		1,203.7			1,104.6

		1,787.8			1,657.7
Less: Inventory reserves		(128.9	)		(111.2	)

	$	1,658.9		$	1,546.5

~~Intangible~~- ~~assets consisted~~17 of- ~~the following (in millions):~~

	June 30,			December 31,
	2013			2012
				(Revised)
Intangibles with finite lives:
Product rights and other related intangibles	$	5,270.0		$	5,117.6
Core technology		91.6			92.2
Customer relationships		166.4			169.0
		5,528.0			5,378.8
Less: accumulated amortization		(2,367.6	)		(2,055.3	)
		3,160.4			3,323.5
Intangibles with indefinite lives:
IPR&D		620.0			384.6
Trade name		76.2			76.2
		696.2			460.8
Total intangible assets, net	$	3,856.6		$	3,784.3

The increase in IPR&D in 2013 is primarily due to IPR&D of $250.0 million acquired as part of the Uteron acquisition and $190.4 million acquired as part of the Medicines360 acquisition partially offset by IPR&D transfers to currently marketed products (“CMP”) of $185.3NOTE ~~million,~~5 an– ~~IPR&D~~GOODWILL ~~impairment~~AND ~~loss~~INTANGIBLE ofASSETS ~~$4.4 million and foreign currency translation losses.~~

-Goodwill 17consisted - of the following (in millions):


	September 30,		December 31,
	2013		2012
			(Revised)
Actavis Pharma segment	$	3,612.1	$	4,293.2
Actavis Specialty Brands segment		504.3		474.7
Anda Distribution segment		86.3		86.3

Total goodwill	$	4,202.7	$	4,854.2

~~NOTE~~We 6test –goodwill ~~DEBT~~for impairment annually at the end of the second quarter and when events occur that could potentially reduce the fair value of a reporting unit below its carrying amount. Goodwill is considered impaired if the carrying amount of the reporting unit’s net assets exceeds the fair value of the reporting unit. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company determines the fair value of its reporting units using the income approach, which is based on estimated future cash flows. The aggregate fair value for all reporting units is reconciled to the Company’s market capitalization. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then the Company performs step two of the impairment test, which allocates the fair value of the reporting unit’s assets and liabilities in a manner similar to a purchase price allocation, with any residual fair value being allocated to goodwill. If the carrying value of a reporting unit’s goodwill exceeds the implied goodwill, then an impairment of goodwill has occurred for such difference.

~~Debt~~During ~~consisted~~the 2013 integration of the ~~following~~Actavis ~~(in~~Group ~~millions)~~with the Legacy Watson business, the Company reorganized its organizational structure and management performance reporting. Consequently, the reporting units within the Actavis Pharma operating segment were organized as follows: Americas; Europe; MEAAP; and, Third-Party Business. These reporting units combine the legacy Watson and Actavis Group businesses. Previously, goodwill for the legacy Watson’s Global Generics operating segment was tested as one unit. The combination of the legacy Watson and the Actavis Group business and net assets in the European reporting unit, combined with other market factors, lead to the impairment of the goodwill associated with this reporting unit.

	June 30,2013			December 31,2012
Senior Notes:
$450.0 million 5.00% notes due August 14, 2014	$	450.0		$	450.0
$1,200.0 million 1.875% notes due October 1, 2017		1,200.0			1,200.0
$400.0 million 6.125% notes due August 14, 2019		400.0			400.0
$1,700.0 million 3.250% notes due October 1, 2022		1,700.0			1,700.0
$1,000.0 million 4.625% notes due October 1, 2042		1,000.0			1,000.0
Less: Unamortized discount		(33.7	)		(35.1	)
Senior Notes, net		4,716.3			4,714.9
Term Loan Credit Agreement		1,615.0			1,700.0
Other, including capital leases		19.8			18.4
Total debt		6,351.1			6,433.3
Less: Current portion		177.2			176.2
Total long-term debt	$	6,173.9		$	6,257.1

During the second quarter of 2013, concurrent with the availability of discrete financial information for the Company’s new reporting units, the Company completed an extensive review of its operating businesses, including exploring options for addressing overall profitability of seven Western European commercial operations consisting of, among other things, restructuring their operations, refocusing their activities on specific sub-markets as well as potential divestitures of such businesses to other third parties. The potential impact of these conditions were considered in our projections when determining the indicated fair value of our reporting units for the impairment tests that were performed during the second quarter of this year. Upon completion of step one of the impairment analysis it was concluded the fair value of the Actavis Pharma – Europe reporting unit was below its carrying value including goodwill. This was primarily related to the integration of our legacy Arrow Group with the newly acquired Actavis Group in Europe. The fair value of the Company’s reporting units was estimated based on a discounted cash flow model using management’s business plans and projections as the basis for expected future cash flows for approximately five years and residual growth rates ranging from 2% to 4% thereafter. Management believes that the assumptions it used for the impairment tests performed are consistent with those that would be utilized by a market participant in performing similar valuations of our reporting units. A separate discount rate was utilized for each reporting unit that was derived from published sources and, on a weighted average basis, a discount rate of 8% was utilized using our weighted average cost of capital, which considered the overall inherent risk of the reporting unit and the rate of return a market participant would expect. Although step two of the impairment was initiated during the second quarter, due to the time necessary to complete the analysis, the Company recorded an impairment of the Actavis Pharma — Europe reporting unit of $647.5 million, representing primarily all the goodwill allocated to this reporting unit. During the third quarter of 2013, the Company finalized the step two analysis relating to its impairment assessment of the goodwill in the Actavis Pharma — Europe reporting unit resulting in no further adjustment to the amount recorded in the second quarter.

~~Senior~~- ~~Notes~~18 -

OnDuring ~~October 2,~~the ~~2012~~second quarter of 2013, the Company ~~issued $1,200.0~~had ~~million~~also ~~aggregate~~tested ~~principal~~its ~~amount~~other ofreporting ~~1.875%~~units ~~senior~~for impairment ~~notes~~for ~~due~~which ~~2017~~all others, $1except Actavis Pharma – Europe,~~700~~ did not yield impairment in step one.0 ~~million~~The ~~aggregate~~Company ~~principal~~will ~~amount~~continue to monitor the carrying value of 3goodwill, particularly with respect to our Actavis Pharma – MEAAP and Actavis Pharma – Third Party reporting units.~~250%~~ ~~senior~~Actavis ~~notes~~Pharma ~~due~~– ~~2022,~~Third Party had $125 million of goodwill and Actavis Pharma – MEAAP had $~~1,000.0~~178 million ~~aggregate~~of ~~principal~~goodwill ~~amount~~as of 4June 30, 2013.~~625%~~ ~~senior~~As ~~notes~~of ~~due~~the ~~2042~~second ~~(collectively~~quarter, these two reporting units had fair values that exceeded carrying values by at least 23%. However, because some of the ~~“2012~~inherent ~~Senior~~assumptions ~~Notes”)~~and estimates used in adetermining ~~registered~~fair ~~offering~~value ~~pursuant~~of tothese anreporting ~~effective~~units ~~Registration~~are ~~Statement~~outside onthe ~~Form~~control ~~S-3~~of ~~filed~~management, ~~with~~including interest rates, the cost ~~Securities~~of capital and ~~Exchange~~tax ~~Commission~~rates, ~~(“SEC”)~~changes in these underlying assumptions can also adversely impact the business units’ fair value. The ~~2012~~amount ~~Senior~~of ~~Notes~~any ~~were~~impairment ~~issued~~is ~~pursuant~~dependent toon anall ~~indenture~~these factors, which cannot be predicted with certainty, and may ~~dated~~result asin impairment for a portion or all of ~~August 24,~~the ~~2009~~goodwill (amounts noted previously. Holding all other assumptions constant at the ~~“Base~~test ~~Indenture”)~~date, ~~between~~a 100 basis point increase in the ~~Company~~discount ~~and~~rate ~~Wells~~would ~~Fargo~~reduce ~~Bank,~~the ~~National~~fair ~~Association,~~values asthat ~~trustee~~exceeded (carrying values from the ~~“Trustee”),~~23% to as ~~supplemented~~low byas a6%. ~~third~~If ~~supplemental~~economic ~~indenture~~and ~~dated~~market conditions deteriorate or do not perform as offorecasted ~~October 2~~in these reporting units, ~~2012,~~ ~~between~~this could increase the likelihood of future non-cash impairment charges related to our goodwill. The Company ~~and~~also reconciled the ~~trustee~~fair value of its aggregated reporting units to its market capitalization as of June 30, 2013 with a reasonable implied control premium.

~~Interest~~Intangible ~~payments~~assets ~~are~~consisted ~~due~~of on the ~~2012~~following ~~Senior Notes semi-annually~~ (in ~~arrears~~millions): ~~on April 1 and October 1 beginning April 1, 2013.~~

The Company may redeem the 2012 Senior Notes, in whole at any time or in part from time to time, at the Company’s option, at a redemption price equal to the greater of 100% of the principal amount of notes to be redeemed and the sum of the present values of the remaining scheduled payments of principal and interest in respect of the 2012 Senior Notes being redeemed discounted on a semi-annual basis at the Treasury Rate plus 20 basis points in the case of the 2017 Notes, 25 basis points in the case of the 2022 Notes and 30 basis points in the case of the 2042 Notes, plus in each case accrued and unpaid interest, if any, to, but excluding, the date of redemption.


	September 30,			December 31,
	2013			2012
				(Revised)
Intangibles with finite lives:
Product rights and other related intangibles	$	5,361.2		$	5,117.6
Core technology		93.1			92.2
Customer relationships		157.3			169.0

		5,611.6			5,378.8
Less: accumulated amortization		(2,540.7	)		(2,055.3	)

		3,070.9			3,323.5

Intangibles with indefinite lives:
IPR&D		628.4			384.6
Trade name		76.2			76.2

		704.6			460.8

Total intangible assets, net	$	3,775.5		$	3,784.3

~~In addition,~~The ~~the~~increase ~~Company~~in ~~may~~IPR&D ~~redeem~~in ~~the~~2013 ~~2022~~is ~~Notes~~primarily ondue orto ~~after~~IPR&D ~~July 1,~~of ~~2022~~$250.0 ~~(three~~million ~~months~~acquired ~~prior~~as topart ~~their~~of ~~maturity~~the Uteron ~~date),~~acquisition and ~~the~~$191.7 ~~2042~~million ~~Notes~~acquired onas ~~or after April 1, 2042 (six months prior to their maturity date) in each case, in whole at any time or in~~ part ~~from~~of ~~time to time, at~~ the ~~Company’s~~Medicines360 ~~option~~acquisition atpartially aoffset ~~redemption~~by ~~price~~IPR&D ~~equal~~transfers to ~~100%~~currently ofmarketed ~~the~~products ~~aggregate~~(“CMP”) ~~principal amount~~ of ~~the~~$194.4 ~~2012 Senior Notes being redeemed~~million, ~~plus,~~an inIPR&D ~~each~~impairment ~~case,~~loss ~~accrued~~of ~~and~~$4.4 ~~unpaid~~million ~~interest, if any, to, but excluding, the~~and ~~date~~foreign ofcurrency ~~redemption~~translation gains.

- 1819 -

~~Upon~~NOTE a6 ~~change~~– ofDEBT control triggering event and a downgrade of the 2012 Senior Notes below an investment grade rating by each of Moody’s Investors Service, Inc. and Standard & Poor’s Rating Services, the Company will be required to make an offer to purchase each of the 2012 Senior Notes at a price equal to 101% of the principal amount of the 2012 Senior Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

~~Net~~Debt ~~proceeds~~consisted ~~from the offering~~ of the ~~2012~~following ~~Senior~~(in ~~Notes~~millions): ~~were used for the acquisition of the Actavis Group. The outstanding balance under the 2012 Senior Notes at June 30, 2013 was $3,867.3 million.~~

Senior Notes Issued in 2009


	September 30,			December 31,
	2013			2012
Senior Notes:
$450.0 million 5.00% notes due August 14, 2014	$	450.0		$	450.0
$1,200.0 million 1.875% notes due October 1, 2017		1,200.0			1,200.0
$400.0 million 6.125% notes due August 14, 2019		400.0			400.0
$1,700.0 million 3.250% notes due October 1, 2022		1,700.0			1,700.0
$1,000.0 million 4.625% notes due October 1, 2042		1,000.0			1,000.0
Less: Unamortized discount		(32.9	)		(35.1	)

Senior Notes, net		4,717.1			4,714.9
Term Loan Credit Agreement		1,572.5			1,700.0
Other, including capital leases		20.8			18.4

Total debt		6,310.4			6,433.3
Less: Current portion		627.1			176.2

Total long-term debt and capital leases	$	5,683.3		$	6,257.1

On August 24, 2009, the Company issued $450.0 million aggregate principal amount of 5.00% senior notes due 2014 and $400.0 million aggregate principal amount of 6.125% senior notes due 2019 (collectively the “2009 Senior Notes”) pursuant to an effective Registration Statement on Form S-3 filed with the SEC. The Senior Notes issued in 2009 were issued pursuant to the Base Indenture, as supplemented by a first supplemental indenture dated August 24, 2009.

~~Interest payments are due on the 2009~~ Senior Notes ~~semi-annually~~Issued in ~~arrears~~2012 ~~on February 15 and August 15, respectively, beginning February 15, 2010.~~

~~The~~On October 2, 2012, the Company ~~may~~issued ~~redeem~~$1,200.0 ~~the~~million ~~2009~~aggregate ~~Senior Notes~~principal inamount ~~whole~~of at1.875% ~~any~~senior ~~time~~notes ordue in2017, ~~part~~$1,700.0 ~~from~~million ~~time~~aggregate toprincipal ~~time,~~amount atof ~~the~~3.250% ~~Company’s~~senior ~~option~~notes atdue a2022, ~~redemption~~and ~~price~~$1,000.0 ~~equal~~million toaggregate ~~the~~principal ~~greater~~amount of ~~(i) 100~~ 4.625% ofsenior ~~the~~notes ~~principal~~due ~~amount~~2042 of(collectively the ~~notes~~“2012 Senior Notes”) in a registered offering pursuant to bean ~~redeemed~~effective Registration Statement on Form S-3 filed with the Securities and Exchange Commission (ii“SEC”) ~~the~~. ~~sum~~The of2012 ~~the~~Senior Notes ~~present~~were ~~values~~issued ofpursuant ~~the remaining~~to ~~scheduled~~an ~~payments~~indenture dated as of ~~principal~~August 24, ~~and~~2009 ~~interest~~(the in“Base ~~respect~~Indenture”), ofbetween the ~~2009~~Company ~~Senior~~and ~~Notes~~Wells ~~being~~Fargo ~~redeemed~~Bank, ~~discounted~~National onAssociation, aas ~~semi-annual~~trustee ~~basis~~(the at“Trustee”), ~~the~~as ~~Treasury~~supplemented ~~Rate~~by ~~plus~~a 40third supplemental indenture dated as of October ~~basis~~2, ~~points~~2012, ~~plus~~between ~~accrued~~the Company and ~~unpaid~~the ~~interest~~trustee, ifand ~~any~~a fourth supplemental indenture dated as of October 1, to2013, ~~but~~between ~~excluding~~the Company and the Trustee, pursuant to which Actavis plc ~~the~~(“Parent”) ~~date~~was added as a guarantor of ~~redemption~~the 2012 Senior Notes.

~~Upon~~Interest apayments ~~change~~are ofdue ~~control~~on ~~triggering event, as defined by~~ the ~~Indenture,~~2012 ~~the Company is required to make an offer to repurchase the 2009~~ Senior Notes ~~for~~semi-annually in ~~cash~~arrears aton aApril 1 ~~repurchase price equal to 101% of the principal amount of the 2009 Senior Notes to be repurchased plus accrued~~ and ~~unpaid~~October 1 ~~interest~~beginning toApril 1, ~~the date of purchase~~2013.

~~Net~~The ~~proceeds~~Company may redeem the 2012 Senior Notes, in whole at any time or in part from time to time, at the ~~offering~~Company’s option, at a redemption price equal to the greater of ~~2009~~100% ~~Senior~~of ~~Notes~~the ~~were~~principal ~~used~~amount of notes to ~~repay~~be ~~certain~~redeemed ~~debt~~and ~~with~~the sum of the present values of the remaining ~~net~~scheduled ~~proceeds~~payments of principal and interest in respect of the 2012 Senior Notes being ~~used~~redeemed todiscounted ~~fund~~on a ~~portion~~ ofsemi-annual basis at the ~~cash~~Treasury ~~consideration~~Rate ~~for~~plus 20 basis points in the ~~Arrow~~case ~~acquisition.~~of ~~The~~the ~~outstanding~~2017 ~~balance~~Notes, ~~under~~25 basis points in the ~~2009~~case ~~Senior~~of the 2022 Notes at(defined ~~June~~ below) and 30 basis points in the case of the 2042 Notes (defined below), ~~2013~~plus ~~was~~in ~~$849.0~~each ~~million~~case accrued and unpaid interest, if any, to, but excluding, the date of redemption.

~~Term~~In ~~Loan~~addition, ~~Credit~~the ~~Agreement~~Company may redeem the 2022 Notes on or after July 1, 2022 (three months prior to their maturity date), and the 2042 Notes on or after April 1, 2042 (six months prior to their maturity date) in each case, in whole at any time or in part from time to time, at the Company’s option at a redemption price equal to 100% of the aggregate principal amount of the 2012 Senior Notes being redeemed, plus, in each case, accrued and unpaid interest, if any, to, but excluding, the date of redemption.

On- ~~June 22,~~20 ~~2012,~~- the Company, Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, N.A. as Syndication Agent, and a syndicate of banks participating as lenders entered into a senior unsecured Term Loan Credit Agreement (the “Term Loan Credit Agreement”) pursuant to which the lenders agree to provide the Company a Term Loan in an aggregate amount not to exceed $1.8 billion. On October 31, 2012, the Company borrowed $1.8 billion under the Term Loan Credit Agreement to fund the Actavis Group acquisition. Debt related costs for the borrowing were $5.9 million, which the Company paid on the date of the borrowing. On December 10, 2012, the Company prepaid $100.0 million of the Term Loan Credit Agreement.

~~The~~Upon ~~Term~~a ~~Loan~~change ~~Credit~~of ~~Agreement~~control ~~will~~triggering ~~mature~~event onand ~~the~~a ~~fifth~~downgrade ~~anniversary~~ of the ~~closing~~2012 ~~date~~Senior ofNotes ~~the~~below ~~Actavis~~an investment ~~Group~~grade ~~acquisition.~~rating ~~The~~by ~~outstanding principal~~each ~~amount~~of ~~under~~Moody’s ~~the~~Investors ~~Term~~Service, ~~Loan~~Inc. ~~Credit~~and ~~Agreement~~Standard & isPoor’s ~~payable~~Rating inServices, ~~equal~~the ~~quarterly~~Company ~~amounts~~will ofbe ~~2.50% per~~required ~~quarter prior~~ to ~~the~~make ~~fifth~~an ~~anniversary~~offer ofto ~~the~~purchase ~~closing~~each ~~date~~ of the ~~Actavis~~2012 ~~Group~~Senior ~~acquisition~~Notes ~~(beginning~~at ~~with~~a ~~the~~price ~~quarter~~equal ~~ending March 31,~~to ~~2013),~~101% ~~with~~of the principal ~~remaining~~amount ~~balance~~of ~~payable on~~ the ~~maturity~~2012 ~~date.~~Senior ~~The~~Notes ~~Term~~to ~~Loan~~be ~~Credit~~repurchased, ~~Agreement~~plus ~~contains~~any ~~covenants~~accrued ~~that~~and ~~are~~unpaid ~~substantially~~interest, ~~similar~~if any, to, ~~those~~but inexcluding, the ~~Company’s~~date ~~Revolving~~of ~~Credit Facility~~repurchase. ~~The Term Loan Credit Agreement contains standard events of default (the~~

-Net 19proceeds -from the offering of the 2012 Senior Notes were used for the acquisition of the Actavis Group. The outstanding balance under the 2012 Senior Notes at September 30, 2013 was $3,868.0 million.

~~Table~~Senior ofNotes ~~Contents~~Issued in 2009

~~occurrence~~On ofAugust 24, ~~which~~2009, ~~may~~the ~~trigger~~Company anissued ~~acceleration~~$450.0 million aggregate principal amount of ~~amounts~~5.00% ~~outstanding~~senior ~~under~~notes due 2014 (the ~~Term~~“2014 Notes”) ~~Loan~~and ~~Credit~~$400.0 million ~~Agreement)~~aggregate principal amount of 6.125% ~~The~~senior ~~Term~~notes ~~Loan~~due ~~Credit~~2019 ~~Agreement~~(collectively ~~became~~the ~~effective~~“2009 inSenior ~~accordance~~Notes”) ~~with~~pursuant ~~its~~to ~~terms~~an effective Registration Statement on ~~June 22,~~ ~~2012~~Form S-3 filed with the SEC. The ~~Company~~Senior isNotes ~~subject~~issued in 2009 were issued pursuant to, ~~and,~~the atBase ~~June 30~~Indenture, ~~2013,~~as ~~was~~supplemented inby ~~compliance~~a ~~with,~~first ~~all~~supplemental ~~financial~~indenture dated August 24, 2009, and ~~operational~~a ~~covenants~~fourth ~~under~~supplemental ~~the~~indenture ~~terms~~dated as of October 1, 2013, between the ~~Term~~Company ~~Loan~~and ~~Credit~~the ~~Agreement.~~Trustee, ~~The~~pursuant ~~outstanding~~to which ~~balance~~Parent ofwas ~~the~~added ~~Term~~as ~~Loan~~a ~~Credit~~guarantor ~~Agreement at~~of ~~June 30,~~the ~~2013~~2009 ~~was~~Senior ~~$1,615~~Notes.0 ~~million.~~

~~Amended~~Interest ~~Revolving~~payments ~~Credit~~are ~~Facility~~due on the 2009 Senior Notes semi-annually in arrears on February 15 and August 15, respectively, beginning February 15, 2010.

OnThe ~~May 21,~~Company ~~2012,~~may redeem the ~~Company~~2009 ~~entered~~Senior Notes ~~into~~in ~~Amendment~~whole 1at toany ~~Credit~~time ~~Agreement~~or ~~and~~in ~~Joinder~~part ~~Agreement~~from ~~(the~~time ~~“Amendment”)~~ to time, at the Company’s ~~existing~~option ~~credit~~at ~~agreement~~a ~~that~~redemption ~~closed~~price onequal ~~September 16,~~to ~~2011,~~the ~~with~~greater ~~Bank~~ of ~~America,~~(i) 100% ~~N.A.,~~of asthe ~~Administrative~~principal ~~Agent,~~amount ~~Wells~~of ~~Fargo~~the ~~Bank,~~notes ~~N.A.,~~to asbe ~~Syndication~~redeemed ~~Agent,~~ and a(ii) the ~~syndicate~~sum of ~~banks~~the ~~establishing~~present avalues ~~senior~~of ~~unsecured revolving~~the ~~credit~~remaining ~~facility~~scheduled ~~(as~~payments ~~amended~~of byprincipal ~~the~~and ~~Agreement,~~interest ~~the~~in ~~“Revolving~~respect ~~Credit~~of ~~Facility”).~~the ~~The~~2009 ~~Revolving~~Senior ~~Credit~~Notes ~~Facility~~being ~~provides~~redeemed, andiscounted ~~aggregate~~on ~~principal~~a ~~amount~~semi-annual ofbasis ~~$750.0 million~~at inthe ~~senior~~Treasury ~~unsecured~~Rate ~~revolving~~plus ~~loans.~~40 basis ~~The revolving loans may be borrowed~~points, ~~repaid~~plus accrued and ~~re-borrowed~~unpaid ~~through September 16~~interest, ~~2016~~if ~~and~~any, ~~subject~~ to, ~~certain~~but ~~minimum amounts~~excluding, the ~~may~~date beof ~~prepaid in whole or in part without premiums or penalties~~redemption.

~~Committed~~Upon ~~borrowings under the Revolving Credit Facility bear interest at the Company’s choice of~~ a ~~per~~change ~~annum rate equal to either a base rate or Eurocurrency rate, plus an applicable margin. The base rate is the higher~~ of ~~(a) the~~control ~~Federal~~triggering ~~Funds Rate plus 0.50%~~event, ~~(b) prime rate~~ as ~~publicly~~defined ~~announced~~ by the ~~Administrative Agent~~Indenture, orthe ~~(c) one-month~~Company ~~London~~is ~~Interbank~~required ~~Offered~~to ~~Rate~~make ~~plus~~an ~~1.00%. The applicable margin is a percentage~~offer ~~determined~~to inrepurchase ~~accordance with a pricing grid based on~~ the ~~Company’s~~2009 ~~credit~~Senior ~~rating~~Notes ~~and~~for iscash ~~currently set~~ at ~~0.25%~~a ~~for~~repurchase ~~base~~price ~~rate~~equal ~~loans~~to ~~and 1.25~~101% ~~for~~of ~~Eurocurrency~~the ~~rate~~principal ~~loans.~~amount ~~Additionally, to maintain availability~~ of ~~funds,~~ the ~~Company~~2009 ~~pays~~Senior ~~an unused~~Notes ~~commitment fee, which according~~ to ~~the~~be ~~pricing~~repurchased ~~grid~~plus isaccrued ~~set~~and atunpaid ~~0.15%~~interest ofto the ~~unused~~date ~~portion~~ of ~~the Revolving Credit Facility~~purchase.

~~Subject~~Net toproceeds ~~certain~~from ~~limitations, borrowings under~~ the ~~Revolving~~offering ~~Credit~~of ~~Facility~~2009 ~~may~~Senior beNotes ~~made~~were inused ~~alternative~~to ~~currencies,~~repay ~~including~~certain ~~Euros,~~debt ~~British~~with ~~Pounds~~the ~~Sterling~~remaining ~~and~~net ~~other~~proceeds ~~currencies.~~being ~~The~~used ~~Revolving~~to ~~Credit~~fund a ~~Facility~~portion ~~contains sublimits on letters~~ of ~~credit~~the ~~and~~cash ~~swingline~~consideration ~~loans~~for in the ~~amount~~Arrow ~~of $100~~acquisition.0 ~~million and $50.0 million, respectively.~~ The ~~issuance~~outstanding ofbalance ~~letters of credit and borrowings of swingline loans reduces the amount available to be borrowed~~ under the ~~Revolving~~2009 ~~Credit~~Senior ~~Facility~~Notes onat aSeptember 30, ~~dollar-for-dollar~~2013 ~~basis~~was $849.1 ~~Amounts borrowed under the Revolving Credit Facility may be used to finance working capital and other general corporate purposes~~million.

~~The~~On ~~Revolving Credit Facility imposes certain customary restrictions including~~October 18, ~~but not limited to~~2013, ~~limits on~~ the ~~incurrence~~Company ofinstructed ~~debt or liens upon~~ the ~~assets~~Trustee ofto ~~the~~issue ~~Company or its subsidiaries, investments and restricted payments. The Revolving Credit Facility includes~~ a ~~Consolidated~~notice ~~Leverage~~from ~~Ratio~~the ~~covenant~~Company ~~providing~~to ~~that~~ the ~~aggregate~~holders ~~principal amount~~ of ~~Acquisition Indebtedness (as such term is defined in~~ the ~~Amendment)~~2014 Notes that ~~includes a “special mandatory redemption” provision (or other similar provision) requiring~~ the Company tohas ~~redeem~~elected ~~such Acquisition Indebtedness will be excluded for purposes of determining Consolidated Total Debt at any time prior~~ to ~~the~~redeem ~~proposed Actavis Group acquisition as more fully set forth~~ in full the ~~Amendment.~~entire ~~The~~aggregate ~~Amendment~~principal ~~also~~amount ~~provides~~of ~~that (a) during~~ the ~~period~~2014 ~~prior~~Notes ~~to the date~~ on ~~which~~November 5, ~~the~~2013 ~~Actavis Group acquisition is consummated~~ (~~such date,~~ the “~~Acquisition~~Redemption Date”),. ~~the~~The ~~Company~~2014 isNotes, ~~permitted~~which to have aan ~~maximum~~outstanding ~~Consolidated~~principal ~~Leverage~~balance ~~Ratio as~~ of ~~the last date of any period of four consecutive fiscal quarters of the Company of up to 3~~$450.500 million ~~to 1.00,~~ and which ~~(b) as~~are offully ~~the~~and ~~Acquisition~~unconditionally ~~Date~~guaranteed ~~and~~by ~~thereafter~~ the Company, iswill ~~permitted~~be toredeemed ~~have~~at a ~~maximum~~redemption ~~Consolidated~~price ~~Leverage~~equal ~~Ratio~~to ~~as of~~ the ~~last~~sum ~~day~~ of ~~any~~the ~~period~~present ofvalues ~~four consecutive fiscal quarters~~ of the ~~Company~~remaining ofscheduled uppayments toof ~~(i) with~~principal ~~respect~~and tointerest on the ~~four consecutive~~2014 ~~fiscal~~Notes ~~quarters~~ from the ~~Acquisition~~Redemption Date ~~through December~~to August 3115, ~~2013~~2014, ~~4.25~~discounted to ~~1.00; (ii) with respect to~~ the ~~four~~Redemption ~~consecutive~~Date ~~fiscal~~on ~~quarters~~a ~~from~~semi-annual ~~January 1,~~basis ~~2014~~at ~~through~~the ~~December 31,~~Treasury ~~2014,~~Rate ~~4.00 to 1.00; and~~ (~~iii) with~~as ~~respect~~defined toin the ~~period of four consecutive fiscal quarters ending from January 1~~Indenture), ~~2015~~plus ~~and~~40 ~~thereafter,~~basis ~~3.50 to 1.00. To the extent litigation~~points, ~~settlement~~plus ~~charges~~accrued and ~~unusual~~unpaid ~~charges~~interest, inif ~~each case which are paid in cash exceed 7.50% of the Company’s net worth for the prior twelve month period for the most recent ended fiscal quarter~~any, ~~the Company would be subject~~ to, ~~maintenance~~but ofexcluding, ~~a springing minimum net worth covenant not less than~~ the ~~sum~~Redemption ofDate. ~~(x) 75%~~The ~~of the~~ Company’s will ~~consolidated~~use ~~net~~cash ~~worth~~on ashand ofand ~~June 30,~~revolving ~~2011~~loans ~~plus~~to ~~(y) 50%~~fund ofthis ~~the Company’s consolidated net income (but not loss) for each fiscal quarter ending after June 30, 2011~~redemption.

~~The~~- ~~Company~~21 is- subject to, and, at June 30, 2013, was in compliance with, all financial and operational covenants under the terms of the Revolving Credit Facility. The Credit Agreement contains standard events of default (the occurrence of which may trigger an acceleration of amounts outstanding under the credit facilities). At June 30, 2013, there were $6.7 million letters of credit outstanding. The net availability under the Revolving Credit Facility was $743.3 million.

~~Table~~Amended ofand ~~Contents~~Restated Credit Facilities

~~Fair~~On ~~Value~~August 1, 2013, the Company, Bank of ~~Debt~~America, ~~Instruments~~N.A. and a syndicate of lenders entered into (i) an amendment agreement (the “Revolver Amendment”) to amend and restate the Company’s existing $750.0 million senior unsecured revolving credit loan facility dated as of September 16, 2011, as amended by Amendment 1 to Credit Agreement and Joinder Agreement dated May 12, 2012 (the “Amended and Restated Revolver”); and, (ii) an amendment agreement (the “Term Loan Amendment” and, together with the Revolver Amendment, the “Amendments”) to amend and restate the Company’s existing $1.8 billion senior unsecured term loan credit facility dated June 22, 2012 (the “Amended and Restated Term Loan”). The Amendments were effective in accordance with their terms on October 1, 2013.

AsThe ~~of June 30~~Amendments, ~~2013,~~among ~~the~~other ~~fair~~things ~~value~~as ofdescribed ~~our~~below: ~~Senior~~(i) replaced ~~Notes was $102.6 million less than~~ the ~~carrying~~Company, ~~value.~~as ~~Generally~~borrower, ~~changes~~with ina ~~market interest rates affect the fair value of fixed~~newly-~~rate~~formed ~~debt~~Luxembourg company, Actavis ~~but~~WC doHolding ~~not~~S.à.r.l. ~~impact~~that ~~earnings~~is ora ~~cash~~parent ~~flows.~~of ~~Accordingly, we believe~~ the ~~effect,~~Company ifand ~~any,~~a ~~of reasonably possible near~~wholly-~~term~~owned ~~changes~~subsidiary ~~in the fair value~~ of ~~our~~Actavis ~~debt would not be material on our financial condition~~plc, ~~results~~and of(ii) added ~~operations,~~Actavis ~~comprehensive~~plc ~~income~~and orthe ~~cash~~Company ~~flows~~as guarantors.

~~NOTE~~The 7Amended –and ~~INCOME~~Restated ~~TAXES~~Term Loan and the Amended and Restated Revolver provides that all obligations thereunder are jointly and severally guaranteed by (i) Actavis plc, (ii) the Company and (iii) any subsidiary (other than Actavis WC Holdings S.à r.l) that becomes a guarantor of third party indebtedness of Actavis plc in an aggregate principal amount exceeding $200.0 million (unless, in the case of a foreign subsidiary, such guarantee would give rise to adverse tax consequences as reasonably determined by Actavis plc).

~~The~~In ~~Company’s effective tax rate for the six months ended June 30~~addition, 2013 was (13.5%) compared to 145.7% for the six months ended June 30, 2012. The effective tax rate for the six months ended June 30, 2013 was impacted by certain one-time non-deductible pre-tax expenses including a goodwill impairment charge of $647.5 million and a charge for consideration due to the former Actavis ~~Group~~plc ~~stakeholders~~shall ofbe ~~$150.3~~required ~~million. This was partially offset by non-taxable pre-tax income of $15.0 million related~~ to ~~the~~comply ~~Arrow~~with ~~acquisition. The effective tax rate for the six months ended June 30, 2012 was impacted by the non-deductibility of~~ a ~~loss~~quarterly ~~from~~total ~~foreign~~leverage ~~exchange~~maintenance ~~derivatives~~covenant ~~partially~~that ~~offset~~is bysubstantially ~~the~~similar ~~reversal of deferred tax liabilities relating~~ to the ~~Ascent acquisition. The Company’s effective tax rate is also negatively impacted~~ bycovenant ~~losses~~ in ~~certain foreign jurisdictions for which no tax benefit is provided and~~ the ~~amortization~~Existing ofCredit ~~intangible assets being tax benefited at a lower rate than the U~~Facilities.S. ~~federal tax rate.~~

~~The~~Amended ~~Company conducts business globally~~ and, asRestated aTerm ~~result,~~Loan it files federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are the probable outcomes, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the condensed consolidated financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues and issuance of new legislation, regulations or case law. Management believes that adequate amounts of tax and related penalty and interest have been provided for any adjustments that may result from these uncertain tax positions.

~~With~~On ~~few~~August 1, ~~exceptions~~2013, the Company ~~is no longer subject to U.S. federal~~, ~~state~~Bank ~~and~~of ~~local~~America, ~~or non-U~~N.SA. ~~income~~and ~~tax~~a ~~examinations~~syndicate ~~for~~of ~~years~~lenders ~~before~~entered ~~2008.~~into Inan ~~the~~amendment ~~first~~agreement ~~quarter~~to ofamend ~~2013,~~and restate the Company ~~resolved the 2007-2009 examination for Arrow~~’s ~~U.S.~~existing ~~business, resulting in a reduction of the uncertain tax positions by~~ $31.98 ~~million~~billion ~~with~~senior ~~no impact~~unsecured onterm ~~the~~loan ~~effective~~credit ~~tax~~facility ~~rate.~~dated ~~For the Company’s 2008-2009 tax years~~June 22, ~~the~~2012. ~~IRS~~The ~~has~~Amendments ~~agreed~~revise ~~on all issues except the timing of the deductibility of~~ certain ~~litigation~~representations ~~costs.~~and ~~The~~warranties, ~~IRS~~financial isreporting ~~examining~~requirements ~~the~~and ~~2009-2011~~other ~~tax~~affirmative ~~returns~~and ~~for~~negative ~~Actavis’~~covenants ~~pre-acquisition~~and ~~U.S.~~events ~~business. Additionally, the IRS has begun the examination~~ of ~~the~~default ~~Company’s~~as ~~2010-2011~~set ~~tax~~forth ~~years~~ in the ~~second~~Amended ~~quarter~~and ofRestated ~~2013~~Credit Facilities. ~~While~~The itAmendments isbecame ~~often~~effective ~~difficult~~in toaccordance ~~predict~~with ~~the~~their ~~final~~terms ~~outcome~~on ~~or the timing of resolution of any particular uncertain tax position~~October 1, ~~the Company has accrued for amounts it believes are the likely outcomes~~2013.

-On 21June 22, -2012, the Company, Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, N.A. as Syndication Agent, and a syndicate of banks participating as lenders entered into a senior unsecured Term Loan Credit Agreement (the “Term Loan Credit Agreement”) pursuant to which the lenders agree to provide the Company a Term Loan in an aggregate amount not to exceed $1.8 billion.

~~Table~~The Amended and Restated Term Loan provides that loans thereunder will bear interest, at the Company’s choice, of ~~Contents~~a per annum rate equal to either (a) a base rate, plus an applicable margin per annum varying from 0.00% per annum to 1.00% per annum depending on the publicly announced debt ratings for non-credit-enhanced, senior unsecured long-term indebtedness of Parent (such applicable debt rating the “Debt Rating”) or (b) a Eurodollar rate, plus an applicable margin varying from 1.00% per annum to 2.00% per annum depending on the Debt Rating.

~~NOTE~~The 8Amended –and ~~STOCKHOLDERS’~~Restated ~~EQUITY~~Term Loan matures on October 31, 2017 (or if such day is not a business day, the next preceding business day), and the outstanding principal amount is payable in equal quarterly installments of 2.50% per quarter, with the remaining balance payable on the maturity date.

AThe ~~summary~~Amended ofand ~~the~~Restated ~~changes~~Term Loan contains covenants that are substantially similar to those in ~~stockholders~~the Company’s ~~equity~~Amended ~~for~~and Restated Revolver. The Amended and Restated Term Loan contains standard events of default (the ~~six~~occurrence ~~months~~of ~~ended~~which ~~June 30,~~may ~~2013~~trigger ~~consisted~~an acceleration of amounts outstanding under the ~~following~~ ~~(in~~Term ~~millions~~Loan Credit Agreement):. The Amended and Restated Term Loan became effective in accordance with its terms on October 1, 2013.

Stockholders’ equity, December 31, 2012	$	3,833.8
Common stock issued in connection with Actavis Group acquisition		471.7
Common stock issued under employee plans		5.8
Increase in additional paid-in capital for share-based compensation plans		26.0
Net (loss)		(667.6	)
Other comprehensive (loss)		(121.1	)
Excess tax benefit from employee stock plans		14.2
Repurchase of common stock		(22.5	)
Acquisition of noncontrolling interests		(4.2	)
Stockholders’ equity, June 30, 2013	$	3,536.1

The Company is subject to, and, at September 30, 2013, was in compliance with, all financial and operational covenants under the terms of the Term Loan Credit Agreement. The outstanding balance of the Term Loan at September 30, 2013 was $1,572.5 million.

~~NOTE~~- 922 –- ~~DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES~~

~~Foreign~~Amended ~~Currency~~and ~~Forward~~Restated ~~Contracts~~Revolver

AsOn aAugust 1, ~~result of the Actavis Group acquisition~~2013, the Company’s, ~~exposure~~Bank toof ~~foreign~~America, ~~exchange~~N.A. ~~fluctuations~~and ~~has~~a ~~increased.~~syndicate ~~The~~of ~~Company~~lenders ~~has~~ entered into ~~foreign~~an ~~currency~~amendment ~~forward~~agreement ~~contracts~~ to ~~mitigate~~amend ~~volatility in anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, primarily associated with non-functional currency denominated revenues~~ and ~~expenses~~ of foreign subsidiaries. The foreign currency forward contracts outstanding at June 30, 2013 have settlement dates within 6 months. These foreign currency forward contracts are not accounted for as hedges and therefore any unrealizedrestate ~~gains or losses are recognized in income during~~ the ~~period.~~Company’s ~~The~~existing ~~impact of the forward contracts was a gain of~~ $1750.0 million ~~and~~senior ~~$0.7~~unsecured ~~million~~revolving ~~for~~credit ~~the~~loan ~~three~~facility ~~and~~dated ~~six months ended June~~September 3016, ~~2013~~2011, ~~respectively.~~as ~~The~~amended ~~forward~~by ~~contracts are classified in~~ the ~~condensed~~May 21, ~~consolidated balance sheet in prepaid expenses and other assets. In~~ 2012, ~~the~~Amendment ~~Company~~1 ~~entered~~to ~~into~~Credit ~~foreign~~Agreement ~~currency exchange options~~ and ~~forward~~Joinder ~~contracts to hedge its agreed upon purchase of Actavis of €4~~Agreement.25 ~~billion.~~ The ~~foreign currency~~revolving ~~options~~loans ~~had~~may ~~a net premium payable of $158.3 million~~be borrowed, ~~which~~repaid ~~was included in accounts payable~~ and ~~accrued~~re-borrowed ~~expenses~~through ~~at June~~September 3016, ~~2012.~~2017 ~~These~~and, ~~transactions~~subject ~~were entered into~~ to ~~mitigate~~certain ~~exposure~~minimum ~~resulting~~amounts, ~~from~~may ~~movements~~be ofprepaid ~~the U.S. dollar against the Euro~~ in ~~connection~~whole ~~with~~or ~~the future purchase obligation. Since these derivatives were hedges on foreign currency risk for a business combination denominated~~ in apart ~~foreign~~without ~~currency,~~premiums ~~the~~or ~~change in the value of the derivatives was recognized in the statement of operations~~penalties. ~~The impact of the foreign currency options and forwards decreased other income and expense by $142.7 million and $142.7 million for the three and six months ended June 30, 2012, respectively.~~

The ~~foreign~~Amended ~~currency~~and ~~forward~~Restated ~~contracts~~Revolver provides that loans thereunder will bear interest, at the Company’s choice, of a per annum rate equal to ~~buy/sell~~either ~~Euros~~(a) a ~~with~~base rate, plus an applicable margin per annum varying from 0.00% per annum to 0.75% per annum depending on the ~~foreign~~Debt ~~currencies~~Rating ~~noted~~or ~~below~~(b) a atEurodollar ~~June~~rate, plus an applicable margin varying from 0.875% 30per annum to 1.75% per annum depending on the Debt Rating. Additionally, ~~2013~~to ~~were~~maintain asavailability ~~follows:~~of funds, the Company pays an unused commitment fee, which according to the pricing grid is set at 0.15% of the unused portion of the Amended and Restated Revolver.

	Notional Amount
Foreign Currency	Buy		Sell
Czech Republic Koruna	€	2.3	€	—
Polish Zloty		6.7		—
Romanian Leu		—		4.0
Swedish Krona		9.9		—
	€	18.9	€	4.0

Subject to certain limitations, borrowings under the Amended and Restated Revolver may be made in alternative currencies, including Euros, British Pounds Sterling and other currencies. The Amended and Restated Revolver contains sublimits on letters of credit and swingline loans in the amount of $100.0 million and $50.0 million, respectively. The issuance of letters of credit and borrowings of swingline loans reduces the amount available to be borrowed under the Amended and Restated Revolver on a dollar-for-dollar basis. Amounts borrowed under the Amended and Restated Revolver may be used to finance working capital and other general corporate purposes.

-The 22Amended -and Restated Revolver imposes certain customary restrictions including, but not limited to, limits on the incurrence of debt or liens upon the assets of the Company or its subsidiaries, investments and restricted payments. The Amended and Restated Revolver includes a Consolidated Leverage Ratio covenant providing that the aggregate principal amount of Acquisition Indebtedness (as such term is defined in the Amendment) that includes a “special mandatory redemption” provision (or other similar provision) requiring the Company to redeem such Acquisition Indebtedness will be excluded for purposes of determining Consolidated Total Debt at any time prior to the proposed Actavis Group acquisition as more fully set forth in the Amendment. The Amendment also provides that (a) during the period prior to the date on which the Actavis Group acquisition is consummated (such date, the “Acquisition Date”), the Company is permitted to have a maximum Consolidated Leverage Ratio as of the last date of any period of four consecutive fiscal quarters of the Company of up to 3.50 to 1.00, and (b) as of the Acquisition Date and thereafter the Company is permitted to have a maximum Consolidated Leverage Ratio as of the last day of any period of four consecutive fiscal quarters of the Company of up to (i) with respect to the four consecutive fiscal quarters from the Acquisition Date through December 31, 2013, 4.25 to 1.00; (ii) with respect to the four consecutive fiscal quarters from January 1, 2014 through December 31, 2014, 4.00 to 1.00; and (iii) with respect to the period of four consecutive fiscal quarters ending from January 1, 2015 and thereafter, 3.50 to 1.00.

~~Table~~The Company is subject to, and, at September 30, 2013, was in compliance with, all financial and operational covenants under the terms of the ~~Contents~~Revolving Credit Facility. At September 30, 2013, there were $7.4 million letters of credit outstanding. The net availability under the Revolving Credit Facility was $742.6 million.

~~NOTE~~New 10Term Loan Agreement (as of October 1, 2013 – ~~FAIR~~Warner ~~VALUE~~Chilcott ~~MEASUREMENT~~Term Loan Credit and Guaranty Agreement)

~~Fair~~On ~~value~~October 1, is2013, ~~the~~Actavis ~~price~~plc, ~~that~~Bank ~~would~~of beAmerica, ~~received~~N.A., as Administrative Agent and a syndicate of banks participating as lenders entered into a new senior unsecured term loan credit facility (the “New Term Loans”) pursuant to ~~sell~~which anthe ~~asset~~lenders orparty ~~paid~~to the agreement provide loans, to ~~transfer~~Warner Chilcott Corporation, a ~~liability~~Delaware corporation (anthe ~~exit~~“US ~~price~~Borrower”), inWC anLuxco ~~orderly~~S.à ~~transaction~~r.l., ~~between~~a ~~market~~private ~~participants.~~limited ~~Fair~~liability ~~values~~company ~~determined~~(société ~~based~~à onresponsabilité ~~Level 1~~limitée), ~~inputs~~incorporated ~~utilize~~under ~~quoted~~the ~~prices~~laws of the Grand-Duchy of Luxembourg (~~unadjusted~~the “Luxembourg Borrower”), inand ~~active~~Warner Chilcott ~~markets~~Company, ~~for~~LLC, ~~identical~~a ~~assets~~limited orliability ~~liabilities.~~company ~~Fair~~organized ~~values~~under ~~determined~~the ~~based~~laws onof ~~Level 2~~the ~~inputs utilize~~Commonwealth ~~observable~~of ~~quoted~~Puerto ~~prices~~Rico ~~for~~(the ~~similar~~“Puerto ~~assets~~Rico Borrower” and, ~~liabilities~~together inwith ~~active~~the ~~markets~~US Borrower and ~~observable~~the ~~quoted~~Luxembourg ~~prices~~Borrower, ~~for~~the ~~identical~~“WC orBorrowers”) ~~similar~~in ~~assets~~an aggregate ~~and~~amount ~~liabilities~~of in$2.0 ~~markets~~billion, comprised of (i) a $1.0 billion tranche that ~~are~~will ~~not~~mature ~~very~~on ~~active~~October 1, 2016 (the “Three Year Tranche”) and (ii) a $1.0 ~~Fair~~billion ~~values~~tranche ~~determined~~that ~~based~~will mature on ~~Level~~October ~~3 inputs~~1, ~~utilize~~2018 ~~unobservable~~(the “Five ~~inputs~~Year ~~and~~Tranche”). ~~include~~The ~~valuations~~proceeds of ~~assets~~borrowings orunder ~~liabilities~~the ~~for~~New ~~which~~Term ~~there~~Loans iswere ~~little~~used to finance, ifin ~~any~~part, ~~market~~the ~~activity.~~repayment Ain ~~financial~~full ~~asset~~of orall ~~liability~~amounts outstanding under Warner Chilcott’s ~~classification~~then-existing ~~within~~Credit ~~the~~Agreement, ~~above~~dated ~~hierarchy~~as isof March 17, ~~determined~~2011, ~~based~~as amended by Amendment No. 1 on August 20, 2012, among the ~~lowest level~~WC ~~input~~Borrowers, ~~that~~Bank isof ~~significant~~America, toas ~~the~~administrative ~~fair~~agent ~~value~~and ~~measurement~~a syndicate of banks participating as lenders.

~~Assets~~- ~~and~~23 ~~liabilities~~- ~~measured at fair value on a recurring basis as at June 30, 2013 and December 31, 2012 consisted of the following (in millions):~~

	Fair Value Measurements as at June 30, 2013 Using:
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	8.0	$	8.0	$	—	$	—
Foreign exchange forward contracts		0.7				0.7
Total assets		8.7		8.0		0.7		—
Liabilities:
Contingent consideration		220.5		14.6		—		205.9
Total liabilities	$	220.5	$	14.6	$	—	$	205.9

	Fair Value Measurements as at December 31, 2012 Using:
	Total		Level 1		Level 2		Level 3
Assets
Marketable securities	$	9.0	$	9.0	$	—	$	—
Total assets		9.0		9.0		—		—
Liabilities:
Contingent consideration		363.1		—		—		363.1
Total liabilities	$	363.1	$	—	$	—	$	363.1

Borrowings under the New Term Loan Agreement bear interest at the applicable WC Borrower’s choice of a per annum rate equal to either (i) a base rate plus an applicable margin per annum varying from (x) 0.00% per annum to 0.75% per annum under the Three Year Tranche and (y) 0.125% per annum to 0.875% per annum under the Five Year Tranche, depending on the Debt Rating or (b) a Eurodollar rate, plus an applicable margin varying from (x) 1.00% per annum to 1.75% per annum under the Three Year Tranche and (y) 1.125% per annum to 1.875% per annum under the Five Year Tranche, depending on the Debt Rating.

~~Marketable~~The ~~securities~~outstanding ~~consist~~principal amount of ~~available-for-sale~~loans ~~investments~~under inthe Three ~~U.S. Treasury~~Year ~~and~~Tranche ~~agency securities~~is not subject to quarterly amortization and ~~publicly~~shall ~~traded~~be ~~equity~~payable ~~securities~~in ~~for~~full ~~which~~on ~~market~~the ~~prices~~three ~~are~~year ~~readily~~anniversary ~~available~~of the Closing Date. ~~Unrealized~~The ~~gains~~outstanding orprincipal ~~losses~~amount onof ~~marketable~~loans ~~securities~~under ~~are~~the ~~recorded~~Five Year Tranche is payable in ~~accumulated~~equal ~~other~~quarterly ~~comprehensive~~amounts of ~~(loss)~~2.50% per ~~income~~quarter prior to the fifth anniversary of the Closing Date, with the remaining balance payable on the fifth year anniversary of the Closing Date.

The ~~fair~~New ~~value~~Term ~~measurement~~Loan ofAgreement ~~the~~provides ~~contingent~~that ~~consideration~~all ~~obligation~~obligations isthereunder ~~determined~~are ~~using~~jointly ~~Level~~and 1severally ~~inputs~~guaranteed ~~for~~by ~~the~~(i) Parent, ~~Actavis Group earn out~~(ii) each ~~and~~subsidiary ~~Level 3~~of ~~inputs~~Parent ~~for all~~ (other ~~contingent~~than ~~consideration.~~any ~~The~~WC ~~fair~~Borrower) ~~value~~that ofis ~~Level~~a 1primary ~~contingent~~obligor ~~consideration~~or isa ~~based~~guarantor onunder ~~quoted prices of~~ the ~~Company’s stock prices~~7.75% ~~The~~senior ~~fair~~notes ~~value~~due of2018 ~~Level~~issued 3by ~~contingent~~the ~~consideration~~Puerto ~~obligations~~Rico isBorrower ~~based on~~and aWarner ~~probability-weighted~~Chilcott ~~income~~Finance ~~approach.~~LLC ~~The~~and ~~measurement~~(iii) any issubsidiary ~~based~~(other ~~upon~~than ~~unobservable~~any ~~inputs~~WC Borrower) ~~supported~~that bybecomes ~~little~~a orguarantor noof ~~market~~third ~~activity~~party ~~based~~indebtedness ~~on our own assumptions. Changes in the fair value~~ of ~~the contingent consideration obligations are recorded as~~ a ~~component~~WC ofBorrower ~~operating income~~ in ~~our~~an ~~consolidated~~aggregate ~~statement~~principal ofamount ~~operations.~~exceeding ~~Interest accretion of~~ $1200.0 million ~~and~~(unless, ~~$1.4~~in ~~million for~~ the ~~three~~case ~~and~~of ~~six~~a ~~month~~foreign ~~period ended June 30~~subsidiary, ~~2013~~such ~~and~~guarantee ~~$2.3~~would ~~million~~give ~~and~~rise ~~$5.8~~to ~~million~~adverse ~~for~~tax ~~the three and six~~consequences ~~month~~as ~~period~~reasonably ~~ended~~determined ~~June 30,~~by ~~2012, respectively, were included within interest expense in the accompanying condensed consolidated statements of operations~~Parent).

-The 23New -Term Loan Agreement contains representations and warranties, financial reporting covenants and other affirmative covenants, negative covenants, a financial covenant and events of default that are substantially similar to those in the Amended and Restated Credit Facilities.

~~Table~~Fair Value of ~~Contents~~Debt Instruments

~~The~~As of ~~table~~September 30, ~~below~~2013, ~~provides~~the afair ~~summary~~value of our Senior Notes was $112.2 million less than the carrying value. Generally changes in market interest rates affect the fair value of ~~all~~fixed-rate ~~financial~~debt, ~~assets~~but ~~and~~do not impact earnings or cash flows. ~~liabilities~~Accordingly, ~~measured~~we atbelieve the effect, if any, of reasonably possible near-term changes in the fair value onof aour ~~recurring~~debt ~~basis~~would ~~using~~not ~~significant~~be ~~unobservable~~material ~~inputs~~on ~~(Level 3)~~our ~~for~~financial ~~the~~condition, ~~six~~results ~~months~~of ~~ended June 30~~operations, ~~2013~~comprehensive ~~and~~income ~~2012~~or ~~(in~~cash ~~millions):~~flows.

~~Six~~NOTE ~~Months~~7 ~~Ended~~– ~~June 30,~~INCOME ~~2013~~TAXES

	Balance atDecember 31,2012		Nettransfers into (out of)Level 3			Purchasesandsettlements,net		Net accretionand fair valueadjustments		Foreigncurrencytranslation			Balance atJune 30,2013
Liabilities:
Contingent consideration obligations	$	363.1	($	335.8	)	$	179.0	$	1.4	($	1.8	)	$	205.9

The Company’s effective tax rate for the nine months ended September 30, 2013 was (22.6%) compared to 45.8% for the nine months ended September 30, 2012. The effective tax rate for the nine months ended September 30, 2013 was impacted by certain non-deductible pre-tax expenses including a goodwill impairment charge of $647.5 million and a charge for consideration due to the former Actavis Group stakeholders of $150.3 million. This was partially offset by non-taxable pre-tax income of $15.0 million related to the Arrow acquisition. The effective tax rate for the nine months ended September 30, 2012 was impacted by the reversal of deferred tax liabilities relating to the Ascent acquisition and the settlement of an IRS examination, partially offset by a non-deductible loss from foreign exchange derivatives. The Company’s effective tax rate is also negatively impacted by losses in certain foreign jurisdictions for which no tax benefit is provided and the amortization of intangible assets being tax benefited at a lower rate than the U.S. federal tax rate.

~~Six~~The ~~Months~~Company ~~Ended~~conducts ~~June 30~~business globally and, ~~2012~~as a result, it files federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are the probable outcomes, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the condensed consolidated financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities,

	Balance atDecember 31,2011		Nettransfers into (out of)Level 3		Purchasesandsettlements,net			Net accretionand fair valueadjustments			Foreigncurrencytranslation			Balance atJune 30,2012
Liabilities:
Contingent consideration obligations	$	181.6		—		(115.3	)		(15.5	)		(0.8	)	$	50.0

- 24 -

~~NOTE 11 –~~ identification ~~BUSINESS~~of ~~RESTRUCTURING~~new ~~CHARGES~~issues and issuance of new legislation, regulations or case law. Management believes that adequate amounts of tax and related penalty and interest have been provided for any adjustments that may result from these uncertain tax positions.

~~During~~With few exceptions, the ~~six~~Company ~~month~~is ~~period~~no oflonger ~~June 30~~subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2008. In the first quarter of 2013, ~~activity~~the ~~related~~Company toresolved ~~our~~the 2007-2009 examination for Arrow’s U.S. business, ~~restructuring~~resulting ~~and~~in ~~facility~~a reduction of the uncertain tax positions by $3.9 ~~rationalization~~million ~~activities~~with ~~primarily~~no ~~related~~impact toon the ~~cost~~effective ~~optimization~~tax ~~initiatives~~rate. inFor ~~conjunction~~the ~~with~~Company’s 2008-2009 tax years, the ~~acquisition~~IRS has agreed on all issues except the timing of the deductibility of certain litigation costs. The IRS is examining the 2009-2011 tax returns for Actavis’ ~~Group~~pre-acquisition ~~and~~U.S. ~~additional~~business. ~~steps~~Additionally, tothe ~~improve~~IRS ~~our~~has ~~operating~~begun ~~cost~~the ~~structure~~examination ~~and~~of ~~achieve~~the ~~operating~~Company’s ~~excellence~~2010-2011 ~~and~~tax ~~efficiencies~~years in the second quarter of 2013. While it is often difficult to predict the final outcome or the timing of ~~through~~resolution ~~our~~of ~~Global~~any ~~Supply~~particular ~~Chain~~uncertain ~~Initiative~~tax ~~(“GSCI”)~~position, asthe ~~follows~~Company ~~(in~~has ~~millions):~~accrued for amounts it believes are the likely outcomes.

	AccrualBalance atDecember 31,2012		Chargedto Expense		CashPayments			Non-cashAdjustments			AccrualBalance atJune 30,2013
Cost of sales
Severance and retention	$	14.9	$	8.2	$	(0.8	)	$	0.9		$	23.2
Product transfer costs		0.5		5.6		(5.6	)		(0.2	)		0.3
Facility decommission costs		7.3		0.1		(1.5	)		—			5.9
Accelerated depreciation		—		13.6		—			(13.6	)		—
		22.7		27.5		(7.9	)		(12.9	)		29.4
Operating expenses
Research and development		3.4		2.8		(1.4	)		(1.1	)		3.7
Accelerated depreciation R & D		—		1.8		—			(1.8	)		—
Selling, general and administrative		39.0		6.8		(22.7	)		(0.7	)		22.4
Accelerated depreciation SG&A		—		2.2		—			(2.2	)
		42.4		13.6		(24.1	)		(5.8	)		26.1
Total	$	65.1	$	41.1	$	(32.0	)	$	(18.7	)	$	55.5

NOTE 8 – STOCKHOLDERS’ EQUITY

-A 24summary -of the changes in stockholders’ equity for the nine months ended September 30, 2013 consisted of the following (in millions):


Stockholders’ equity, December 31, 2012	$	3,833.8
Common stock issued in conjunction with Actavis Group acquisition		486.3
Common stock issued under employer plans		44.0
Increase in additional paid-in-capital for share-based compensation plans		74.7
Net (loss) attributable to common shareholders		(602.0	)
Other comprehensive income		6.7
Excess tax benefit from employee stock plans		69.2
Repurchase of common stock		(165.4	)
Acquisition of noncontrolling interests		(4.3	)

Stockholders’ equity, September 31, 2013	$	3,743.0

~~Product~~NOTE ~~transfer~~9 ~~costs~~– ~~consist~~DERIVATIVE ofINSTRUMENTS ~~documentation,~~AND ~~testing~~HEDGING ~~and~~ACTIVITIES shipping costs to transfer product to other facilities. Operating expenses include severance, retention and accelerated depreciation. Retention is expensed over the service period of employees. Activity related to our business restructuring and facility rationalization activities is primarily attributable to our Actavis Pharma segment.

~~During~~The ~~the~~Company’s ~~three~~revenue, earnings, cash flows and ~~six~~fair ~~months~~value ~~ended~~of ~~June 30,~~its ~~2013,~~assets and liabilities can be impacted by ~~the~~fluctuations in foreign exchange risks and interest rates, as applicable. The Company ~~recognized~~manages ~~restructuring~~the ~~charges~~impact of ~~$24.7~~foreign ~~million~~exchange risk and ~~$41.1~~interest ~~million~~rate movements through operational means and through the use of various financial instruments, ~~respectively~~including derivative instruments such as foreign currency contracts.

-Foreign 25Currency - Forward Contracts

~~Table~~As a result of ~~Contents~~the Actavis Group acquisition, the Company’s exposure to foreign exchange fluctuations has increased. The Company has entered into foreign currency forward contracts to mitigate volatility in anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates, primarily associated with non-functional currency denominated revenues and expenses of foreign subsidiaries. The foreign currency forward contracts outstanding at September 30, 2013 have settlement dates within 6 months. These foreign currency forward contracts are not accounted for as hedges and therefore any unrealized gains or losses are recognized in income during the period. The effect of the forward contracts was a loss of $0.5 million and a gain of $0.2 million for the three and nine months ended September 30, 2013, respectively. The forward contracts are classified in the condensed consolidated balance sheet in prepaid expenses and other assets or accounts payable and accrued expenses, as applicable. In 2012, the Company entered into foreign currency exchange options and forward

~~NOTE~~- 1225 –- ~~COMMITMENTS AND CONTINGENCIES~~

~~Actavis~~ contracts ~~and~~to hedge its ~~affiliates~~agreed ~~are~~upon ~~involved~~purchase inof ~~various~~Actavis ~~disputes,~~of ~~governmental~~€4.25 ~~and/or~~billion. ~~regulatory~~The ~~inspections,~~foreign ~~inquires~~currency options had a net premium payable of $156.8 million, ~~investigations~~which was included in accounts payable and accrued ~~proceedings~~expenses at September 30, 2012 and ~~litigation~~subsequently ~~matters~~paid ~~that~~on ~~arise~~October 9, ~~from~~2012. ~~time~~These transactions were entered into to ~~time~~mitigate ~~in the~~exposure ~~ordinary~~resulting ~~course~~from movements of ~~business~~the U.S. ~~The~~dollar ~~process~~against ofthe ~~resolving~~Euro ~~matters~~in ~~through~~connection ~~litigation~~with orthe ~~other~~future ~~means~~purchase obligation. isSince ~~inherently~~these ~~uncertain~~derivatives ~~and~~were ithedges ison ~~possible~~foreign ~~that~~currency anrisk ~~unfavorable~~for ~~resolution~~a ofbusiness ~~these~~combination ~~matters~~denominated ~~will~~in ~~adversely~~a ~~affect~~foreign currency, the ~~Company,~~change ~~its~~in ~~results~~the value of ~~operations,~~ ~~financial~~the ~~condition~~derivatives ~~and~~was ~~cash~~recognized ~~flows~~in the statement of operations. The ~~Company’s~~impact ~~general~~of ~~practice~~the foreign iscurrency tooptions ~~expense~~and ~~legal~~forwards ~~fees~~resulted asin ~~services~~a ~~are~~gain ~~rendered~~(loss) being reflected in ~~connection~~other ~~with~~income ~~legal~~and ~~matters,~~expense of $52.7 million and to$(90.0) ~~accrue~~million for ~~liabilities~~the ~~when~~three ~~losses~~and ~~are~~nine ~~probable~~months ~~and~~ended ~~reasonably~~September 30, ~~estimable~~2012, respectively.

WeThe ~~evaluate,~~foreign oncurrency aforward ~~quarterly~~contracts ~~basis,~~to ~~developments~~buy/sell inEuros ~~legal proceedings~~ and ~~other~~US ~~matters~~dollars ~~that~~with ~~could cause an increase or decrease in~~ the ~~amount~~foreign ofcurrencies ~~the~~noted ~~liability~~below ~~that~~at ~~has been accrued previously. At June~~September 30, 2013~~, the Company’s consolidated balance sheet includes accrued loss contingencies of $227.7 million. This amount includes contingent losses associated~~ ~~with~~were ~~the drug pricing litigation discussed below,~~ as ~~well~~follows: ~~as additional reserves for potential or known contingent losses.~~

Our legal proceedings range from cases brought by a single plaintiff to mass tort actions and class actions with thousands of putative class members. These legal proceedings, as well as other matters, involve various aspects of our business and a variety of claims (including, but not limited to, qui tam actions, antitrust, product liability, breach of contract, securities, patent infringement and trade practices), some of which present novel factual allegations and/or unique legal theories. In addition, a number of the matters pending against us are at very early stages of the legal process (which in complex proceedings of the sort faced by us often extend for several years). As a result, some matters have not yet progressed sufficiently through discovery and/or development of important factual information and legal issues to enable us to estimate a range of possible loss. In those proceedings in which plaintiffs do request publicly quantified amounts of relief, we do not believe that the quantified amounts are meaningful because they are merely stated jurisdictional limits, exaggerated and/or unsupported by the evidence or applicable burdens of proof.


	Notional Amount
Foreign Currency	Buy		Sell
Czech Republic Koruna	€	1.2	€	—
New Zealand Dollar				0.2
Polish Zloty		3.3		—
Romanian Leu		—		2.0
Swedish Krona		4.9		—

	€	9.4	€	2.2


	Notional Amount
Foreign Currency	Buy		Sell
New Zealand Dollar	$	—	$	2.2

	$	—	$	2.2

~~Cipro®~~NOTE ~~Litigation. Beginning~~10 in– ~~July 2000,~~FAIR aVALUE ~~number~~MEASUREMENT of suits were filed against the Company, The Rugby Group, Inc. (“Rugby”) and other company affiliates in various state and federal courts alleging claims under various federal and state competition and consumer protection laws. Several plaintiffs have filed amended complaints and motions seeking class certification. Approximately 42 were cases filed against the Company, Rugby and other Company entities. Many of these actions have been dismissed. Actions remain pending in various state courts, including California, Kansas, Tennessee, and Florida. The actions generally allege that the defendants engaged in unlawful, anticompetitive conduct in connection with alleged agreements, entered into prior to the Company’s acquisition of Rugby from Sanofi Aventis (“Sanofi”), related to the development, manufacture and sale of the drug substance ciprofloxacin hydrochloride, the generic version of Bayer’s brand drug, Cipro ®. The actions generally seek declaratory judgment, damages, injunctive relief, restitution and other relief on behalf of certain purported classes of individuals and other entities. In the action pending in Kansas, the court has administratively terminated the matter. There has been no action in the cases pending in Florida and Tennessee since 2003. In the action pending in the California Superior Court for the County of San Diego ( In re: Cipro Cases I & II, JCCP Proceeding Nos. 4154 & 4220 ), on July 21, 2004, the California Court of Appeal ruled that the majority of the plaintiffs would be permitted to pursue their claims as a class. On August 31, 2009, the California Superior Court granted defendants’ motion for summary judgment, and final judgment was entered on September 24, 2009. On October 31, 2011, the California Court of Appeal affirmed the Superior Court’s judgment. On December 13, 2011, the plaintiffs filed a petition for review in the California Supreme Court. On February 15, 2012, the California Supreme Court granted review. On September 12, 2012, the California Supreme Court entered a stay of all proceedings in the case pending a decision from the United States Supreme Court in an unrelated case that raises similar legal issues. The California Supreme Court lifted the stay on June 26, 2013 following the ruling by the United States Supreme Court. Plaintiffs and Bayer recently announced that they have reached an agreement to settle the claims pending against Bayer. Plaintiffs are continuing to pursue claims against the generic defendants, including the Company and Rugby. The remaining parties now will resume briefing in this appeal.

InFair ~~addition~~value tois the ~~pending~~price that would be received to sell an asset or paid to transfer a liability (an exit price) in an ~~actions,~~orderly ~~the~~transaction ~~Company~~between ~~understands~~market ~~that~~participants. ~~various~~Fair ~~state~~values ~~and~~determined ~~federal~~based ~~agencies~~on ~~are~~Level 1 ~~investigating~~inputs ~~the~~utilize ~~allegations~~quoted ~~made~~prices (unadjusted) in ~~these~~active ~~actions~~markets for identical assets or liabilities. ~~Sanofi~~Fair ~~has~~values ~~agreed~~determined tobased ~~defend~~on Level 2 inputs utilize observable quoted prices for similar assets and ~~indemnify~~liabilities ~~the~~in ~~Company~~active markets and ~~its~~observable ~~affiliates~~quoted inprices ~~connection~~for ~~with~~identical ~~the~~or ~~claims~~similar assets and ~~investigations~~ ~~arising~~liabilities ~~from~~in ~~the~~markets ~~conduct~~that ~~and~~are ~~agreements~~not ~~allegedly~~very ~~undertaken~~active. byFair ~~Rugby~~values determined based on Level 3 inputs utilize unobservable inputs and ~~its~~include ~~affiliates~~valuations ~~prior~~of toassets ~~the~~or ~~Company~~liabilities for which there is little, if any, market activity. A financial asset or liability’s ~~acquisition~~classification ofwithin ~~Rugby,~~the ~~and~~above hierarchy is ~~currently~~determined ~~controlling~~based on the ~~defense~~lowest level ofinput ~~these~~that ~~actions~~is significant to the fair value measurement.

- 26 -

~~Governmental~~Assets ~~Reimbursement Investigations~~ and ~~Drug~~liabilities ~~Pricing~~measured ~~Litigation. In November 1999,~~at ~~Schein~~fair ~~Pharmaceutical,~~value ~~Inc.,~~on ~~now known as Actavis Pharma, Inc. was informed by the U.S. Department of Justice that it, along with numerous other pharmaceutical companies, is~~ a ~~defendant~~recurring inbasis aas qui tam action brought in 1995 under the U.S. False Claims Act currently pending in the U.S. District Court for the Southern District of Florida (the “Florida Qui Tam Action”). The Company has not been served in the qui tam action. A qui tam action is a civil lawsuit brought by an individual or a company (the “qui tam relator”) for an alleged violation of a federal statute, in which the U.S. Department of Justice has the right to intervene and take over the prosecution of the lawsuit at ~~its~~ ~~option. Pursuant to applicable federal law~~September 30, ~~the qui tam action is under seal as to Actavis, Inc. The Company believes that the qui tam action relates to whether allegedly improper price reporting by pharmaceutical manufacturers led~~2013 ~~to increased payments by Medicare~~ and~~/or~~ ~~Medicaid. The Company believes that the Florida Qui Tam Action against the Company was dismissed without prejudice while still sealed as to the Company. Subsequently~~December 31, ~~the~~2012 ~~Company~~consisted ~~also received and responded to notices or subpoenas from the Attorneys General~~ of various states, including Florida, Nevada, New York, California and Texas, relating to pharmaceutical pricing issues and whether allegedly improper actions by pharmaceutical manufacturers led to excessive payments by Medicare and/or Medicaid. On June 26, 2003, the ~~Company~~following ~~received a request for records and information from the U.S. House Committee on Energy and Commerce~~ (in ~~connection~~millions): with that committee’s investigation into pharmaceutical reimbursements and rebates under Medicaid. The Company produced documents in response to the request. Other state and federal inquiries regarding pricing and reimbursement issues are anticipated.

The Company and certain of its subsidiaries also are named as defendants in various lawsuits filed by numerous states and qui tam relators, including Wisconsin, Kentucky, Illinois, Mississippi, Missouri, South Carolina, Utah, Kansas and Louisiana captioned as follows: State of Wisconsin v. Abbott Laboratories, et al., Case No. 04-cv-1709, Wisconsin Circuit Court for Dane County; State of Wisconsin, ex rel., et al. v. Actavis Mid Atlantic LLC, et al., Case No. 11-cv-5544, Wisconsin Circuit Court for Dane County; Commonwealth of Kentucky v. Alpharma, Inc., et al., Case Number 04-CI-1487, Kentucky Circuit Court for Franklin County; State of Illinois v. Abbott Laboratories, Inc. et al., Civil Action No. 05-CH-02474, Illinois Circuit Court for Cook County; State of Mississippi v. Abbott Laboratories, Inc. et al., Civil Action No. G2005-2021 S/2, Mississippi Chancery Court of Hinds County; State of Missouri ex rel. Jeremiah W. (Jay) Nixon v. Mylan Laboratories, et al, Case No. 054-2486, Missouri Circuit Court of St. Louis; State of South Carolina and Henry D. McMaster v. Watson Pharmaceuticals (New Jersey), Inc., In the Court of Common Pleas for the Fifth Judicial Circuit, State of South Carolina, County of Richland, C.A. No. 2006-CP-40-7152; State of South Carolina and Henry D. McMaster v. Watson Pharmaceuticals (New Jersey), Inc., In the Court of Common Pleas for the Fifth Judicial Circuit, State of South Carolina, County of Richland, C.A. No. 2006-CP-40-7155; State of Utah v. Actavis U.S., Inc., et al., In the Third Judicial District Court of Salt Lake County, Civil No. 07-0913719; State of Kansas ex rel. Steve Six v. Watson Pharmaceuticals, Inc. and Watson Pharma, Inc., Case Number: 08CV2228, District Court of Wyandotte County, Kansas, Civil Court Department; and State of Louisiana V. Abbott Laboratories, Inc., et al., Case No. 596144, Parish of East Baton Rouge, 19 th Judicial District.


	Fair Value Measurements as at September 30, 2013 Using:
	Total		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	5.5	$	5.5	$	—	$	—
Foreign exchange forward contracts		0.2		—		0.2		—

Total assets		5.7		5.5		0.2		—

Liabilities:
Contingent consideration		217.7		—		—		217.7

Total liabilities	$	217.7	$	—	$	—	$	217.7


	Fair Value Measurements as at December 31, 2012 Using:
	Total		Level 1		Level 2		Level 3
Assets
Marketable securities	$	9.0	$	9.0	$	—	$	—

Total assets		9.0		9.0		—		—

Liabilities:
Contingent consideration		363.1		—		—		363.1

Total liabilities	$	363.1	$	—	$	—	$	363.1

InMarketable ~~2011,~~securities ~~the~~consist ~~Company~~of ~~settled~~available-for-sale ~~certain~~investments ~~claims made against it by a relator~~ in ~~a qui tam action brought against the Company on behalf of the United States~~U.S. ~~The~~Treasury ~~settlement~~and ofagency ~~that qui tam~~securities action resolved all claims on behalf of the United States asserted in that action except for claims relating to the federal share of Medicaid payments made by the States of Alabama, Alaska, Kentucky, Idaho, Illinois, South Carolina and ~~Wisconsin. The~~publicly ~~Company~~traded ~~subsequently~~equity ~~settled~~securities all claims, including the claims on behalf of the United States, brought by Alabama. The case against the Company on behalf of Kentucky was tried in November 2011. The jury reached a verdict in the Company’s favor on each of Kentucky’s claims against the Company. Kentucky has filed post-trial motions for ~~relief~~which ~~from~~market ~~the~~prices ~~jury~~are ~~verdict.~~readily ~~The case against the Company on behalf of Mississippi was tried from November 2012 through April 2013~~available. ~~The~~Unrealized ~~Company is~~gains ~~awaiting~~or alosses ~~decision in that case. The case against the Company~~ on ~~behalf~~marketable ofsecurities ~~Louisiana~~are isrecorded ~~scheduled for trial~~ in ~~August~~accumulated ~~2013.~~other ~~The~~comprehensive ~~case~~(loss) ~~against the Company on behalf of Missouri is scheduled for trial in November 2013~~income. ~~The case against the Company on behalf of Kansas is scheduled for trial in January 2014.~~

AtThe ~~June 30,~~fair ~~2013,~~value ~~the~~measurement ~~Company’s~~of ~~consolidated balance sheets included accrued expenses in connection with~~ the ~~remaining~~contingent ~~drug~~consideration ~~pricing~~obligation ~~actions~~is ofdetermined ~~$150.4~~using ~~million.~~Level ~~With~~1 ~~regard~~inputs tofor the ~~remaining~~Actavis ~~drug~~Group ~~pricing~~earn ~~actions,~~out ~~the Company believes that it has meritorious defenses~~ and Level 3 ~~intends~~inputs tofor ~~vigorously~~all ~~defend itself~~other incontingent ~~those actions~~consideration. The ~~Company~~fair ~~continually~~value ~~monitors the status~~ of ~~these~~Level ~~actions~~1 ~~and~~contingent ~~may~~consideration ~~settle~~is orbased ~~otherwise~~on ~~resolve~~quoted ~~some~~prices ~~or all~~ of ~~these matters on terms that~~ the Company’s ~~deems~~stock ~~to be in its best interests~~prices. ~~However,~~The ~~the~~fair ~~Company~~value ~~can~~of ~~give~~Level ~~no assurance~~3 ~~that~~contingent itconsideration ~~will~~obligations beis ~~able~~based toon ~~settle~~a probability-weighted ~~the~~income ~~remaining~~approach. ~~actions~~The onmeasurement ~~terms~~is itbased ~~deems~~upon ~~reasonable,~~unobservable orinputs ~~that~~supported ~~such~~by ~~settlements~~little or ~~adverse~~no ~~judgments~~market inactivity ~~the~~based ~~remaining~~on ~~actions,~~our ifown ~~entered,~~assumptions. ~~will~~Changes ~~not~~in ~~exceed~~ the ~~amounts~~fair value of the ~~liability~~contingent ~~reserves.~~consideration ~~Additional actions~~obligations ~~by other states, cities and/or counties~~ are ~~anticipated.~~recorded ~~These~~as ~~actions and/or the actions described above, if successful, could adversely affect the Company and could have~~ a component ~~material~~of ~~adverse~~operating ~~effect~~income onin ~~the~~our ~~Company’s~~consolidated ~~business,~~statement ~~results~~ of ~~operations,~~ ~~financial condition and cash flows~~operations.

-The 27table -below provides a summary of the changes in fair value of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013 and 2012 (in millions):


Nine Months Ended September 30, 2013
	Balance at December 31, 2012		Net transfers in to (out of) Level 3			Purchases and settlements, net		Net accretion and fair value adjustments		Foreign currency translation		Balance at September 30, 2013
Liabilities:
Contingent consideration obligations	$	363.1		(335.8	)		178.0		12.4		—	$	217.7

Medicaid Drug Reimbursement Litigation. In December 2009, the Company learned that numerous pharmaceutical companies, including certain subsidiaries of the Company, have been named as defendants in a qui tam action pending in the United States District Court for the District of Massachusetts (United States of America ex rel. Constance A. Conrad v. Abbott Loboratories, Inc. et. al., USDC Case No. 02-CV-11738-NG). The seventh amended complaint, which was served on certain of the Company’s subsidiaries in December 2009, alleges that the defendants falsely reported to the United States that certain pharmaceutical products were eligible for Medicaid reimbursement and thereby allegedly caused false claims for payment to be made through the Medicaid program. In July 2011, the plaintiff served a tenth amended complaint that unseals the action in its entirety and continues to allege the previously asserted claims against certain subsidiaries of the Company. The Company’s subsidiaries named in the action together with all other named defendants filed a Joint Motion to Dismiss the Tenth Amended Complaint on December 9, 2011. On February 25, 2013, the court granted the motion to dismiss as to all defendants. The plaintiff may appeal. Additional actions alleging similar claims could be asserted. The Company believes that it has meritorious defenses to the claims and intends to vigorously defend itself against such allegations. However, this action or similar actions, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.


Nine Months Ended September 30, 2012
	Balance at December 31, 2011		Net transfers in to (out of) Level 3		Purchases and settlements, net			Net accretion and fair value adjustments			Foreign currency translation			Balance at September 30, 2012
Liabilities:
Contingent consideration obligations	$	181.6		—		(137.1	)		(14.7	)		(0.7	)	$	29.1

~~FDA~~- ~~Matters. In~~27 May 2002, the Company’s subsidiary reached an agreement with the FDA on the terms of a consent decree with respect to its Corona, California manufacturing facility. The court approved the consent decree on May 13, 2002 (United States of America v. Watson Laboratories, Inc., et. al., United States District Court for the Central District of California, EDCV-~~02-412-VAP).~~ The consent decree applies only to the Company’s Corona, California facility and not other manufacturing sites. The decree requires that the Corona, California facility complies with the FDA’s current Good Manufacturing Practices (“cGMP”) regulations.

~~Androgel®Antitrust~~During ~~Litigation. On January 29, 2009,~~ the ~~U.S.~~nine ~~Federal~~months ~~Trade~~ended ~~Commission~~September 30, ~~and~~2013, the ~~State~~Company oftransferred ~~California~~to ~~filed~~level a1 ~~lawsuit in~~ the ~~United States District~~ ~~Court~~contingent obligation for the ~~Central~~Actavis ~~District~~Group ofearn-out ~~California~~ (~~Federal Trade Commission, et~~$335.8 almillion). v.The ~~Watson Pharmaceuticals, Inc., et. al., USDC Case No. CV 09-00598) alleging that the~~ Company’s ~~September 2006~~recorded ~~patent~~additional ~~lawsuit~~contingent ~~settlement~~consideration ~~with Solvay~~of ~~Pharmaceuticals, Inc~~$43.,4 ~~related~~million toand ~~AndroGel®~~ $146.1% ~~(testosterone~~million ~~gel)~~in ~~CIII~~connection iswith ~~unlawful.~~the ~~The~~Uteron ~~complaint generally~~acquisition ~~alleged~~and ~~that~~ the ~~Company~~license ~~improperly~~agreement ~~delayed~~entered ~~its~~into ~~launch~~with Medicines360, ofrespectively, aoffset ~~generic~~in ~~version~~part ofby ~~Androgel~~contingent ®payment inmade ~~exchange for Solvay’s agreement~~ to ~~permit~~ the ~~Company~~Arrow toGroup ~~co-promote~~selling ~~Androgel~~shareholders ®based ~~for~~on ~~consideration in excess of~~ the ~~fair~~ ~~value~~after-tax ofgross ~~the~~profits ~~services~~or ~~provided~~sales ~~by the Company, in violation~~ of ~~federal and state antitrust and consumer protection laws~~atorvastatin. ~~The~~During ~~complaint~~the ~~sought~~nine ~~equitable~~months ~~relief~~ended ~~and civil penalties. On February~~September ~~2 and 3~~30, ~~2009~~2012, ~~three~~the ~~separate~~Company ~~lawsuits alleging~~recorded ~~similar~~contingent ~~claims~~payments ~~were~~made ~~filed~~to in the ~~United~~Arrow ~~States~~Group ~~District~~selling ~~Court~~shareholders ~~for~~based on the ~~Central~~after-tax ~~District~~gross ofprofits ~~California~~on bysales ~~various private plaintiffs purporting to represent certain classes~~ of ~~similarly~~atorvastatin ~~situated~~within ~~claimants~~the ~~(Meijer, Inc~~U.~~, et~~S. ~~al.,~~of v$126.0 ~~Unimed Pharmaceuticals, Inc~~million., ~~et.~~For ~~al.,~~addition ~~USDC~~information ~~Case~~on ~~No. EDCV~~the ~~09-0215);~~Medicines360 ~~(Rochester~~and ~~Drug~~Uteron ~~Co-Operative~~transactions, ~~Inc.~~refer v.to “Note ~~Unimed~~2 ~~Pharmaceuticals~~– ~~Inc.,~~Acquisitions” ~~et. al., Case~~

-NOTE 11 – 28BUSINESS - RESTRUCTURING CHARGES

~~Table~~During the nine month period ended on September 30, 2013, activity related to our business restructuring and facility rationalization activities primarily related to the cost optimization initiatives in conjunction with the acquisition of ~~Contents~~Actavis Group and additional steps to improve our operating cost structure and achieve operating excellence and efficiencies through our Global Supply Chain Initiative (“GSCI”) as follows (in millions):

No. EDCV 09-0226); (Louisiana Wholesale Drug Co. Inc. v. Unimed Pharmaceuticals Inc., et. al, Case No. EDCV 09-0228). On April 8, 2009, the Court transferred the government and private cases to the United States District Court for the Northern District of Georgia. On April 21, 2009 the State of California voluntarily dismissed its lawsuit against the Company without prejudice. The Federal Trade Commission and the private plaintiffs in the Northern District of Georgia filed amended complaints on May 28, 2009. The private plaintiffs amended their complaints to include allegations concerning conduct before the U.S. Patent and Trademark Office, conduct in connection with the listing of Solvay’s patent in the Food and Drug Administration’s “Orange Book,” and sham litigation. Additional actions alleging similar claims have been filed in various courts by other private plaintiffs purporting to represent certain classes of similarly situated direct or indirect purchasers of Androgel ® (Stephen L. LaFrance Pharm., Inc. d/b/a SAJ Dist. v. Unimed Pharms., Inc., et al., D. NJ Civ. No. 09-1507); (Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund v. Unimed Pharms. Inc., et al., D. NJ Civ. No. 09-1856); (Scurto v. Unimed Pharms., Inc., et al., D. NJ Civ. No. 09-1900); (United Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund v. Unimed Pharms., Inc., et al., D. MN Civ. No. 09-1168); (Rite Aid Corp. et al. v. Unimed Pharms., Inc. et al., M.D. PA Civ. No. 09-1153); (Walgreen Co., et al. v. Unimed Pharms., LLC, et al., MD. PA Civ. No. 09-1240); (Supervalu, Inc. v. Unimed Pharms., LLC, et al, ND. GA Civ. No. 10-1024); (LeGrand v. Unimed Pharms., Inc., et al., ND. GA Civ. No. 10-2883); (Jabo’s Pharmacy Inc. v. Solvay Pharmaceuticals, Inc., et al., Cocke County, TN Circuit Court Case No. 31,837). On April 20, 2009, the Company was dismissed without prejudice from the Stephen L. LaFrance action pending in the District of New Jersey. On October 5, 2009, the Judicial Panel on Multidistrict Litigation transferred all actions then pending outside of the United States District Court for the Northern District of Georgia to that district for consolidated pre-trial proceedings (In re: AndroGel® Antitrust Litigation (No. II), MDL Docket No. 2084), and all currently-pending related actions are presently before that court. On February 22, 2010, the judge presiding over all the consolidated litigations related to Androgel® then pending in the United States District Court for the Northern District of Georgia granted the Company’s motions to dismiss the complaints, except the portion of the private plaintiffs’ complaints that include allegations concerning sham litigation. Final judgment in favor of the defendants was entered in the Federal Trade Commission’s action on April 21, 2010. On April 25, 2012, the Court of Appeals affirmed the dismissal. On December 7, 2012, the U.S. Supreme Court granted the FTC’s Petition for a Writ of Certiorari. The hearing on the petition was held on March 25, 2013. On June 17, 2013, the Supreme Court issued a decision, holding that the settlements between brand and generic drug companies which include a payment from the brand company to the generic competitor must be evaluated under a “rule of reason” standard of review. The case will now be sent back to the Court of Appeals. On July 20, 2010, the plaintiff in the Fraternal Order of Police action filed an amended complaint adding allegations concerning conduct before the U.S. Patent and Trademark Office, conduct in connection with the listing of Solvay’s patent in the Food and Drug Administration’s “Orange Book,” and sham litigation similar to the claims raised in the direct purchaser actions. On October 28, 2010, the judge presiding over MDL 2084 entered an order pursuant to which the LeGrand action, filed on September 10, 2010, was consolidated for pretrial purposes with the other indirect purchaser class action as part of MDL 2084 and made subject to the Court’s February 22, 2010 order on the motion to dismiss. In February 2012, the direct and indirect purchaser plaintiffs and the defendants filed cross-motions for summary judgment, and on June 22, 2012, the indirect purchaser plaintiffs, including Fraternal Order of Police, LeGrand and HealthNet, filed a motion for leave to amend and consolidate their complaints. On September 28, 2012, the district court granted summary judgment in favor of the defendants on all outstanding claims. The plaintiffs have appealed.


	Accrual										Accrual
	Balance at										Balance at
	December 31,		Charged		Cash			Non-cash			September 30,
	2012		to Expense		Payments			Adjustments			2013
Cost of sales
Severance and retention	$	14.9	$	10.2	$	(4.0	)	$	0.9		$	22.0
Product transfer costs		0.5		8.2		(7.9	)		(0.8	)		—
Facility decommission costs		7.3		5.8		(7.2	)		—			5.9
Accelerated depreciation		—		21.8		—			(21.8	)		—

		22.7		46.0		(19.1	)		(21.7	)		27.9

Operating expenses
Research and development		3.4		11.7		(3.8	)		(9.6	)		1.7
Accelerated depreciation R & D		—		2.7		—			(2.7	)		—
Selling, general and administrative		39.0		9.6		(30.1	)		(1.3	)		17.2
Accelerated depreciation SG&A		—		3.3		—			(3.3	)

		42.4		27.3		(33.9	)		(16.9	)		18.9

Total	$	65.1	$	73.3	$	(53.0	)	$	(38.6	)	$	46.8

~~The~~Product ~~Company~~transfer ~~believes~~costs ~~that~~consist ~~these~~of ~~actions~~documentation, ~~are~~testing ~~without merit~~ and ~~intends~~shipping costs to ~~defend~~transfer ~~itself~~product ~~vigorously~~to other facilities. ~~However,~~Operating ~~these~~expenses ~~actions~~include severance, ifretention ~~successful, could~~and ~~have~~accelerated adepreciation. ~~material~~Retention ~~adverse~~is ~~effect~~expensed onover the ~~Company’s~~service ~~business,~~period ~~results~~ of ~~operations,~~employees. ~~financial~~Activity ~~condition~~related to our business restructuring and ~~cash~~facility ~~flows~~rationalization activities is primarily attributable to our Actavis Pharma segment.

~~Loestrin~~During ~~24® Antitrust Litigation. On April 5, 2013, two putative class actions were filed in~~ the ~~federal~~three ~~district court (New York Hotel Trades Council & Hotel Assoc. of New York City, Inc. Health Benefits Fund v. Warner Chilcott Pub. Ltd. Co., et al., D.N.J., Civ. No. 13-02178,~~ and ~~United~~nine ~~Food~~months ~~and~~ended ~~Commercial Workers Local 1776~~September ~~& Participating Employers Health and Welfare Fund v. Warner Chilcott (US)~~30, ~~LLC~~2013, ~~et al., E.D.Pa., No. 13-01807) alleging~~ the Company’s ~~2009 patent lawsuit~~recognized ~~settlement~~restructuring ~~with~~charges ~~Warner Chilcott related to Loestrin 24 Fe® (norethindrone acetate/ethinyl estradiol tablets and ferrous fumarate tablets, “Loestrin 24®”) is unlawful. The complaints, both asserted on behalf~~ of ~~putative~~ classes of end-payors, generally allege that the Company and another generic manufacturer improperly delayed launching generic versions of Loestrin 24® in exchange for substantial payments from Warner Chilcott, in violation of federal and state antitrust and consumer protection laws$32.2 ~~The~~million ~~complaints each seek declaratory~~ and ~~injunctive relief and damages~~$73.3 ~~On April 15~~million, 2013, the plaintiff in New York Hotel Trades withdrew its complaint and, on April 16, 2013, refiled it in the federal court for the Eastern District of Pennsylvania (New York Hotel Trades Council & Hotel Assocrespectively. ~~of New York City, Inc. Health~~

-NOTE 2912 - – COMMITMENTS AND CONTINGENCIES

~~Table~~Legal ofMatters ~~Contents~~

~~Benefits~~Actavis ~~Fund~~and v.its ~~Warner~~affiliates ~~Chilcott~~are ~~Public~~involved ~~Ltd.~~in ~~Co.,~~various ~~et al.~~disputes, ~~E.D.Pa.,~~governmental ~~Civ.~~and/or ~~No. 13-02000).~~regulatory ~~Additional complaints have been filed by different plaintiffs seeking to represent the same putative class of end-payors (A.F. of L. – A.G.C. Building Trades Welfare Plan v. Warner Chilcott~~inspections, ~~et al.~~inquires, ~~D.N.J.~~investigations ~~13-02456, Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund v. Warner Chilcott Public Ltd. Co., et~~and ~~al.~~proceedings, ~~E.D.Pa. Civ. No. 13-02014). Electrical Workers 242~~ and ~~294~~litigation ~~Health &~~matters ~~Welfare~~that ~~Fund~~arise v.from ~~Warner~~time ~~Chilcott~~to ~~Public~~time ~~Ltd.~~in ~~Co.,~~the etordinary ~~al.,~~course ~~E.D.Pa.~~of ~~Civ~~business. ~~No. 13-2862~~The ~~and~~process ~~City~~ of ~~Providence~~resolving v.matters ~~Warner~~through ~~Chilcott~~litigation ~~Public~~or ~~Ltd.~~other ~~Co.,~~means ~~et al.,~~is ~~D.R.I.~~inherently ~~Civ.~~uncertain ~~No. 13-307).~~and Init ~~addition~~is topossible ~~the~~that ~~end-payor~~an ~~suits,~~unfavorable ~~two~~resolution ~~lawsuits have been filed on behalf~~ of these amatters ~~class~~will ofadversely ~~direct~~affect ~~payors~~the ~~(American Sales~~ Company, ~~LLC~~its v.results ~~Warner~~of ~~Chilcott Public Ltd.~~operations, ~~Co.~~financial etcondition ~~al., D.R.I. Civ. No. 12-347~~ and ~~Rochester~~cash ~~Drug Co-Operative Inc~~flows., v.The ~~Warner~~Company’s ~~Chilcott~~general ~~(US),~~practice ~~LLC,~~is etto ~~al.,~~expense ~~E.D.Pa.~~legal ~~Civ.~~fees ~~No. 13-133476).~~as Onservices ~~June 18,~~are ~~2013,~~rendered ~~defendants~~in ~~filed~~connection ~~a motion~~ with ~~the~~legal ~~Judicial~~matters, ~~Panel~~and ~~on Multidistrict Litigation~~ to ~~consolidate these~~accrue ~~cases in one federal district court. Defendants’ motion is expected to be heard in late September 2013. Notwithstanding the motion~~ for liabilities ~~consolidation,~~when ~~these~~losses ~~cases~~ are ~~still~~probable ~~in their early stages~~ and ~~discovery~~reasonably ~~has not yet begun on either the class allegations or merits~~estimable. ~~The Company anticipates additional claims or lawsuits based on the same or similar allegations.~~

~~The~~- ~~Company~~28 ~~believes~~- that these actions are without merit and intends to defend itself vigorously. However, these actions, if successful, could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Fentanyl~~We ~~Transdermal~~evaluate, ~~System~~on ~~Litigation. Beginning~~a inquarterly ~~2009~~basis, adevelopments ~~number~~in oflegal ~~product~~proceedings ~~liability suits were filed against the Company~~ and ~~certain Company affiliates, as well as~~ other ~~manufacturers~~matters ~~and~~that ~~distributors~~could cause ofan ~~fentanyl~~increase ~~transdermal system products, for personal injuries~~ or ~~deaths~~decrease ~~allegedly~~in ~~arising out of~~ the ~~use~~amount of the ~~fentanyl~~liability ~~transdermal~~that ~~system~~is ~~products~~accrued. ~~The~~At ~~Company settled~~September ~~the~~30, ~~majority~~2013, ~~of these cases in November 2012. There are approximately 9 cases that remain pending against~~ the Company’s ~~and/or~~consolidated ~~its~~balance ~~affiliates~~sheet inincludes ~~state~~accrued ~~and~~loss ~~federal~~contingencies ~~courts that are not part~~ of ~~the~~$230.3 ~~November~~million. ~~2012~~This ~~settlement,~~amount ~~representing claims~~includes ~~by approximately 21 plaintiffs~~$93.7 ~~Discovery~~million isin ~~ongoing.~~fixed amounts ~~The~~due ~~Company~~in ~~believes~~the itfuture ~~has~~pursuant ~~substantial meritorious defenses~~ to ~~these~~drug ~~cases~~pricing and ~~maintains~~patent ~~product liability insurance against such cases. However,~~ litigation issettlements ~~inherently~~entered ~~uncertain~~into ~~and the~~by ~~Company cannot predict~~ the ~~outcome~~legacy ofActavis ~~this~~Group ~~litigation.~~prior ~~These~~to ~~actions,~~its ifacquisition ~~successful,~~by ~~or if insurance does not provide sufficient coverage against such claims, could adversely affect~~ the Company, ~~and~~contingent ~~could~~losses ~~have~~associated awith ~~material~~the ~~adverse~~drug ~~effect~~pricing onlitigation ~~the Company’s~~discussed ~~business~~below, ~~results~~as well ofas ~~operations,~~additional ~~financial~~reserves ~~condition~~for ~~and~~known ~~cash~~or ~~flows~~contingent losses.

~~Metoclopramide Litigation. Beginning~~Our inlegal ~~2009,~~proceedings arange ~~number~~from ofcases ~~product~~brought ~~liability~~by ~~suits~~a ~~were~~single ~~filed~~plaintiff ~~against~~to ~~the~~mass tort ~~Company~~actions and ~~certain~~class ~~Company~~actions ~~affiliates,~~with ~~including~~thousands ~~legacy~~of ~~Actavis~~putative ~~and~~class ~~Watson~~members. ~~companies~~These legal proceedings, as well as other ~~manufacturers and distributors of metoclopramide~~matters, ~~for~~involve ~~personal~~various ~~injuries~~aspects ~~allegedly~~of ~~arising~~our ~~out~~business ofand ~~the~~a ~~use~~variety of ~~metoclopramide.~~claims ~~Approximately 1~~(including,~~330 cases~~ ~~are~~but ~~pending~~not ~~against~~limited ~~the~~to, ~~Company~~qui ~~and/or~~tam ~~its~~actions, antitrust, ~~affiliates~~product inliability, ~~state~~breach ~~and~~of ~~federal~~contract, ~~courts~~securities, ~~representing~~patent ~~claims~~infringement byand ~~multiple~~trade ~~plaintiffs. These~~practices), ~~cases~~some ~~are~~of ~~generally~~which inpresent ~~their~~novel ~~preliminary~~factual ~~stages~~allegations and/or ~~discovery~~unique islegal ~~ongoing~~theories. ~~The~~In ~~Company believes that~~addition, ~~with~~a ~~respect~~number toof the ~~majority~~matters ofpending ~~the~~against ~~cases~~us ~~against~~are ~~the~~at ~~legacy~~very early ~~Watson~~stages ~~companies,~~of itthe ~~will~~legal beprocess ~~defended~~(which in ~~and~~complex ~~indemnified~~proceedings ~~by Pliva, Inc., an affiliate~~ of ~~Teva Pharmaceutical Industries, Ltd., from whom~~ the ~~Company~~sort ~~purchased~~faced ~~its~~by ~~metoclopramide~~us ~~product~~often ~~line~~extend infor ~~late~~several ~~2008~~years). ~~With~~As ~~respect~~a toresult, ~~the~~some ~~cases~~matters ~~pending~~have ~~against~~not ~~the~~yet ~~legacy~~progressed ~~Actavis~~sufficiently ~~companies,~~through ~~the~~discovery ~~Company~~and/or isdevelopment ~~actively~~of ~~defending~~important ~~them. The~~factual ~~Company~~information ~~believes~~and ~~that~~legal itissues ~~has~~to ~~substantial~~enable ~~meritorious~~us ~~defenses~~ to ~~these~~estimate ~~cases~~a ~~and~~range ~~maintains~~of ~~product~~possible ~~liability insurance against such cases~~loss. ~~However,~~In ~~litigation~~those isproceedings ~~inherently~~in ~~uncertain~~which ~~and~~plaintiffs ~~the~~do ~~Company~~request ~~cannot~~publicly ~~predict~~quantified ~~the~~amounts ~~outcome~~ of ~~this litigation. These actions~~relief, ifwe ~~successful,~~do ornot ifbelieve ~~our~~that ~~indemnification~~the ~~arrangements~~quantified oramounts ~~insurance~~are domeaningful ~~not~~because ~~provide~~they ~~sufficient~~are merely ~~coverage~~stated ~~against~~jurisdictional ~~such claims~~limits, ~~could~~exaggerated ~~adversely affect the Company~~ and/or ~~could~~unsupported ~~have~~by athe ~~material~~evidence ~~adverse~~or ~~effect~~applicable onburdens ~~the Company’s business, results~~ of ~~operations, financial condition and cash flows~~proof.

-Cipro® 30Litigation. Beginning -in July 2000, a number of suits were filed against the Company, The Rugby Group, Inc. (“Rugby”) and other company affiliates in various state and federal courts alleging claims under various federal and state competition and consumer protection laws. Several plaintiffs have filed amended complaints and motions seeking class certification. Approximately 42 were cases filed against the Company, Rugby and other Company entities. Many of these actions have been dismissed. Actions remain pending in various state courts, including California, Kansas, Tennessee, and Florida. The actions generally allege that the defendants engaged in unlawful, anticompetitive conduct in connection with alleged agreements, entered into prior to the Company’s acquisition of Rugby from Sanofi Aventis (“Sanofi”), related to the development, manufacture and sale of the drug substance ciprofloxacin hydrochloride, the generic version of Bayer’s brand drug, Cipro ®. The actions generally seek declaratory judgment, damages, injunctive relief, restitution and other relief on behalf of certain purported classes of individuals and other entities. The action pending in Kansas, which the court previously terminated administratively, has been reopened. There has been no action in the cases pending in Florida and Tennessee since 2003. In the action pending in the California Superior Court for the County of San Diego ( In re: Cipro Cases I & II, JCCP Proceeding Nos. 4154 & 4220 ), on July 21, 2004, the California Court of Appeal ruled that the majority of the plaintiffs would be permitted to pursue their claims as a class. On August 31, 2009, the California Superior Court granted defendants’ motion for summary judgment, and final judgment was entered on September 24, 2009. On October 31, 2011, the California Court of Appeal affirmed the Superior Court’s judgment. On December 13, 2011, the plaintiffs filed a petition for review in the California Supreme Court. On February 15, 2012, the California Supreme Court granted review. On September 12, 2012, the California Supreme Court entered a stay of all proceedings in the case pending a decision from the United States Supreme Court in an unrelated case that raises similar legal issues. The California Supreme Court lifted the stay on June 26, 2013 following the ruling by the United States Supreme Court. Plaintiffs and Bayer recently announced that they have reached an agreement to settle the claims pending against Bayer. Plaintiffs are continuing to pursue claims against the generic defendants, including the Company and Rugby. The remaining parties now will resume briefing in this appeal.

~~Table~~In addition to the pending actions, the Company understands that various state and federal agencies are investigating the allegations made in these actions. Sanofi has agreed to defend and indemnify the Company and its affiliates in connection with the claims and investigations arising from the conduct and agreements allegedly undertaken by Rugby and its affiliates prior to the Company’s acquisition of ~~Contents~~Rugby, and is currently controlling the defense of these actions.

~~Fax~~Governmental Reimbursement Investigations and Drug Pricing Litigation. In November 1999, Schein Pharmaceutical, Inc., now known as Actavis Pharma, Inc. was informed by the U.S. Department of Justice that it, along with numerous other pharmaceutical companies, is a defendant in a qui tam action brought in 1995 under the U.S. False Claims Act currently pending in the U.S. District Court for the Southern District of Florida (the “Florida Qui Tam Action”). The Company has not been served in the qui tam action. A qui tam action is a civil lawsuit brought by an individual or a company (the “qui tam relator”) for an alleged violation of a federal statute, in which the U.S. Department of Justice has the right to intervene and take over the prosecution of the lawsuit at its option.

~~Medical~~- ~~West~~29 ~~Ballas Pharmacy, LTD, et al. v. Anda, Inc., (Circuit Court of the County of St. Louis, State of Missouri, Case No. 08SL~~-~~CC00257).~~ In January 2008, Medical West Ballas Pharmacy, LTD, filed a putative class action complaint against the Company alleging conversion and alleged violations of the Telephone Consumer Protection Act (“TCPA”) and Missouri Consumer Fraud and Deceptive Business Practices Act. In April 2008, plaintiff filed an amended complaint substituting Anda, Inc., a subsidiary of the Company, as the defendant. The amended complaint alleges that by sending unsolicited facsimile advertisements, Anda misappropriated the class members’ paper, toner, ink and employee time when they received the alleged unsolicited faxes, and that the alleged unsolicited facsimile advertisements were sent to the plaintiff in violation of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act. The TCPA allows recovery of minimum statutory damages of $500 per violation, which can be trebled if the violations are found to be willful. The complaint seeks to assert class action claims on behalf of the plaintiff and other similarly situated third parties. In April 2008, Anda filed an answer to the amended complaint, denying the allegations. In November 2009, the court granted plaintiff’s motion to expand the proposed class of plaintiffs from individuals for which Anda lacked evidence of express permission or an established business relationship to “All persons who on or after four years prior to the filing of this action, were sent telephone facsimile messages advertising pharmaceutical drugs and products by or on behalf of Defendant.” In November 2010, the plaintiff filed a second amended complaint further expanding the definition and scope of the proposed class of plaintiffs. On December 2, 2010, Anda filed a motion to dismiss claims the plaintiff is seeking to assert on behalf of putative class members who expressly consented or agreed to receive faxes from Defendant, or in the alternative, to stay the court proceedings pending resolution of Anda’s petition to the FCC (discussed below). On April 11, 2011, the court denied the motion. On May 19, 2011, the plaintiff’s filed their motion seeking certification of a class of entities with Missouri telephone numbers who were sent Anda faxes for the period January 2004 through January 2008. The motion has been briefed and is currently scheduled for hearing on August 21, 2013. No trial date has been set in the matter.

~~Several~~ Pursuant ~~issues~~to ~~raised~~applicable infederal ~~plaintiff’s~~law, ~~motion~~the ~~for~~qui ~~class~~tam ~~certification~~action inis ~~the~~under ~~Medical~~seal ~~West~~as ~~matter~~to ~~were~~Actavis, ~~addressed~~Inc. byThe ~~the~~Company ~~Eighth Circuit~~believes ~~Court~~that ofthe ~~Appeals~~qui intam anaction ~~unrelated~~relates ~~case~~ to ~~which~~whether ~~Anda~~allegedly isimproper ~~not~~price reporting aby ~~party,~~pharmaceutical ~~Nack~~manufacturers v.led ~~Walburg,~~to ~~No. 11-1460.~~increased ~~Nack~~payments ~~concerned~~by ~~whether~~Medicare ~~there~~and/or isMedicaid. aThe ~~private~~Company ~~right~~believes ofthat ~~action~~the ~~for~~Florida ~~failing~~Qui toTam ~~include~~Action ~~any~~against ~~opt-out~~the ~~notice~~Company onwas ~~faxes~~dismissed ~~sent~~without ~~with express~~prejudice ~~permission,~~while ~~contrary~~still sealed as to athe ~~Federal~~Company. Subsequently, ~~Communications~~the ~~Commission~~Company ~~(FCC)~~also ~~Regulation~~received ~~that~~and ~~requires~~responded ~~such~~to ~~notice~~notices onor ~~fax~~subpoenas ~~advertisements.~~from ~~The~~the ~~Eighth~~Attorneys ~~Circuit~~General ~~granted~~of ~~Anda~~various ~~leave~~states, toincluding ~~file~~Florida, anNevada, ~~amicus~~New ~~brief~~York, California and Texas, relating to ~~participate~~pharmaceutical ~~during~~pricing ~~oral~~issues ~~argument~~and inwhether ~~the~~allegedly ~~matter,~~improper ~~which~~actions ~~was~~by ~~held~~pharmaceutical onmanufacturers ~~September 19,~~led ~~2012.~~to Inexcessive ~~its~~payments ~~ruling,~~by ~~issued~~Medicare ~~May~~and/or Medicaid. On June 2126, ~~2013~~2003, the ~~Eighth~~Company ~~Circuit~~received ~~held~~a ~~that~~request ~~Nack’s~~for ~~arguments~~records onand ~~appeal~~information ~~amounted~~from tothe ~~challenges~~U.S. toHouse ~~the~~Committee ~~FCC’s~~on ~~regulation~~Energy and ~~that~~Commerce ~~the~~in connection ~~court~~with ~~lacked~~that ~~jurisdiction~~committee’s ~~to entertain~~investigation ~~such~~into ~~challenges~~pharmaceutical ~~pursuant~~reimbursements toand ~~the~~rebates ~~Hobbs~~under ~~Act~~Medicaid. ~~and~~The itCompany ~~would~~produced ~~otherwise~~documents ~~not~~in ~~decide~~response ~~any~~to ~~similar~~the ~~challenges~~request. ~~without~~Other ~~the~~state ~~benefit~~and offederal ~~full~~inquiries ~~participation~~regarding bypricing ~~the~~and ~~FCC~~reimbursement issues are anticipated.

InThe aCompany ~~related~~and ~~matter~~certain of its subsidiaries also are named as defendants in various lawsuits filed by numerous states and qui tam relators, onincluding ~~November 30~~Wisconsin, ~~2010~~Kentucky, ~~Anda~~Illinois, ~~filed~~Mississippi, aMissouri, ~~petition~~South Carolina, ~~with~~Utah, ~~the~~Kansas ~~FCC,~~and ~~asking~~Louisiana ~~the~~captioned ~~FCC~~as tofollows: ~~clarify~~State ~~the~~of ~~statutory~~Wisconsin ~~basis~~v. ~~for~~Abbott ~~its~~Laboratories, ~~regulation~~et ~~requiring~~al., ~~“opt~~Case No. 04-~~out”~~cv-1709, ~~language~~Wisconsin onCircuit ~~faxes~~Court ~~sent with~~for ~~express~~Dane ~~permission~~County; State of ~~the~~Wisconsin, ~~recipient~~ex ~~(the~~rel., ~~“FCC~~et ~~Petition”)~~al. Onv. ~~May 2~~Actavis Mid Atlantic LLC, ~~2012~~et al., ~~the~~Case ~~Consumer~~No. &11-cv-5544, ~~Governmental~~Wisconsin ~~Affairs~~Circuit ~~Bureau~~Court for Dane County; Commonwealth of ~~the~~Kentucky ~~FCC~~v. ~~dismissed~~Alpharma, ~~the~~Inc., ~~FCC~~et al., ~~Petition~~Case Number 04-CI-1487, Kentucky Circuit Court for Franklin County; State of Illinois v. OnAbbott ~~May 14~~Laboratories, ~~2012~~Inc. et al., ~~Anda~~Civil ~~filed~~Action anNo. 05-CH-02474, ~~application~~Illinois Circuit Court for ~~review~~Cook County; State of Mississippi v. Abbott ~~the~~Laboratories, ~~Bureau’s~~Inc. ~~dismissal~~et byal., ~~the~~Civil ~~full~~Action ~~Commission~~No. G2005-2021 S/2, ~~requesting~~Mississippi ~~the~~Chancery ~~FCC~~Court toof ~~vacate~~Hinds ~~the~~County; ~~dismissal~~State ~~and~~of ~~grant~~Missouri ~~the~~ex ~~relief~~rel. ~~sought~~Jeremiah inW. ~~the~~(Jay) ~~FCC~~Nixon ~~Petition~~v. ~~The~~Mylan ~~FCC~~Laboratories, ~~has~~et ~~not~~al, ~~ruled~~Case onNo. 054-2486, ~~the~~Missouri ~~application~~Circuit ~~for~~Court ~~review~~of St. ~~Anda~~Louis; ~~believes~~State itof ~~has~~South ~~substantial~~Carolina ~~meritorious defenses~~and toHenry D. McMaster v. Watson Pharmaceuticals (New Jersey), Inc., In the ~~putative~~Court ~~class~~of ~~actions~~Common ~~brought~~Pleas ~~under~~for the ~~TCPA~~Fifth Judicial Circuit, ~~including~~State ~~but~~of ~~not~~South ~~limited~~Carolina, toCounty ~~its~~of ~~receipt~~Richland, C.A. No. 2006-CP-40-7152; State of ~~consent~~South toCarolina ~~receive~~and ~~facsimile~~Henry ~~advertisements~~D. ~~from~~McMaster ~~many~~v. Watson Pharmaceuticals (New Jersey), Inc., In the Court of Common Pleas for the ~~putative~~Fifth ~~class~~Judicial ~~members~~Circuit, ~~and~~State ~~intends~~of toSouth ~~defend~~Carolina, ~~the~~County ~~actions~~of ~~vigorously~~Richland, C.A. ~~However,~~No. 2006-CP-40-7155; State of ~~these~~Utah ~~actions~~v. Actavis U.S., ifInc., ~~successful~~et al., ~~could~~In ~~have~~the aThird ~~material~~Judicial ~~adverse~~District ~~effect~~Court onof ~~the~~Salt ~~Company’s~~Lake ~~business~~County, ~~results~~Civil No. 07-0913719; State of ~~operations~~Kansas ex rel. Steve Six v. Watson Pharmaceuticals, ~~financial~~Inc. ~~condition~~and Watson Pharma, Inc., Case Number: 08CV2228, District Court of Wyandotte County, Kansas, Civil Court Department; and ~~cash~~State ~~flows~~of Louisiana V. Abbott Laboratories, Inc., et al., Case No. 596144, Parish of East Baton Rouge, 19 th Judicial District.

~~Levonorgestrel/Ethinyl~~In ~~Estradiol~~2011, ~~Tablets~~the ~~(Generic~~Company ~~version~~settled ofcertain ~~Seasonique®). On~~claims ~~March 6,~~made against ~~2008,~~it ~~Duramed~~by ~~(now~~a ~~known~~relator asin ~~Teva~~a ~~Women’s~~qui ~~Health)~~tam ~~sued~~action brought against the Company inon behalf of the United States. The ~~District~~settlement ~~Court~~of ~~for~~that ~~the~~qui ~~District~~tam action resolved all claims on behalf of ~~Nevada,~~the ~~alleging~~United States asserted in that ~~sales~~action ofexcept for claims relating to the ~~Company’s~~federal ~~levonorgestrel/ethinyl~~share ~~estradiol~~of ~~tablets,~~Medicaid apayments ~~generic~~made ~~version~~by the States of ~~Duramed’s~~Alabama, ~~Seasonique~~Alaska, ®Kentucky, ~~tablets~~Idaho, ~~would~~Illinois, ~~infringe~~South ~~Duramed’s~~Carolina Uand Wisconsin.S. ~~Patent~~The ~~No. 7~~Company subsequently settled all claims,~~320,969~~ (including the ~~“969~~claims ~~Patent”)~~on ~~(Duramed~~behalf v.of ~~Watson~~the ~~Pharmaceuticals~~United States, ~~Inc.,~~brought ~~et.~~by alAlabama. In addition, ~~Case No. 08cv00116).~~the ~~The~~Company ~~complaint~~recently ~~sought~~reached ~~damages~~settlements ~~and~~in ~~injunctive~~principle ~~relief.~~with Onthe ~~March 31~~states of Louisiana, ~~2010~~South Carolina and Missouri, though the ~~District~~parties ~~Court~~have ~~granted~~yet ~~Duramed’s~~to ~~motion~~reach ~~for~~a ~~summary~~definitive ~~judgment~~agreement. ~~that~~The case against the ~~asserted~~Company ~~claims~~on behalf ~~are~~of ~~not~~Kentucky ~~invalid~~was astried ~~obvious~~in November 2011. The jury reached a verdict in the Company’s ~~appealed~~favor ~~and~~ on ~~March 25,~~each ~~2011,~~of Kentucky’s claims against the UCompany.S. ~~Court~~An ofagreed ~~Appeals~~form ~~for~~of ~~the~~judgment ~~Federal~~has ~~Circuit~~been ~~reversed~~entered and the ~~District~~case ~~Court~~has ~~and~~been ~~remanded~~dismissed ~~the~~with prejudice. The case ~~for~~against athe ~~determination~~Company on behalf of ~~whether~~Mississippi ~~the~~was ~~asserted~~tried ~~claims~~from ~~are~~November ~~obvious~~2012 through April 2013. On ~~June~~August 928, ~~2011~~2013, ~~Duramed~~the ~~moved~~court ~~for~~issued a ~~preliminary injunction~~ruling toin ~~prevent~~favor of the ~~Company~~state ~~from~~and ~~launching~~awarded ~~its~~the ~~product~~state ~~until~~$12.38 ~~after~~million ain ~~trial~~compensatory ondamages ~~the~~and ~~merits~~civil penalties. OnA ~~June 16,~~hearing ~~2011,~~is ~~the~~scheduled ~~court~~on ~~denied~~the ~~Duramed~~state’s ~~motion~~request for the imposition of punitive damages against the Company. ~~Duramed~~The ~~appealed~~case against the Company on behalf of Kansas is scheduled for trial in January 2014.

-At 31September 30, -2013, the Company’s consolidated balance sheets included accrued loss contingencies in connection with the remaining drug pricing actions of $84.8 million. With regard to the remaining drug pricing actions, the Company believes that it has meritorious defenses and intends to vigorously defend itself in those actions. The Company continually monitors the status of these actions and may settle or otherwise resolve some or all of these matters on terms that the Company deems to be in its best interests. However, the Company can give no assurance that it will be able to settle the remaining actions on terms it deems reasonable, or that such settlements or adverse judgments in the remaining actions, if entered, will not exceed the amounts of the liability reserves. Additional actions by other states, cities and/or counties are anticipated. These actions and/or the actions described above, if successful, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Table~~- of30 ~~Contents~~-

~~Drospirenone/Ethinyl~~Medicaid ~~Estradiol~~Drug ~~Tablets~~Reimbursement ~~(Generic version of Yaz®)~~Litigation. OnIn ~~November~~December 52009, ~~2007,~~the ~~Bayer~~Company ~~Schering~~learned that ~~Pharma~~numerous AGpharmaceutical ~~sued~~companies, ~~the~~including ~~Company~~certain insubsidiaries of the ~~United~~Company, ~~States District~~have ~~Court~~been ~~for~~named ~~the~~as ~~District~~defendants ofin ~~Nevada,~~a ~~alleging~~qui ~~that~~tam ~~sales~~action ofpending in the ~~Company’s~~United ~~drospirenone/ethinyl~~States ~~estradiol~~District ~~tablets,~~Court afor ~~generic~~the ~~version~~District of ~~Bayer’s~~Massachusetts ~~Yaz~~(United ®States ~~tablets,~~of America ~~would~~ex ~~infringe~~rel. ~~numerous~~Constance ~~Bayer patents~~A. ~~Bayer~~Conrad ~~Schering Pharma AG~~ v. ~~Watson~~Abbott ~~Pharmaceuticals~~Laboratories, Inc., et. al., USDC Case No. ~~07cv1472~~02-CV-11738-NG). The ~~complaint~~seventh ~~sought damages~~amended ~~and~~complaint, ~~injunctive~~which ~~relief~~was ~~and~~served ~~included~~on ~~claims~~certain ~~related~~of tothe ~~U.S.~~Company’s ~~Patent~~subsidiaries ~~No.~~in December 52009,~~787,531,~~ ~~U.S.~~alleges ~~Patent~~that ~~No.~~the defendants REfalsely ~~37,564,~~reported ~~and~~to ~~U.S.~~the ~~Patent~~United ~~No.~~States REthat ~~37,838.~~certain ~~The~~pharmaceutical ~~Company~~products ~~filed~~were aneligible ~~amended answer and counterclaims~~ for aMedicaid ~~Declaratory~~reimbursement ~~Judgment~~and ofthereby ~~invalidity and/or~~allegedly ~~non-infringement~~caused offalse ~~U.S.~~claims ~~Patent~~for ~~Nos.~~payment ~~5,798,338,~~to ~~6,933,395,~~be ~~6,958,326,~~made ~~7,163,931~~through ~~and~~the REMedicaid ~~38,253~~program. ~~Thereafter~~In July 2011, the plaintiff ~~U.S.~~served ~~Court~~a oftenth ~~Appeals~~amended ~~for~~complaint ~~the Federal Circuit ruled~~ that ~~U.S.~~unseals ~~Patent~~the ~~No. 5,787,531~~action ~~was~~in ~~invalid~~its entirety and ~~the~~continues ~~claims related~~ to ~~that patent~~allege ~~were~~the ~~dismissed.~~previously ~~The~~asserted ~~District~~claims ~~Court~~against ~~subsequently~~certain ~~entered~~subsidiaries aof ~~consent judgment that~~ the Company ~~does not infringe U~~.S. ~~Patent Nos. 5,798,338, 6,933,395, 6,958,326, and 7,163,931, and dismissed with prejudice Bayer~~The Company’s ~~claims~~subsidiaries ~~related~~named toin ~~U.S.~~the action ~~Patent~~together ~~Nos.~~with REall ~~37,838~~other ~~and~~named REdefendants filed ~~38,253.~~a ~~The~~Joint ~~only~~Motion ~~patent~~to ~~still~~Dismiss ~~in dispute in~~ the ~~Nevada~~Tenth ~~lawsuit~~Amended isComplaint on ~~U.S. Patent No. RE 37~~December 9,~~564~~ ~~(the “’564 Patent”)~~2011. On ~~March~~February 3125, ~~2012~~2013, the court granted ~~Bayer’s motion for summary judgment that~~ the ~~‘564~~ ~~Patent is not invalid and denied the Company’s~~ motion ~~for~~to ~~summary~~dismiss ~~judgment~~as ~~that~~to ~~the~~all ~~patent is invalid~~defendants. ~~Actavis~~The ~~timely~~plaintiff ~~filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit~~may appeal. On ~~April~~September 1611, 2013, ~~the~~ ~~U.S.~~a ~~Court~~new ofaction ~~Appeals~~was ~~for~~filed ~~the~~against ~~Federal~~certain ~~Circuit~~affiliates ~~reversed~~of the ~~District~~Company ~~Court’s~~and ~~decision,~~numerous ~~finding~~other ~~that~~pharmaceutical ~~the~~company ~~‘564~~defendants ~~patent~~by isthe ~~invalid.~~State ~~The~~of ~~Company,~~Louisiana ~~which~~based ~~had~~on ~~suspended sales of~~ the ~~generic~~same ~~version~~core set of ~~the~~allegations ~~product~~as ~~from~~asserted ~~January 7,~~in ~~2012~~the Conrad ~~through~~qui ~~March 31,~~tam ~~2012,~~action. ~~resumed~~Additional ~~selling~~actions ~~the~~alleging ~~product~~similar inclaims ~~April~~could ~~2013~~be asserted. OnThe ~~May 15,~~Company ~~2013,~~believes ~~Bayer~~that ~~filed~~it ahas ~~petition~~meritorious ~~for~~defenses ~~rehearing~~to in the ~~Federal~~claims ~~Circuit.~~and ~~The~~intends ~~defendants~~to ~~responded~~vigorously todefend ~~the~~itself ~~petition~~against onsuch ~~July 1,2013~~allegations. ~~The~~However, ~~rehearing~~these ~~petition~~actions ~~remains~~or ~~pending.~~similar Ifactions, ~~the~~if ~~Company~~successful, iscould ~~not~~adversely ~~ultimately~~affect ~~successful~~the inCompany ~~its~~and ~~defense~~could ofhave ~~the~~a ~~lawsuit,~~material itadverse ~~could~~effect ~~adversely~~on ~~affect~~ the Company’s business, results of operations, financial condition and cash flows.

~~Tranexamic~~FDA ~~Acid Tablets (Generic version of Lysteda®)~~Matters. OnIn ~~July~~May 72002, ~~2011, Ferring B.V. sued~~ the Company’s insubsidiary ~~the~~reached ~~United~~an ~~States~~agreement ~~District~~with ~~Court for~~ the ~~District~~FDA ofon ~~Nevada,~~the ~~alleging~~terms ~~that sales~~ of ~~the Company’s tranexamic acid tablets,~~ a ~~generic~~consent ~~version of Ferring’s Lysteda ® tablets, would infringe~~decree ~~U.S.~~with ~~Patent~~respect ~~No. 7,947,739~~to ~~(“the~~its ~~‘739 patent”) (Ferring B.V. v. Watson Pharmaceuticals~~Corona, ~~Inc.,~~California ~~et.~~manufacturing alfacility., ~~Case~~The ~~No. 3:11-cv-00481).~~court Onapproved ~~November 25, 2011, Ferring filed a second complaint in~~ the ~~District~~consent ofdecree ~~Nevada alleging~~on ~~that sales of the Company’s tranexamic acid tables would infringe U.S. Patent No.~~May 813,~~022,106~~ 2002 (~~“the~~United ~~‘106~~States ~~patent”).~~of ~~(Ferring~~America ~~B.V.~~ v. Watson ~~Pharmaceuticals~~Laboratories, Inc., et. al., ~~Case~~United ~~No. 3:11-cv-00853).~~States ~~On November 9, 2012, Ferring filed a third complaint in the~~ District ofCourt ~~Nevada~~for ~~alleging that sales of~~ the ~~Company’s~~Central ~~tranexamic acid tables would infringe U.S. Patent No. 8,273,795 (“the ‘795 patent”) (Ferring B.V. v.~~District ~~Watson~~of ~~Pharmaceuticals~~California, ~~Inc., et. al., Case No. 2:12~~EDCV-cv02-~~01935~~412-VAP). The ~~cases~~consent ~~are~~decree ~~still~~applies ~~pending.~~only ~~The~~to ~~District Court has consolidated all three cases and has set a trial for January 21, 2014. On January 3, 2013,~~ the Company’s ~~began selling its generic version of Lysteda®. The Company believes it has substantial meritorious defenses to the case. However~~Corona, ~~the~~California ~~Company~~facility ~~has sold~~ and isnot ~~continuing~~other tomanufacturing ~~sell its generic version of Lysteda ®~~sites. ~~Therefore,~~The ~~an adverse~~decree ~~final~~requires ~~determination~~ that ~~one of~~ the ~~patents~~Corona, inCalifornia ~~suit~~facility iscomplies ~~valid~~with ~~and infringed could have an adverse effect on~~ the ~~Company~~FDA’s ~~business,~~current ~~results~~Good Manufacturing ofPractices ~~operations,~~(“cGMP”) ~~financial condition and cash flows~~regulations.

~~Oxymorphone~~Pursuant ~~Extended-Release~~to ~~Tablets~~the ~~(Generic~~agreement, ~~version~~the Company hired an independent expert to conduct inspections of ~~Opana®~~the ~~ER)~~Corona facility at least once each year. In each year from 2002 through 2012, the independent expert has reported its opinion to the FDA that, based on the findings of the audit of the facility, the FDA’s applicable cGMP requirements, applicable FDA regulatory guidance, and the collective knowledge, education, qualifications and experience of the expert’s auditors and reviewers, the systems at the Corona facility audited and evaluated by the expert are in compliance with the FDA’s cGMP regulations. However, the FDA is not required to accept or agree with the independent expert’s opinion. The FDA has conducted periodic inspections of the Corona facility since the entry of the consent decree, and concluded its most recent general cGMP inspection in November 2012. At the conclusion of the inspection, the FDA inspectors issued a Form 483 to the facility identifying certain observations concerning the instances where the facility failed to follow cGMP regulations. The facility has responded to the Form 483 observations and has provided the FDA with a corrective action plan to address the observations noted in the Form 483. On ~~December~~April 1119, 2013, the independent expert concluded its annual inspection of the Corona, California facility. The independent expert confirmed the types of observations identified by the FDA during its November 2012 inspection, ~~Endo Pharmaceuticals~~and ~~Inc~~reported its observations to the FDA in May 2013. ~~sued~~During the inspection, the independent expert verified that certain actions in the corrective action plan had been made. The independent expert has agreed to continue to evaluate the corrective actions being taken and to re-inspect the facility during the second half of 2013, and to further evaluate at that time the facility’s compliance with FDA’s cGMP regulations. In September 2013, the FDA requested an update on the actions taken by the Company to correct the violations noted at the conclusion of the November 2012 inspection. The Company has responded to the FDA and has provided the requested information. In October 2013 the independent expert conducted a follow up review and verified that certain corrective actions have been completed in conformance with the ~~United~~updates ~~States~~provided ~~District~~by ~~Court~~the ~~for~~Company. If in the ~~Southern~~future, ~~District~~the FDA determines that, with respect to its Corona facility, the Company has failed to comply with the consent decree or FDA regulations, including cGMPs, or has failed to adequately address the FDA’s inspectional observations, the consent decree allows the FDA to order a variety of actions to remedy the deficiencies. These actions could include ceasing manufacturing and related operations at the Corona facility, and recalling affected products. Such actions, if taken by the FDA, could have a material adverse effect on the Company, its results of operations, financial position and cash flows.

- 3231 -

Androgel®Antitrust ~~New~~Litigation. ~~York~~On January 29, ~~alleging~~2009, ~~that~~the ~~sales~~U.S. Federal Trade Commission and the State of California filed a lawsuit in the United States District Court for the Central District of California (Federal Trade Commission, et. al. v. Watson Pharmaceuticals, Inc., et. al., USDC Case No. CV 09-00598) alleging that the Company’s ~~7.5~~September 2006 mgpatent ~~and~~lawsuit 15settlement mgwith ~~oxymorphone~~Solvay ~~extended-release~~Pharmaceuticals, ~~tablets~~Inc., related to AndroGel® 1% (testosterone gel) CIII is unlawful. The complaint generally alleged that the Company improperly delayed its launch of a generic ~~versions~~version of ~~Endo~~Androgel ® in exchange for Solvay’s ~~Opana~~agreement to permit the Company to co-promote Androgel ® ERfor consideration in excess of the fair value of the services provided by the Company, ~~infringe~~in Uviolation of federal and state antitrust and consumer protection laws.S The complaint sought equitable relief and civil penalties. ~~Patent~~On ~~Nos~~February 2 and 3, 2009, three separate lawsuits alleging similar claims were filed in the United States District Court for the Central District of California by various private plaintiffs purporting to represent certain classes of similarly situated claimants (Meijer, Inc., 7et. al.,~~851~~ v. Unimed Pharmaceuticals,~~482~~ Inc., et. al., USDC Case No. EDCV 09-0215); 8(Rochester Drug Co-Operative,~~309~~ Inc. v. Unimed Pharmaceuticals Inc.,~~122~~ et. al., Case No. EDCV 09-0226); ~~and~~(Louisiana 8Wholesale Drug Co. Inc. v. Unimed Pharmaceuticals Inc.,~~329~~ et. al,~~216~~ Case No. EDCV 09-0228). On April 8, ~~which~~2009, the ~~USPTO~~Court ~~recently~~transferred ~~issued~~the orgovernment ~~Endo~~and ~~recently~~private cases to the United States District Court for the Northern District of Georgia. On April 21, 2009 the State of California ~~acquired~~voluntarily dismissed its lawsuit against the Company without prejudice. The ~~Company~~Federal ~~believes~~Trade itCommission ~~has~~and ~~substantial~~the ~~meritorious~~private ~~defenses~~plaintiffs in the Northern District of Georgia filed amended complaints on May 28, 2009. The private plaintiffs amended their complaints to include allegations concerning conduct before the ~~case~~U.S. ~~However~~Patent and Trademark Office, conduct in connection with the ~~Company~~listing ~~has~~of ~~sold~~Solvay’s patent in the Food and isDrug ~~continuing~~Administration’s “Orange Book,” and sham litigation. Additional actions alleging similar claims have been filed in various courts by other private plaintiffs purporting to ~~sell~~represent ~~its~~certain ~~generic~~classes ~~versions~~of similarly situated direct or indirect purchasers of ~~Opana~~Androgel ® ER(Stephen L. LaFrance Pharm., 7Inc. d/b/a SAJ Dist. v. Unimed Pharms., Inc., et al., D. NJ Civ. No. 09-1507); (Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund v. Unimed Pharms. Inc., et al., D. NJ Civ. No. 09-1856); (Scurto v. Unimed Pharms., Inc., et al., D. NJ Civ. No. 09-1900); (United Food and Commercial Workers Unions and Employers Midwest Health Benefits Fund v. Unimed Pharms., Inc., et al., D. MN Civ. No. 09-1168); (Rite Aid Corp. et al. v. Unimed Pharms., Inc. et al., M.D. PA Civ. No. 09-1153); (Walgreen Co., et al. v. Unimed Pharms., LLC, et al., MD. PA Civ. No. 09-1240); (Supervalu, Inc. v. Unimed Pharms., LLC, et al, ND. GA Civ. No. 10-1024); (LeGrand v. Unimed Pharms., Inc., et al., ND. GA Civ. No. 10-2883); (Jabo’s Pharmacy Inc. v. Solvay Pharmaceuticals, Inc., et al., Cocke County, TN Circuit Court Case No. 31,837). On April 20, 2009, the Company was dismissed without prejudice from the Stephen L. LaFrance action pending in the District of New Jersey. On October 5, mg2009, the Judicial Panel on Multidistrict Litigation transferred all actions then pending outside of the United States District Court for the Northern District of Georgia to that district for consolidated pre-trial proceedings (In re: AndroGel® Antitrust Litigation (No. II), MDL Docket No. 2084), and 15all mgcurrently-pending related actions are presently before that court. ~~Therefore~~On February 22, an2010, ~~adverse~~the ~~final~~judge ~~determination~~presiding over all the consolidated litigations related to Androgel® then pending in the United States District Court for the Northern District of Georgia granted the Company’s motions to dismiss the complaints, except the portion of the private plaintiffs’ complaints that ~~one~~include allegations concerning sham litigation. Final judgment in favor of the ~~patents~~defendants was entered in ~~suit~~the isFederal ~~valid~~Trade Commission’s action on April 21, 2010. On April 25, 2012, the Court of Appeals affirmed the dismissal. On June 17, 2013, the Supreme Court issued a decision, holding that the settlements between brand and ~~infringed~~generic ~~could~~drug ~~have~~companies which include a payment from the brand company to the generic competitor must be evaluated under a “rule of reason” standard of review and ordered the case remanded. On July 20, 2010, the plaintiff in the Fraternal Order of Police action filed an ~~adverse~~amended ~~effect~~complaint adding onallegations concerning conduct before the U.S. Patent and Trademark Office, conduct in connection with the listing of Solvay’s patent in the Food and Drug Administration’s “Orange Book,” and sham litigation similar to the ~~Company~~claims raised in the direct purchaser actions. On October 28, 2010, the judge presiding over MDL 2084 entered an order pursuant to which the LeGrand action, filed on September 10, 2010, was consolidated for pretrial purposes with the other indirect purchaser class action as part of MDL 2084 and made subject to the Court’s ~~business~~February 22, ~~results~~2010 order on the motion to dismiss. In February 2012, the direct and indirect purchaser plaintiffs and the defendants filed cross-motions for summary judgment, and on June 22, 2012, the indirect purchaser plaintiffs, including Fraternal Order of ~~operations~~Police, ~~financial~~LeGrand ~~condition~~and HealthNet, filed a motion for leave to amend and ~~cash~~consolidate ~~flows~~their complaints. On September 28, 2012, the district court granted summary judgment in favor of the defendants on all outstanding claims. The plaintiffs then appealed. On September 12 and 13, 2013, respectively, the indirect purchaser plaintiffs and direct purchaser plaintiffs filed motions with the district court, asking the court for an indicative ruling that it would vacate its final order on the parties’ summary judgment motions and conduct further proceedings in light of the Supreme Court’s ruling in the Federal Trade Commission action, should the Court of Appeals remand the case to the district court. On October 23, 2013, the district court granted the motions.

~~Omeprazole Delayed~~-~~release~~ ~~Capsules~~32 (Generic version of Prilosec®). In July 1999, Astra Aktiegolag, Aktiebolaget Hassle, Astra Merck Enterprises Inc. and Astra Merck Inc. (collectively “Astra”) sued Andrx Pharmaceuticals (which the Company acquired in 2006) in the United States District Court for the Southern District of Florida, alleging that sales of the Company’s omeprazole capsules, a generic version of Astra’s Prilosec®, would infringe certain U.S. Patents, including U.S. Patent Nos. 4,786,505 (“the ‘505 patent”) and 4,853,230 (“the ‘230 patent”) (Astra Aktiebolag et al. v. Andrx Pharmaceuticals Inc., Case No. 99cv6893). The complaint sought injunctive relief. This case was then consolidated by the Multi-~~District~~ Litigation Panel and transferred to the United States District Court for the Southern District of New York. On October 30, 2002, the District Court entered Final Judgment that the Andrx products would infringe certain claims of the ‘505 patent and the ‘230 patent and that Andrx was enjoined from commercializing its product prior to April 20, 2007. On December 11, 2003, the United States Court of Appeals for the Federal Circuit affirmed the District Court decision. On February 8, 2010, Astra filed a supplemental complaint in the District Court alleging that in 2001 Andrx manufactured its generic omeprazole capsules in preparation for a launch in the event of a favorable District Court decision. Astra’s supplemental complaint sought damages for that manufacture. On July 12, 2013, the District Court scheduled a jury trial beginning September 30, 2013 on the potential damages in connection with Andrx’s manufacture (but not sale) of its generic omeprazole capsules. The Company believes it has substantial meritorious defenses to the case and intends to vigorously defend against the damage claim. However, if Astra’s action is successful, a damages award could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Propoxyphene~~The ~~Litigation. Beginning in 2011, a number of product liability suits were filed against the~~ Company, asbelieves ~~well~~that as other manufacturers and distributors of propoxyphene, for personal injuries including adverse cardiovascular events or deaths allegedly arising out of the use of propoxyphene. Cases are pending against the Company and/or its affiliates in various state and federal courts, representing claims by approximately 1,385 plaintiffs. Approximately 77 of the cases naming Watson were consolidated for pre-trial proceedings as part of a multi-district litigation (MDL) matter pending in the United States District Court for the Eastern District of Kentucky (In re: Darvocet, Darvon, and Propoxyphene Products Liability Litigation, MDL No. 2226). Four of the MDL cases were voluntarily dismissed by plaintiffs with prejudice. On June 22, 2012, the court hearing the MDL cases granted the generic defendants’ joint motion to dismiss the remaining MDL cases. Approximately 34 of the dismissed cases were appealed by the plaintiffs to the United States Court of Appeals for the Sixth Circuit. No briefing schedule in these ~~cases~~actions ~~has been set. Approximately 35 of the cases naming the Company have been consolidated in a state court proceeding pending in the Superior Court of California in San Francisco. These cases~~ are atwithout ~~their~~merit ~~preliminary stages~~ and ~~the Company~~ intends to ~~file~~defend ~~demurrers and/or motions to dismiss. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability~~itself ~~insurance against such cases~~vigorously. However, ~~litigation~~these ~~is inherently uncertain and the Company cannot predict the outcome of this litigation. These~~ actions, if successful, ~~or if insurance does not provide sufficient coverage against such claims,~~ could adversely affect the Company and could have a material adverse effect on the Company¹’s business, results of operations, financial condition and cash flows.

~~Columbia~~Loestrin ~~Laboratories,~~24® ~~Inc.~~Antitrust ~~Securities~~ Litigation. On ~~June~~April 85, ~~2012~~2013, two putative class actions were filed in the ~~Company~~federal ~~and~~district ~~certain~~court (New York Hotel Trades Council & Hotel Assoc. of ~~its officers~~New ~~were~~York ~~named~~City, asInc. ~~defendants~~Health inBenefits aFund ~~consolidated~~v. ~~amended~~Warner ~~class~~Chilcott ~~action~~Pub. ~~complaint~~Ltd. ~~filed~~Co., inet ~~the~~al., ~~United~~D.N.J., ~~States~~Civ. ~~District~~No. 13-02178, ~~Court~~and ~~for~~United Food ~~the~~and ~~District~~Commercial ofWorkers ~~New~~Local ~~Jersey~~1776 & ~~(In~~Participating ~~re:~~Employers ~~Columbia~~Health ~~Laboratories,~~and ~~Inc~~Welfare Fund v. ~~Securities~~Warner ~~Litigation~~Chilcott (US), ~~Case~~LLC, Noet al., CVE.D.Pa., 12No. 13-~~614~~01807) byalleging athe ~~putative class~~Company’s of2009 ~~Columbia~~patent ~~Laboratories’~~lawsuit ~~stock~~settlement ~~purchasers.~~with ~~The~~Warner ~~amended~~Chilcott related ~~complaint~~to ~~generally~~Loestrin ~~alleges~~24 ~~that~~Fe® ~~between~~(norethindrone ~~December 6,~~acetate/ethinyl ~~2010~~estradiol tablets and ~~January 20,~~ferrous ~~2012~~fumarate tablets, ~~Actavis~~“Loestrin 24®”) ~~and~~is ~~certain~~unlawful. ofThe ~~its officers~~complaints, asboth ~~well~~asserted ason ~~Columbia~~behalf ~~Laboratories~~of ~~and~~putative ~~certain~~classes of ~~its officers~~end-payors, ~~made~~generally ~~false~~allege that the Company and ~~misleading~~another ~~statements~~generic ~~regarding~~manufacturer ~~the~~improperly ~~likelihood~~delayed launching generic versions of ~~Columbia~~Loestrin ~~Laboratories~~24® ~~obtaining~~in ~~FDA~~exchange ~~approval~~for ~~of Prochieve®~~substantial ~~progesterone~~payments ~~gel~~from Warner Chilcott, ~~Columbia~~in ~~Laboratories’~~violation ~~developmental~~of ~~drug~~federal ~~for~~and ~~prevention~~state ofantitrust ~~preterm~~and ~~birth~~consumer protection laws. The ~~Actavis~~complaints ~~licensed~~each ~~the~~seek ~~rights~~declaratory toand ~~Prochieve®~~injunctive ~~from~~relief ~~Columbia~~and ~~Laboratories~~damages. On April 15, 2013, the plaintiff in ~~July~~New ~~2010.~~York ~~The~~Hotel ~~amended~~Trades withdrew its complaint ~~further alleges~~and, ~~that~~on ~~the~~April 16, ~~defendants~~2013, ~~failed~~refiled toit ~~disclose~~in ~~material~~the ~~information~~federal ~~concerning~~court for the ~~statistical~~Eastern ~~analysis~~District of Pennsylvania ~~the~~(New ~~clinical~~York ~~studies~~Hotel ~~performed~~Trades byCouncil & ~~Columbia~~Hotel ~~Laboratories~~Assoc. inof ~~connection~~New ~~with~~York ~~its~~City, ~~pursuit~~Inc. ofHealth ~~FDA~~Benefits ~~approval~~Fund ~~of Prochieve®~~v. ~~The~~Warner ~~complaint~~Chilcott ~~seeks~~Public ~~unspecified~~Ltd. ~~damages~~Co., Onet ~~August 14~~al., ~~2012~~E.D.Pa., ~~the~~Civ. ~~defendants~~No. 13-02000). Additional complaints have been filed aby ~~motion~~different plaintiffs seeking to ~~dismiss~~represent ~~all~~the same putative class of ~~the~~ ~~claims~~end-payors in(A.F. ~~the~~of ~~amended~~L. ~~complaint~~– ~~which~~A.G.C. ~~the~~Building ~~court~~Trades ~~granted~~Welfare onPlan ~~June 11~~v. Warner Chilcott, ~~2013~~et al., ~~Plaintiffs~~D.N.J. ~~filed~~13-02456, aFraternal ~~second~~Order ~~amended~~of ~~complaint~~Police, onFort ~~July 11~~Lauderdale Lodge 31, ~~2013~~Insurance Trust Fund v. Warner ~~Actavis~~Chilcott ~~believes~~Public ~~the~~Ltd. ~~case~~Co., iset ~~without~~al., ~~merit~~E.D.Pa. ~~and~~Civ. ~~that~~No. 13-02014). itElectrical ~~has~~Workers ~~substantial~~242 ~~meritorious~~and ~~defenses,~~294 ~~which it~~Health & ~~intends~~Welfare toFund ~~vigorously~~v. ~~pursue~~Warner Chilcott Public Ltd. ~~Additionally~~Co., ~~Actavis~~et ~~maintains~~al., ~~insurance~~E.D.Pa. toCiv. ~~provide~~No. 13-2862 ~~coverage~~and ~~for~~City ~~the~~of ~~claims~~Providence ~~alleged~~v. Warner inChilcott ~~the~~Public ~~action~~Ltd. ~~However~~Co., ~~litigation~~et isal., ~~inherently~~D.R.I. ~~uncertain~~Civ. ~~and~~No. 13-307). In addition to the ~~Company~~end-payor ~~cannot~~suits, ~~predict~~two ~~the~~lawsuits ~~outcome~~have been filed on behalf of ~~this~~a ~~litigation~~class of direct payors (American Sales Company, LLC v. ~~The~~Warner Chilcott Public Ltd., ~~action~~Co. et al., ifD.R.I. ~~successful~~Civ. No. 12-347 and Rochester Drug Co-Operative Inc., orv. ifWarner ~~insurance~~Chilcott ~~does~~(US), ~~not~~LLC, ~~provide~~et ~~sufficient~~al., ~~coverage~~E.D.Pa. ~~against~~Civ. ~~such~~No. 13-133476). ~~claims~~On June 18, ~~could~~2013, ~~adversely~~defendants ~~affect~~filed a motion with the ~~Company~~Judicial ~~and~~Panel ~~could~~on Multidistrict ~~have~~Litigation a(“JPML”) ~~material~~to ~~adverse~~consolidate ~~effect~~these cases in one federal district court. After a hearing on September 26, 2013, the ~~Company’s~~JPML ~~business,~~issued ~~results~~an order conditionally transferring all related Loestrin 24 cases to the federal court for the District of ~~operations~~Rhode Island. A preliminary hearing is scheduled for November 4, ~~financial~~2013. ~~condition~~ The consolidated case is still in its early stages and ~~cash~~discovery ~~flows~~has not yet begun on either the class allegations or merits. The Company anticipates additional claims or lawsuits based on the same or similar allegations.

~~Ibandronate~~The ~~Tablets~~Company ~~(Generic~~believes ~~version~~that ofthese ~~Boniva®)~~actions are without merit and intends to defend the actions vigorously. On ~~September 21~~However, ~~2007~~these actions, ~~Hoffmann-La~~if ~~Roche~~successful, ~~Inc.~~could ~~sued~~have ~~Cobalt~~a ~~Laboratories,~~material ~~Inc.~~adverse ~~and~~effect ~~Cobalt Pharmaceuticals~~on ~~Inc.~~the ~~(both~~Company’s business, results of ~~which~~operations, ~~were~~financial ~~subsequently~~condition ~~acquired~~and bycash ~~the~~flows.

-Hormone 33Replacement -Therapy Litigation. Beginning in early 2004, a number of product liability suits were filed against the Company and certain Company affiliates, as well as numerous other pharmaceutical companies, for personal injuries allegedly arising out of the use of hormone replacement therapy products, including but not limited to estropipate and estradiol. Many of the cases originally filed against the Company and its affiliates have been dismissed. Approximately 4 cases remain pending against the Company and/or its affiliates in state and federal courts, representing claims by 4 plaintiffs. Breast cancer is the alleged injury in the remaining cases. The majority of the cases have been transferred to a consolidated action in the United States District Court for the Eastern District of Arkansas (In re: Prempro Products Liability Litigation, MDL Docket No. 1507), as well as proceedings in the federal district court for the District of Minnesota and in the Philadelphia Common Pleas Court. Discovery in the individual cases has not been completed. The Company believes it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Table~~Fentanyl Transdermal System Litigation. Beginning in 2009, a number of ~~Contents~~product liability suits were filed against the Company and certain Company affiliates, as well as other manufacturers and distributors of fentanyl

~~Company in 2009) in the United States District Court for the District of New Jersey, alleging that sales of Ibandronate Tablets, a generic version of Hoffmann~~-La ~~Roche’s~~33 ~~Boniva ® tablets, would infringe U.S. Patent Nos. 4,927,814 (the ‘814 Patent); 6,294,196 (the ‘196 Patent); and 7,192,938 (the ‘938 Patent) (Hoffmann~~-La Roche Inc. v. Cobalt Pharmaceuticals Inc., et. al., Case No. 07cv4540). The complaint sought damages and injunctive relief. Thereafter, Hoffmann-La Roche asserted additional claims, alleging infringement of U.S. Patent Nos. 7,410,957 (the ‘957 Patent) and 7,718,634 (the ‘634 patent) against the Company, and the parties entered into stipulations to dismiss Hoffman-La Roche’s claims related to the ‘196 and the ‘938 Patent. On August 24, 2010, the District Court granted Hoffmann-La Roche’s motion for summary judgment that the Company would infringe at least one claim of the ‘814 patent. On March 17, 2012, the ‘814 patent expired, leaving the ‘957 and ‘634 patents as the only patents in suit. On May 7, 2012, the District Court granted the Company’s motion for summary judgment that the claims of the ‘634 patent are invalid. On October 1, 2012, the District Court granted the Company’s motion for summary judgment that the claims of the ‘957 patent are invalid. On January 25, 2013 the District Court denied Plaintiffs’ motion for reconsideration of the summary judgment decisions finding the ‘634 patent and ‘957 patents invalid. The plaintiff has appealed. In June 2012, the Company began selling its generic version of Boniva ®. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell its generic version of Boniva ®. Therefore, an adverse final appellate determination that one of the patents in suit is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~West~~ transdermal ~~Virginia~~system ~~Prescription~~products, ~~Drug~~for ~~Abuse~~personal ~~Litigation.~~injuries Onor ~~June 26,~~deaths ~~2012,~~allegedly ~~the~~arising ~~State~~out of ~~West~~the ~~Virginia~~use ~~filed a lawsuit against multiple distributors~~ of ~~prescription~~the ~~drugs,~~fentanyl ~~including~~transdermal ~~Anda,~~system ~~Inc~~products., aThe ~~subsidiary~~Company ofsettled the ~~Company~~majority ~~(State~~ of ~~West~~these ~~Virginia~~cases v.in November ~~Amerisourcebergen Drug Corporation, et~~2012. ~~al.,~~There ~~Boone~~are ~~County~~approximately ~~Circuit Court Civil Case No.~~9 ~~12-C-141).~~cases ~~The~~that ~~complaint generally~~remain ~~alleges~~pending ~~that~~against the ~~defendants~~Company ~~distributed~~and/or ~~prescription~~its ~~drugs~~affiliates in ~~West~~state ~~Virginia~~and infederal ~~violation~~courts ofthat ~~state~~are ~~statutes,~~not ~~regulation~~part ~~and~~of ~~common~~the ~~law.~~November ~~The~~2012 ~~complaint~~settlement, ~~seeks~~representing ~~injunctive~~claims ~~relief~~by ~~and~~approximately ~~unspecified~~21 ~~damages~~plaintiffs. Discovery ~~and~~is ~~penalties~~ongoing. OnThe ~~July 26,~~Company ~~2012,~~believes ~~a co-defendant~~it ~~removed~~has ~~the~~substantial ~~case~~meritorious defenses to ~~the~~these ~~federal~~cases ~~court~~and ~~for~~maintains ~~the~~product ~~Southern~~liability ~~District~~insurance ofagainst ~~West~~such ~~Virginia~~cases. ~~On March 27~~However, ~~2013,~~litigation ~~the~~is ~~court~~inherently ~~granted~~uncertain ~~plaintiff’s~~and ~~motion~~the toCompany ~~remand~~cannot predict the ~~case~~outcome toof this ~~state court~~litigation. ~~The~~These ~~case~~actions, isif insuccessful, ~~its~~or ~~preliminary~~if ~~stages~~insurance ~~and~~does ~~the~~not ~~Company believes~~provide itsufficient ~~has~~coverage ~~substantial~~against ~~meritorious~~such ~~defenses to the~~ claims ~~alleged. However~~, ancould ~~adverse~~adversely ~~determination~~affect in the ~~case~~Company and could have ana material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Paroxetine~~Metoclopramide ~~Investigation~~Litigation. Beginning Onin ~~April 19~~2009, ~~2013,~~a ~~the~~number ~~Office~~ of ~~Fair~~product liability ~~Trading~~suits ~~issued~~were afiled ~~Statement of Objections~~ against ~~GlaxoSmithKline~~ ~~(“GSK”)~~the Company and ~~various~~certain ~~generic~~Company ~~drug companies~~affiliates, including legacy Actavis UKand ~~Limited~~Watson companies, ~~formerly~~as ~~known~~well as ~~Alpharma~~other ~~Limited~~manufacturers and distributors of metoclopramide, ~~now~~for apersonal ~~subsidiary~~injuries allegedly arising out of the use of metoclopramide. Approximately 1,260 cases are pending against the Company and/or its affiliates in state and federal courts, ~~alleging~~representing ~~that~~claims ~~GSK’s~~by ~~settlements~~multiple ~~with~~plaintiffs. ~~such~~These ~~generic~~cases ~~drug~~are ~~companies~~generally ~~improperly~~in their preliminary stages and discovery is ~~delayed~~ongoing. ~~generic~~The ~~entry~~Company ofbelieves ~~paroxetine~~that, inwith ~~violation~~respect to the majority of the ~~United~~cases ~~Kingdom’s~~against ~~competition~~the ~~laws~~legacy Watson companies, it will be defended in and indemnified by Pliva, Inc., ~~The~~an affiliate of Teva Pharmaceutical Industries, Ltd., from whom the Company purchased ~~has~~its ~~not~~metoclopramide ~~yet~~product ~~responded~~line in late 2008. With respect to the ~~Statement~~cases ofpending ~~Objections~~against ~~but~~the legacy Actavis companies, the Company is actively defending them. The Company believes that it has substantial meritorious defenses to ~~the~~these ~~allegations~~cases and maintains product liability insurance against such cases. However, anlitigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if our indemnification arrangements or ~~adverse~~insurance ~~determination~~do innot provide sufficient coverage against such claims, could adversely affect the ~~matter~~Company and could have ana material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Actavis~~Fax ~~and~~Litigation—Medical ~~its~~West ~~affiliates~~Ballas ~~are~~Pharmacy, ~~involved~~LTD, inet ~~various~~al. ~~other~~v. ~~disputes~~Anda, ~~governmental~~Inc., (Circuit Court of the County of St. Louis, State of Missouri, Case No. 08SL-CC00257). In January 2008, Medical West Ballas Pharmacy, LTD, filed a putative class action complaint against Anda, Inc. alleging conversion and~~/or~~ ~~regulatory~~alleged ~~inspections~~violations of the Telephone Consumer Protection Act (“TCPA”) and Missouri Consumer Fraud and Deceptive Business Practices Act. In April 2008, ~~inquires~~plaintiff filed an amended complaint substituting Anda, ~~investigations~~Inc., a subsidiary of the Company, as the defendant. The amended complaint alleges that by sending unsolicited facsimile advertisements, Anda misappropriated the class members’ paper, toner, ink and ~~proceedings~~employee time when they received the alleged unsolicited faxes, and that ~~could~~the ~~result~~alleged unsolicited facsimile advertisements were sent to the plaintiff in ~~litigation~~violation of the TCPA and Missouri Consumer Fraud and Deceptive Business Practices Act. The TCPA allows recovery of minimum statutory damages of $500 per violation, which can be trebled if the violations are found to be willful. The complaint seeks to assert class action claims on behalf of the plaintiff and other similarly situated third parties. In April 2008, Anda filed an answer to the amended complaint, denying the allegations. In November 2009, the court ~~litigation~~granted ~~matters~~plaintiff’s ~~that~~motion ~~arise~~to expand the proposed class of plaintiffs from ~~time~~individuals for which Anda lacked evidence of express permission or an established business relationship to ~~time.~~“All ~~The~~persons ~~process~~who on or after four years prior to the filing of ~~resolving~~this ~~matters~~action, ~~through~~were ~~litigation~~sent telephone facsimile messages advertising pharmaceutical drugs and products by or ~~other~~on ~~means~~behalf isof ~~inherently~~Defendant.” ~~uncertain~~In November 2010, the plaintiff filed a second amended complaint further expanding the definition and itscope of the proposed class of plaintiffs. On December 2, 2010, Anda filed a motion to dismiss claims the plaintiff is ~~possible~~seeking ~~that~~to anassert ~~unfavorable~~on behalf of putative class members who expressly consented or agreed to receive faxes from Defendant, or in the alternative, to stay the court proceedings pending resolution of ~~these~~Anda’s ~~matters~~petition ~~will~~to ~~adversely~~the ~~affect~~FCC (discussed below). On April 11, 2011, the ~~Company~~court denied the motion. On May 19, ~~its~~2011, the plaintiff’s filed their motion seeking ~~results~~certification of ~~operations~~a class of entities with Missouri telephone numbers who were sent Anda faxes for the period January 2004 through January 2008. The motion has been briefed. However, ~~financial~~the ~~condition~~court ~~and~~granted ~~cash~~Anda’s ~~flows~~motion to vacate the class certification hearing until similar issues are resolved in either or both the pending Nack litigation or with the FCC Petition, both of which are described in more detail below. A status conference is currently scheduled for November 13, 2013. No trial date has been set in the matter.

-On 34May 1, -2012, an additional action under the TCPA was filed by Physicians Healthsource, Inc., purportedly on behalf of the “end users of the fax numbers in the United States but outside Missouri to which faxes advertising pharmaceutical products for sale by Anda were sent.” (Physicians Healthsource Inc. v. Anda Inc. United States District Court for the Southern District of Florida, 12 CV 60798). On July 10, 2012, Anda filed its answer and affirmative defenses. The matter is in its preliminary stages and no trial date has been set.

~~Table~~- of34 ~~Contents~~-

~~The~~Several ~~following~~issues ~~discussion~~raised ofin ~~our~~plaintiff’s ~~financial~~motion ~~condition~~for ~~and~~class ~~the~~certification ~~results~~in ofthe ~~operations~~Medical West ~~should~~matter bewere ~~read in~~addressed ~~conjunction~~by ~~with~~ the ~~“Condensed~~Eighth ~~Consolidated~~Circuit ~~Financial~~Court ~~Statements”~~of ~~and~~Appeals ~~notes~~in ~~thereto~~an ~~included~~unrelated ~~elsewhere~~case into ~~this~~which ~~Quarterly~~Anda ~~Report~~is onnot ~~Form~~a ~~10-Q~~party, ~~(“Quarterly~~Nack ~~Report”)~~v. ~~This~~Walburg, ~~discussion~~No. 11-1460. ~~contains~~Nack ~~forward-looking~~concerned ~~statements~~whether ~~that~~there ~~are subject~~is toa ~~known~~private ~~and~~right ~~unknown~~of ~~risks,~~action ~~uncertainties~~for ~~and~~failing ~~other~~to include ~~factors~~any ~~that~~opt-out ~~may~~notice ~~cause~~on ~~our~~faxes ~~actual~~sent ~~results~~with express permission, contrary to ~~differ~~a ~~materially~~Federal ~~from~~Communications ~~those~~Commission ~~expressed~~(FCC) orRegulation ~~implied~~that byrequires such ~~forward-looking~~notice ~~statements~~on fax advertisements. ~~These~~The ~~risks,~~Eighth ~~uncertainties~~Circuit ~~and~~granted ~~other~~Anda ~~factors~~leave ~~include, among~~to ~~others,~~file ~~those~~an ~~identified~~amicus ~~under~~brief and ~~“Cautionary~~to ~~Note~~participate ~~Regarding~~during ~~Forward-Looking~~oral ~~Statements”~~argument in ~~our~~the ~~Annual~~matter, ~~Report~~which was held on ~~Form~~September 19, ~~10-K~~2012. ~~for~~In ~~the~~its ~~year~~ruling, ~~ended~~issued ~~December~~May 3121, ~~2012~~2013, asthe ~~revised~~Eighth byCircuit ~~Form~~held ~~8-K~~that ~~filed~~Nack’s arguments on ~~June 18,~~appeal ~~2013,~~amounted ~~and~~to ~~elsewhere~~challenges into the FCC’s ~~this~~regulation ~~Quarterly~~and ~~Report~~that the court lacked jurisdiction to entertain such challenges pursuant to the Hobbs Act and it would otherwise not decide any similar challenges without the benefit of full participation by the FCC.

~~Overview~~In a related matter, on November 30, 2010, Anda filed a petition with the FCC, asking the FCC to clarify the statutory basis for its regulation requiring “opt-out” language on faxes sent with express permission of ~~Actavis~~the recipient (the “FCC Petition”). On May 2, ~~Inc~~2012, the Consumer & Governmental Affairs Bureau of the FCC dismissed the FCC Petition. On May 14, 2012, Anda filed an application for review of the Bureau’s dismissal by the full Commission, requesting the FCC to vacate the dismissal and grant the relief sought in the FCC Petition. The FCC has not ruled on the application for review. Anda believes it has substantial meritorious defenses to the putative class actions brought under the TCPA, including but not limited to its receipt of consent to receive facsimile advertisements from many of the putative class members, and intends to defend the actions vigorously. However, these actions, if successful, could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Actavis,~~Levonorgestrel/Ethinyl ~~Inc~~Estradiol Tablets (Generic version of Seasonique®). On March 6, 2008, Duramed (~~“Actavis~~now known as Teva Women’s Health) sued the Company in the United States District Court for the District of Nevada,” “alleging that sales of the Company’s levonorgestrel/ethinyl estradiol tablets,” ora generic version of Duramed’s Seasonique ® tablets, would infringe Duramed’s U.S. Patent No. 7,320,969 (the “We969 Patent”) is(Duramed anv. ~~integrated~~Watson ~~global~~Pharmaceuticals, ~~specialty~~Inc., ~~pharmaceutical~~et. ~~company~~al., Case No. 08cv00116). The complaint sought damages and injunctive relief. On March 31, 2010, the District Court granted Duramed’s ~~engaged~~motion infor summary judgment that the ~~development,~~asserted ~~manufacturing~~claims are not invalid as obvious. The Company appealed and on March 25, ~~marketing~~2011, ~~sale~~the ~~and~~U.S. ~~distribution~~Court of ~~generic~~Appeals ~~and~~for ~~brand~~the ~~pharmaceutical~~Federal ~~products.~~Circuit ~~Through~~reversed ~~its~~the ~~third-party~~District ~~business~~Court ~~within~~and remanded the ~~Actavis~~case ~~Pharma~~for ~~segment~~a determination of whether the asserted claims are obvious. On June 9, ~~Actavis~~2011, ~~out-licenses~~Duramed ~~generic~~moved ~~pharmaceutical~~for ~~products~~a ~~rights developed~~preliminary orinjunction ~~acquired~~to byprevent the Company from launching its product until after a trial on the merits. On June 16, ~~primarily~~2011, inthe ~~Europe~~court denied Duramed’s motion. ~~Actavis~~Duramed isappealed and also ~~developing~~requested ~~biosimilar~~temporary ~~products~~injunctive ~~within~~relief during the ~~Actavis~~pendency ~~Specialty~~of ~~Brands~~its ~~segment~~appeal (Duramed v. ~~Additionally~~Watson Laboratories, weCase ~~distribute~~No. 3011-1438). On July 27, 2011, the U.S. Court of Appeals for the Federal Circuit denied Duramed’s request for temporary relief. Actavis launched its generic ~~and~~product ~~certain~~on ~~select~~July 28, ~~brand~~2011. ~~pharmaceutical~~On ~~products~~November 10, ~~manufactured~~2011, the U.S. Court of Appeals for the Federal Circuit affirmed the District Court’s denial of Duramed’s bypreliminary ~~third~~injunction ~~parties~~motion. ~~through~~On ~~our~~August 5, ~~Anda~~2011, ~~Distribution~~Duramed ~~segment~~filed a motion in the District Court to amend its complaint to add a claim for damages as a result of the Company’s launch of its generic product. ~~Our~~On ~~largest~~November 18, ~~market~~2011, isthe Company moved for summary judgment. On June 29, 2012, in a litigation involving the same patent, the United States District Court for the District of ~~America~~New ~~(“U~~Jersey held that the asserted claims of the patent are invalid.S On May 21, 2013 the United States Court of Appeals for the Federal Circuit affirmed the New Jersey District Court’s judgment that the asserted claims of the patent are invalid.”) On July 9, ~~followed~~2012, bythe ~~our~~Company ~~key~~filed ~~international~~a ~~markets~~motion ~~including~~for ~~Europe~~judgment based on the collateral estoppel effect of the New Jersey decision. In response, ~~Canada~~on July 20, ~~Australia~~2012, ~~Southeast~~Duramed ~~Asia~~filed a motion to stay the litigation pending the Federal Circuit’s decision in the appeal of the New Jersey decision. On July 25, ~~South~~2012, ~~America~~the Court granted Duramed’s motion to stay and ~~South~~denied without prejudice the Company‘s motion for summary judgment and judgment based on collateral estoppels. On July 8, 2013, Duramed informed the Nevada District Court that it did not intend to ~~Africa~~pursue further appeals of the Federal Circuit’s finding that the ‘969 Patent is invalid. On July 23, 2013 the case was dismissed with prejudice in favor of Watson.

~~Acquisition~~Drospirenone/Ethinyl Estradiol Tablets (Generic version of ~~Warner~~Yaz®). On November 5, ~~Chilcott~~2007, Bayer Schering Pharma AG sued the Company in the United States District Court for the District of Nevada, alleging that sales of the Company’s drospirenone/ethinyl estradiol tablets, a generic version of Bayer’s Yaz ® tablets, would infringe numerous Bayer patents. Bayer Schering Pharma AG v. Watson Pharmaceuticals, Inc., et. al., Case No. 07cv1472) The complaint sought damages and injunctive relief and included claims related to U.S. Patent No. 5,787,531, U.S.

~~On May 19, 2013, the Company entered into a definitive agreement under which the Company will acquire Warner Chilcott plc (“Warner Chilcott”) in a stock~~-~~for-stock~~ ~~transaction~~35 valued at approximately $8.5 billion. The proposed transaction has been unanimously approved by the Boards of Directors of Actavis and Warner Chilcott, and is supported by the management teams of both companies. At the close of the transaction, which is expected by year-~~end~~ 2013, the Company and Warner Chilcott will be combined under a new company incorporated in Ireland, where Warner Chilcott is currently incorporated. The newly created company, which is expected to be called Actavis plc, or a variant thereof (“New Actavis”), will be led by the current Actavis leadership team.

~~Acquisition~~ Patent No. RE 37,564, and U.S. Patent No. RE 37,838. The Company filed an amended answer and counterclaims for a Declaratory Judgment of ~~Uteron~~invalidity ~~Pharma~~and/or non-infringement of U.S. Patent Nos. 5,798,338, SA6,933,395, 6,958,326, 7,163,931 and RE 38,253. Thereafter, the U.S. Court of Appeals for the Federal Circuit ruled that U.S. Patent No. 5,787,531 was invalid and the claims related to that patent were dismissed. The District Court subsequently entered a consent judgment that the Company does not infringe U.S. Patent Nos. 5,798,338, 6,933,395, 6,958,326, and 7,163,931, and dismissed with prejudice Bayer’s claims related to U.S. Patent Nos. RE 37,838 and RE 38,253. The only patent still in dispute in the Nevada lawsuit is U.S. Patent No. RE 37,564 (the “’564 Patent”). On March 31, 2012, the court granted Bayer’s motion for summary judgment that the ‘564 Patent is not invalid and denied the Company’s motion for summary judgment that the patent is invalid. Actavis timely filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit. On April 16, 2013, the U.S. Court of Appeals for the Federal Circuit reversed the District Court’s decision, finding that the ‘564 patent is invalid. The Company, which had suspended sales of the generic version of the product from January 7, 2012 through March 31, 2012, resumed selling the product in April 2013. On May 15, 2013, Bayer filed a petition for rehearing in the Federal Circuit. On August 12, 2013, the Federal Circuit denied Bayer’s petition for rehearing and issued the mandate on August 20, 2013. If the Company is not ultimately successful in its defense of the lawsuit, it could adversely affect the Company’s business, results of operations, financial condition and cash flows.

Tranexamic Acid Tablets (Generic version of Lysteda®). On ~~January~~July 237, 2011, ~~2013~~Ferring B.V. sued the Company in the United States District Court for the District of Nevada, alleging that sales of the Company’s ~~completed~~tranexamic acid tablets, a generic version of Ferring’s Lysteda ® tablets, would infringe U.S. Patent No. 7,947,739 (“the ~~acquisition~~‘739 patent”) (Ferring B.V. v. Watson Pharmaceuticals, Inc., et. al., Case No. 3:11-cv-00481). On November 25, 2011, Ferring filed a second complaint in the District of ~~Belgium~~Nevada alleging that sales of the Company’s tranexamic acid tables would infringe U.S. Patent No. 8,022,106 (“the ‘106 patent”). (Ferring B.V. v. Watson Pharmaceuticals, Inc., et. al., Case No. 3:11-~~based~~cv-00853). ~~Uteron~~On ~~Pharma~~November 9, SA2012, Ferring filed a third complaint in the District of Nevada alleging that sales of the Company’s tranexamic acid tables would infringe U.S. Patent No. 8,273,795 (“the ‘795 patent”) (Ferring B.V. v. Watson Pharmaceuticals, Inc., et. al., Case No. 2:12-cv-01935). The ~~acquisition~~cases ~~was~~are ~~consummated~~still ~~for~~pending. The District Court has consolidated all three cases and has set a ~~cash~~trial for ~~payment~~January 21, 2014. On January 3, 2013, the Company began selling its generic version of ~~$142~~Lysteda®.0 ~~million~~On September 6, ~~plus~~2013, ~~assumption~~Ferring offiled ~~debt~~a ~~and~~fourth ~~other~~complaint in the ~~liabilities~~District of $7Nevada alleging that sales of the Company’s tranexamic acid tablets would infringe U.7S. ~~million~~Patent ~~and~~No. 8,487,055 up(“the to‘795 ~~$155~~patent”) (Ferring B.0V. ~~million~~v. inActavis, ~~potential~~Inc., ~~future~~et. ~~milestone~~al., ~~payments~~Case No. 3:13-cv-00477). The fourth ~~acquisition~~complaint ~~expands~~also ~~our~~seeks ~~Specialty~~damages ~~Brands’~~for ~~pipeline~~the alleged infringement of ~~Women~~the ‘739, ‘106, ‘759, and ‘055 patents by the Company’s ~~Health~~sales ~~products~~of ~~including~~its ~~two~~generic ~~potential~~version ~~near~~of Lysteda®. ~~term~~The ~~commercial~~fourth ~~opportunities~~case ~~in contraception~~has ~~and~~not ~~infertility~~been consolidated with the first three cases. The Company believes it has substantial meritorious defenses to the case. However, ~~and~~the ~~one~~Company ~~oral~~has ~~contraceptive~~sold and ~~project~~is ~~projected~~continuing to ~~launch~~sell byits ~~2018~~generic version of Lysteda ®. ~~Several~~Therefore, ~~additional~~an ~~products~~adverse infinal ~~earlier~~determination ~~stages~~that one of ~~development~~the ~~are~~patents ~~also~~in ~~included~~suit inis valid and infringed could have an adverse effect on the ~~acquisition~~Company’s business, results of operations, financial condition and cash flows.

Oxymorphone Extended-Release 35Tablets (Generic version of Opana® ER). On December 11, 2012, Endo Pharmaceuticals Inc. sued the Company in the United States District Court for the Southern District of New York, alleging that sales of the Company’s 7.5 mg and 15 mg oxymorphone extended-release tablets, generic versions of Endo’s Opana® ER, infringe U.S. Patent Nos. 7,851,482; 8,309,122; and 8,329,216, which the USPTO recently issued or Endo recently acquired. On July 11, 2013, the FDA approved the Company’s 5 mg, 10 mg, 20 mg, 30 mg, and 40 mg oxymorphone extended-release tablets. On August 6, 2013, Endo filed a motion for a preliminary injunction seeking to prevent the Company from selling its 5 mg, 10 mg, 20 mg, 30 mg, and 40 mg oxymorphone extended-release tablets. On September 12, 2013, the Court denied Endo’s motion for a preliminary injunction and the Company began selling its generic versions of Opana® ER. On September 17, 2013, Endo filed a motion for an injunction pending appeal, which is currently pending. Endo also appealed the district court’s denial of the motion for a preliminary injunction. That appeal is currently pending. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell its generic versions of Opana® ER, 5mg, 7.5 mg, 10 mg, 15 mg, 20 mg, 30 mg and 40 mg. Therefore, an adverse final determination that one of the patents in suit is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Table~~Omeprazole Delayed-release Capsules (Generic version of ~~Contents~~Prilosec®). In July 1999, Astra Aktiegolag, Aktiebolaget Hassle, Astra Merck Enterprises Inc. and Astra Merck Inc. (collectively “Astra”) sued Andrx

~~Acquisition~~- of36 ~~Actavis~~- ~~Group~~

~~Segments~~ Pharmaceuticals (which the Company acquired in 2006) in the United States District Court for the Southern District of Florida, alleging that sales of the Company’s omeprazole capsules, a generic version of Astra’s Prilosec®, would infringe certain U.S. Patents, including U.S. Patent Nos. 4,786,505 (“the ‘505 patent”) and 4,853,230 (“the ‘230 patent”) (Astra Aktiebolag et al. v. Andrx Pharmaceuticals Inc., Case No. 99cv6893). The complaint sought injunctive relief. This case was then consolidated by the Multi-District Litigation Panel and transferred to the United States District Court for the Southern District of New York. On October 30, 2002, the District Court entered Final Judgment that the Andrx products would infringe certain claims of the ‘505 patent and the ‘230 patent and that Andrx was enjoined from commercializing its product prior to April 20, 2007. On December 11, 2003, the United States Court of Appeals for the Federal Circuit affirmed the District Court decision. On February 8, 2010, Astra filed a supplemental complaint in the District Court alleging that in 2001 Andrx manufactured its generic omeprazole capsules in preparation for a launch in the event of a favorable District Court decision. Astra’s supplemental complaint sought damages for that manufacture. On July 12, 2013, the District Court scheduled a jury trial beginning September 30, 2013 on the potential damages in connection with Andrx’s manufacture (but not sale) of its generic omeprazole capsules. On September 20, 2013 the Court granted Andrx’s motion to exclude the testimony of Astra’s only expert witness (“Daubert Motion”). On September 30, the Court entered a Consent Judgment in favor of Andrx, which states “[b]ecause Astra has concluded that it cannot meet its burden to prove damages in this case in view of the Court’s grant of Andrx’s Daubert Motion, Astra requests that the Court grant judgment as a matter of law in favor of Andrx, and award Astra no damages. The Court grants that request and thus enters judgment.” Astra has indicated that it will appeal. The Company believes it has substantial meritorious defenses to the case and intends to vigorously defend against the damage claim. However, if Astra’s action is successful, a damages award could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Actavis,~~Alendronate ~~Inc~~Litigation. Beginning ~~has~~in ~~three~~2010, ~~reportable~~a ~~segments:~~number ~~Actavis~~of ~~Pharma~~product liability suits were filed against the Company and certain Company affiliates, ~~Actavis~~as ~~Specialty~~well ~~Brands~~as other manufacturers and distributors of alendronate, for personal injuries including femur fractures and ~~Anda~~osteonecrosis ~~Distribution~~of the jaw allegedly arising out of the use of alendronate. ~~The~~Approximately ~~Actavis~~424 ~~Pharma~~cases ~~segment~~are pending against the ~~includes~~Company ~~off-patent~~and/or ~~pharmaceutical~~its ~~products~~affiliates ~~that~~in ~~are~~various ~~therapeutically~~state ~~equivalent~~and tofederal ~~proprietary~~courts, ~~products.~~representing ~~The~~claims ~~Actavis~~by ~~Specialty~~approximately ~~Brands~~547 ~~segment~~plaintiffs. ~~includes~~These ~~patent-protected~~cases ~~products~~are ~~and~~generally ~~certain~~at ~~trademarked~~their ~~off-patent~~preliminary ~~products~~stages. The Company believes that ~~Actavis~~it ~~sells~~will be defended in, and indemnified for, the ~~markets~~majority asof ~~brand~~these ~~pharmaceutical~~claims ~~products~~by Merck & Co., ~~The~~the ~~Anda~~New ~~Distribution~~Drug ~~segment~~Application ~~mainly~~holder ~~distributes~~and ~~generic~~manufacturer ~~pharmaceutical~~of ~~products~~the ~~manufactured~~product sold by ~~third~~the ~~parties~~Company during most of 2008. In addition, there are 139 lawsuits that name as ~~well~~a defendant Cobalt Laboratories, which the Company acquired in 2009 as bypart ~~Actavis~~of its acquisition of the Arrow Group, ~~primarily~~in toconnection ~~independent~~with ~~pharmacies~~Cobalt’s manufacture and sale of alendronate. Nineteen of the cases naming the Company and/or Cobalt were consolidated for pre-trial proceedings as part of a multi-district litigation (MDL) matter pending in the United States District Court for the District of New Jersey (In re: Fosamax (Alendronate Sodium) Products Liability Litigation, ~~pharmacy~~MDL ~~chains~~No. 2243). In 2012, ~~pharmacy~~the ~~buying~~United States District ~~groups~~Court for the District of New Jersey granted the Company’s motion to dismiss all of the cases then pending against the Company in the New Jersey MDL matter. Several of the plaintiffs appealed the dismissal to the United States Court of Appeals for the Third Circuit and ~~physicians~~that appeal remains pending. Any cases filed against the Company in the District of New Jersey MDL after the Court’s ~~offices~~January 2012 dismissal are subject to a case management order that calls for their dismissal unless plaintiffs can establish that their claims should be exempted from the 2012 dismissal order. To date, no plaintiff with a post-January 2012 complaint in the District of New Jersey against the Company has moved for such exemption have been or are expected to be dismissed. Several other cases are part of an MDL in the United States District Court for the Southern District of New York, where the Company has filed a similar motion to dismiss. The ~~Anda~~Court ~~Distribution~~granted, ~~segment~~in ~~operating~~part, ~~results~~a ~~exclude~~motion ~~sales~~to bydismiss, which ~~Anda~~the Company expects will result in the Court removing several cases from its MDL docket. Seven additional cases are part of ~~products~~consolidated ~~developed~~litigation in the California Superior Court (Orange County). The Orange County Court partially granted a similar motion to dismiss, ~~acquired~~but the Company has not yet been able to determine how that will affect the cases filed against and served on it. All cases pending in the state court of Missouri have been discontinued against the Company. Approximately 405 cases are pending as part of a mass tort coordinated proceeding in the Superior Court of New Jersey, orAtlantic ~~licensed~~County. byIn ~~Actavis~~that ~~Pharma~~state court proceeding, responsive pleadings and ~~Actavis~~discovery ~~Specialty~~have ~~Brands~~been ~~segments~~suspended with respect to the Company pending the court’s decision on a motion to dismiss, which the Company filed in March 2012. The Court recently granted that motion, in part, but the Company has not yet assessed how that will affect the cases filed against it. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict

~~The~~- ~~Company~~37 ~~evaluates~~- segment performance based on segment net revenues and segment contribution. Segment contribution represents segment net revenues less cost of sales (excludes amortization), R&D expenses and selling and marketing expenses. The Company does not report total assets, capital expenditures, general and administrative expenses, amortization, gains or losses on asset sales or disposal and impairments by segment as not all such information is accounted for at the segment level, nor is such information used by all segments.

~~Results~~ the outcome of ~~operations,~~this ~~including~~litigation. ~~segment~~These ~~net~~actions, ~~revenues~~if successful, ~~segment~~or ~~operating~~if ~~expenses~~our ~~and~~indemnification ~~segment~~arrangements ~~contribution~~or ~~information~~insurance ~~for~~do ~~the~~not ~~Company’s~~provide ~~Actavis~~sufficient ~~Pharma~~coverage against such claims, ~~Actavis~~could ~~Specialty~~adversely ~~Brands~~affect the Company and ~~Anda~~could ~~Distribution segments~~have a material adverse effect on the Company’s business, ~~consisted~~results of ~~the~~operations, ~~following~~financial ~~(in~~condition ~~millions):~~and cash flows.

Propoxyphene Litigation. Beginning in 2011, a number of product liability suits were filed against the Company, as well as other manufacturers and distributors of propoxyphene, for personal injuries including adverse cardiovascular events or deaths allegedly arising out of the use of propoxyphene. Cases are pending against the Company and/or its affiliates in various state and federal courts, representing claims by approximately 1,385 plaintiffs. Approximately 77 of the cases naming Watson were consolidated for pre-trial 36proceedings as part of a multi-district litigation (MDL) matter pending in the United States District Court for the Eastern District of Kentucky (In re: Darvocet, Darvon, and Propoxyphene Products Liability Litigation, MDL No. 2226). Four of the MDL cases were voluntarily dismissed by plaintiffs with prejudice. On June 22, 2012, the court hearing the MDL cases granted the generic defendants’ joint motion to dismiss the remaining MDL cases. Approximately 34 of the dismissed cases were appealed by the plaintiffs to the United States Court of Appeals for the Sixth Circuit and briefing is underway. No briefing schedule in these cases has been set. Approximately 35 of the cases naming the Company have been consolidated in a state court proceeding pending in the Superior Court of California in Los Angeles. These cases are at their preliminary stages and the Company intends to file demurrers and/or motions to dismiss. The Company believes that it has substantial meritorious defenses to these cases and maintains product liability insurance against such cases. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. These actions, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company¹s business, results of operations, financial condition and cash flows.

~~Table~~Columbia Laboratories, Inc. Securities Litigation. On June 8, 2012, the Company and certain of ~~Contents~~its officers were named as defendants in a consolidated amended class action complaint filed in the United States District Court for the District of New Jersey (In re: Columbia Laboratories, Inc. Securities Litigation, Case No. CV 12-614) by a putative class of Columbia Laboratories’ stock purchasers. The amended complaint generally alleges that between December 6, 2010 and January 20, 2012, Actavis and certain of its officers, as well as Columbia Laboratories and certain of its officers, made false and misleading statements regarding the likelihood of Columbia Laboratories obtaining FDA approval of Prochieve® progesterone gel, Columbia Laboratories’ developmental drug for prevention of preterm birth. Actavis licensed the rights to Prochieve® from Columbia Laboratories in July 2010. The amended complaint further alleges that the defendants failed to disclose material information concerning the statistical analysis of the clinical studies performed by Columbia Laboratories in connection with its pursuit of FDA approval of Prochieve®. The complaint seeks unspecified damages. On August 14, 2012, the defendants filed a motion to dismiss all of the claims in the amended complaint which the court granted on June 11, 2013. Plaintiffs filed a second amended complaint on July 11, 2013. Defendants filed motions to dismiss the second amended complaint on August 9, 2013. On October 21, 2013, the court granted the motion to dismiss the second amended complaint. In ruling on the motion to dismiss, the court also ruled that if the plaintiffs seek to further amend the complaint, they must file a motion within thirty days seeking permission to do so. Actavis believes the case is without merit and that it has substantial meritorious defenses, which it intends to vigorously pursue. Additionally, Actavis maintains insurance to provide coverage for the claims alleged in the action. However, litigation is inherently uncertain and the Company cannot predict the outcome of this litigation. The action, if successful, or if insurance does not provide sufficient coverage against such claims, could adversely affect the Company and could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

	Three Months Ended June 30, 2013												Three Months Ended June 30, 2012
	ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total			ActavisPharma			ActavisSpecialtyBrands			AndaDistribution			Total
Product sales	$	1,525.5		$	126.9		$	275.8		$	1,928.2		$	976.0		$	100.9		$	240.9		$	1,317.8
Other		43.7			17.9			—			61.6			19.0			18.4			—			37.4
Net revenues		1,569.2			144.8			275.8			1,989.8			995.0			119.3			240.9			1,355.2
Operarting expenses:
Cost of sales (1)		776.8			34.4			238.8			1,050.0			517.4			28.7			207.9			754.0
Research and development		103.7			31.9			0			135.6			53.8			25.9			—			79.7
Selling and marketing		160.9			47.0			27.7			235.6			52.6			42.5			22.8			117.9
Contribution	$	527.8		$	31.5		$	9.3		$	568.6		$	371.2		$	22.2		$	10.2		$	403.6
Contibution margin		33.6	%		21.8	%		3.4	%		28.6	%		37.3	%		18.6	%		4.2	%		29.8	%
General and administrative											225.8												121.8
Amortization											149.6												105.8
Loss on asset sales, impairments, and contingent consideration adjustment, net											655.3												79.8
Operating income (loss)										$	(462.1	)										$	96.2
Operating margin											(23.2	%)											7.1	%

Ibandronate Tablets (Generic version of Boniva^®). On September 21, 2007, Hoffmann-La Roche Inc. sued Cobalt Laboratories, Inc. and Cobalt Pharmaceuticals Inc. (both of which were subsequently acquired by the Company in 2009) in the United States District Court for the District of New Jersey, alleging that sales of Ibandronate Tablets, a generic version of Hoffmann-La Roche’s Boniva ^® tablets, would infringe U.S. Patent Nos. 4,927,814 (the ‘814 Patent); 6,294,196 (the ‘196 Patent); and 7,192,938 (the ‘938 Patent) (Hoffmann-La Roche Inc. v. Cobalt Pharmaceuticals Inc., et. al., Case No. 07cv4540). The complaint sought damages and injunctive relief. Thereafter, Hoffmann-La Roche asserted additional claims, alleging infringement of U.S. Patent Nos. 7,410,957 (the ‘957 Patent) and 7,718,634 (the ‘634 patent) against the Company, and the parties entered into stipulations to dismiss Hoffman-La Roche’s claims related to the ‘196 and the ‘938 Patent. On August 24, 2010, the District Court granted Hoffmann-La Roche’s motion for summary judgment that the Company would infringe at

~~(1)~~- ~~Excludes~~38 ~~amortization~~- ~~of acquired intangibles, including product rights.~~

~~Net~~ least ~~Revenues~~one claim of the ‘814 patent. On March 17, 2012, the ‘814 patent expired, leaving the ‘957 and ‘634 patents as the only patents in suit. On May 7, 2012, the District Court granted the Company’s motion for summary judgment that certain claims of the ‘634 patent are invalid. On October 1, 2012, the District Court granted the Company’s motion for summary judgment that certain claims of the ‘957 patent are invalid. On January 25, 2013 the District Court denied Plaintiffs’ motion for reconsideration of the summary judgment decisions finding the ‘634 patent and ‘957 patent claims invalid. The plaintiff has appealed. Oral argument on the appeal is scheduled for December 6, 2013. In June 2012, the Company began selling its generic version of Boniva ®. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell its generic version of Boniva ®. Therefore, an adverse final appellate determination that one of the patents in suit is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Our~~Generess® ~~Pharma~~Fe ~~segment~~– ~~develops,~~On ~~manufactures~~November 22, ~~markets~~2011, ~~sells~~Warner ~~and~~Chilcott ~~distributes~~Company ~~generic~~sued Mylan Inc., ~~branded~~Mylan ~~generic~~Pharmaceuticals Inc. and ~~OTC~~Famy ~~products~~Care Ltd. ~~Generic~~in ~~products~~the ~~are~~ United States District Court for the ~~therapeutic~~District ~~equivalent~~of toNew ~~their~~Jersey, ~~brand~~alleging ~~name~~that ~~counterparts~~sales of norethindrone and ~~are~~ethinyl ~~generally~~estradiol ~~sold~~and atferrous ~~prices~~fumarate ~~significantly~~tablets, ~~less~~a ~~than~~generic version of Warner Chilcott’s Generess ® Fe tablets (which is exclusively licensed by the ~~brand~~Company), ~~product~~would infringe U.S. AsPatent ~~such~~No. 6,667,050 ~~generic~~(the ~~products~~‘050 ~~provide~~patent) an(Warner ~~effective~~Chilcott ~~and~~Company LLC ~~cost-efficient~~v. ~~alternative~~Mylan toInc., ~~brand~~et ~~products~~al., ~~When~~Case ~~patents~~No. 11cv6844). ~~or other~~The ~~regulatory~~complaint ~~exclusivity~~seeks noinjunctive ~~longer~~relief. ~~protect~~On aDecember 12, ~~brand~~2011 ~~product,~~Warner orChilcott ifsued weLupin ~~are~~Ltd. ~~successful~~and Lupin Pharmaceuticals, Inc. in ~~developing~~the aUnited ~~bioequivalent~~States District Court for the District of New Jersey, ~~non-infringing~~alleging that sales of Lupin’s generic version of aGeneress ~~brand~~® ~~product~~Fe would infringe the ‘050 patent. (Warner Chilcott Company LLC v. Lupin Ltd., ~~opportunities~~et ~~exist~~al., Case No. 11cv7228). The complaint seeks injunctive relief. Warner Chilcott’s lawsuits against Mylan and Lupin have been consolidated and remain pending. Pursuant to ~~introduce~~the ~~off~~provisions of the Hatch-~~patent~~Waxman orAct, ~~generic~~the ~~counterparts~~FDA is precluded from granting final approval to the ~~brand product.~~generic ~~Additionally,~~applicants weuntil ~~distribute~~the earlier of thirty months after the generic ~~versions~~applicant provided Warner Chilcott with notice of ~~third~~its ~~parties’~~abbreviated ~~brand~~new ~~products~~drug ~~(sometimes~~application ~~known~~filing asor ~~“authorized~~the ~~generics”)~~generic toapplicant prevails in the ~~extent~~pending ~~such~~litigation. The ~~arrangements~~trial ~~are~~is ~~complementary~~scheduled to ~~our~~begin ~~core~~on ~~business~~January 13, 2014. ~~Our~~The ~~portfolio~~Company believes Warner Chilcott has meritorious claims to prevent the generic applicants from launching a generic version of Generess Fe. However, if a generic applicant prevails in the ~~products~~pending ~~includes~~litigation ~~products~~or welaunches ~~have~~a ~~internally~~generic ~~developed~~version of Generess Fe before the pending litigation is finally resolved, ~~products~~it wecould have ~~licensed~~an ~~from~~adverse ~~third~~effect ~~parties~~on the Company’s business, ~~and~~results ~~products~~of weoperations, ~~distribute~~financial ~~for~~condition ~~third~~and ~~parties~~cash flows.

~~Net~~West ~~revenues~~Virginia inPrescription ~~our~~Drug ~~Actavis~~Abuse ~~Pharma~~Litigation. ~~segment~~On ~~include~~June 26, ~~product~~2012, ~~sales~~the ~~and~~State ~~other~~of ~~revenue.~~West ~~Our~~Virginia ~~Actavis~~filed ~~Pharma~~a ~~segment~~lawsuit ~~product~~against ~~line~~multiple distributors ~~includes~~of prescription drugs, including Anda, Inc., a ~~variety~~subsidiary of ~~products~~the ~~and~~Company ~~dosage~~(State ~~forms.~~of ~~Indications~~West ~~for~~Virginia ~~this~~v. ~~line include~~Amerisourcebergen ~~pregnancy~~Drug ~~prevention~~Corporation, ~~pain~~et. ~~management~~al., ~~depression,~~Boone ~~hypertension,~~County ~~attention~~Circuit Court Civil Case No. 12-~~deficit/hyperactivity~~C-141). ~~disorder~~The complaint generally alleges that the defendants distributed prescription drugs in West Virginia in violation of state statutes, regulation and ~~smoking~~common ~~cessation~~law. ~~Dosage~~The ~~forms~~complaint ~~include~~seeks ~~oral~~injunctive ~~solids~~relief and unspecified damages and penalties. On July 26, ~~semi~~2012, a co-~~solids~~defendant removed the case to the federal court for the Southern District of West Virginia. On March 27, ~~liquids~~2013, ~~gels~~the ~~transdermals~~court granted plaintiff’s motion to remand the case to state court. The case is in its preliminary stages and the Company believes it has substantial meritorious defenses to the claims alleged. However, ~~injectables~~an adverse determination in the case could have an adverse effect on the Company’s business, ~~inhalation~~results of operations, financial condition and ~~oral transmucosals~~cash flows.

~~Other~~Paroxetine ~~revenues~~Investigation. ~~consist~~On ~~primarily~~April 19, 2013, the Office of ~~royalties~~Fair Trading issued a Statement of Objections against GlaxoSmithKline (“GSK”) and various generic drug companies, ~~milestone~~including ~~receipts~~Actavis UK Limited, ~~commission~~formerly ~~income~~known ~~and~~as ~~revenue~~Alpharma ~~from~~Limited, now a subsidiary of the Company, alleging that GSK’s settlements with such generic drug companies improperly delayed generic ~~licensing~~entry ~~arrangements~~of paroxetine, in violation of the United Kingdom’s competition laws. The Company has not yet responded to the Statement of Objections but believes it has substantial meritorious defenses to the allegations. However, an adverse determination in the matter could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~Net~~Actavis ~~revenues~~and ~~within~~its ~~our~~affiliates ~~Actavis~~are ~~Pharma~~involved ~~segment~~in ~~increased~~various ~~57.7%~~other disputes, governmental and/or ~~$574.2~~regulatory ~~million to~~inspections, $1inquires,~~569.2~~ ~~million~~investigations ~~for~~and proceedings ~~the~~that ~~three~~could ~~months~~result ~~ended~~in ~~June 30~~litigation, ~~2013~~and ~~compared~~other tolitigation ~~net~~matters ~~revenues~~that ofarise ~~$995.0~~from ~~million~~time into ~~the prior year period~~time. The ~~increase~~process inof ~~net~~resolving ~~revenues~~matters isthrough ~~primarily~~litigation ~~due~~or toother ~~the~~means ~~Actavis~~is ~~Group~~inherently ~~acquisition~~uncertain inand ~~October~~it ~~2012~~is ~~partially~~possible ~~offset~~that ~~by lower~~an ~~unit~~unfavorable ~~sales~~resolution of these ~~the~~matters ~~authorized~~will ~~generic~~adversely ~~version~~affect ofthe ~~Lipitor® (atorvastatin)~~Company, ~~which~~its ~~the~~results ~~Company~~of ~~ceased distributing~~operations, infinancial ~~the~~condition ~~first~~and ~~quarter~~cash ~~2013 ($105~~flows.4 ~~million).~~

- 3739 -

~~Cost~~NOTE of13 ~~Sales~~– SUBSEQUENT EVENTS

~~Cost~~Acquisition of ~~sales~~Warner ~~includes~~Chilcott production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit-sharing or royalty payments for products sold pursuant to licensing agreements, inventory reserve charges and excess capacity utilization charges, where applicable. Cost of sales does not include amortization costs for acquired product rights or other acquired intangibles.

~~Cost~~On ofMay 19, ~~sales~~2013, ~~within~~the ~~our~~Company ~~Actavis~~entered ~~Pharma~~into ~~segment~~a ~~increased~~definitive ~~50.1%~~agreement ~~or $259.4 million~~ to ~~$776.8~~acquire ~~million~~Warner ~~for~~Chilcott ~~the~~plc ~~three~~(“Warner ~~months~~Chilcott”) ~~ended~~in ~~June 30,~~a stock-for-stock ~~2013 compared to $517~~transaction.4 ~~million~~At in the ~~prior~~close ~~year~~of ~~period.~~the ~~The~~transaction, ~~increase~~which inoccurred ~~cost~~on ofOctober 1, ~~sales~~2013, ~~was~~the ~~mainly~~Company ~~due~~and toWarner ~~increased~~Chilcott ~~product~~were ~~sales~~combined asunder a ~~result~~new ofcompany ~~the~~incorporated ~~Actavis~~in ~~Group~~Ireland, ~~acquisition offset~~Actavis inplc. ~~part~~Under by the ~~discontinuation~~terms of ~~our~~the ~~sales~~transaction, ofWarner Chilcott ~~atorvastatin~~shareholders received 0.160 ~~Cost~~shares of ~~sales~~Actavis asplc, afor ~~percentage~~each ofWarner ~~revenue~~Chilcott ~~decreased~~share tothey 49owned.5% asAt ~~compared~~closing, tothe ~~52.0%~~transaction invalue, ~~the~~including ~~prior~~assumed ~~period~~debt was approximately $9.1 billion.

~~Research~~On ~~and~~October 1, ~~Development~~2013, ~~Expenses~~Actavis plc, began trading under the symbol previously used by the Company — ACT — on the New York Stock Exchange as a company incorporated in Ireland.

~~R&D~~- ~~expenses~~40 ~~consist predominantly of personnel~~-~~related~~ ~~costs, active pharmaceutical ingredient (“API”) costs, contract research, biostudy and facilities costs associated with product development.~~

~~Selling~~ITEM ~~and~~2. ~~Marketing~~MANAGEMENT’S ~~Expenses~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Selling~~The ~~and~~following ~~marketing~~discussion ~~expenses~~of ~~consist~~our ~~mainly~~financial condition and the results of ~~personnel~~operations should be read in conjunction with the “Condensed Consolidated Financial Statements” and notes thereto included elsewhere in this Quarterly Report on Form 10-~~related~~Q ~~costs~~(“Quarterly Report”). This discussion contains forward-looking statements that are subject to known and unknown risks, ~~distribution~~uncertainties ~~costs~~and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, ~~professional~~uncertainties ~~services~~and ~~costs~~other factors include, ~~insurance~~among others, those ~~depreciation~~identified under “Cautionary Note Regarding Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2012, as revised by Form 8-K filed on June 18, 2013, and ~~travel~~elsewhere ~~costs~~in this Quarterly Report.

~~Selling~~Overview ~~and~~of ~~marketing expenses within our~~ Actavis ~~Pharma segment increased 205.9% or $108.3 million to $160.9 million for the three months ended June 30~~, ~~2013 compared to $52~~Inc.6 ~~million in the prior year period primarily due to the Actavis Group acquisition.~~

Actavis, Inc. (“Actavis,” “Company,” “Our,” or “We”) is an integrated global specialty pharmaceutical company engaged in the development, manufacturing, marketing, sale and distribution of generic and brand pharmaceutical products. Through its third-party business within the Actavis Pharma segment, Actavis out-licenses generic pharmaceutical products rights developed or acquired by the Company, primarily in Europe. Actavis is also developing biosimilar products within the Actavis Specialty Brands ~~Segment~~segment. Additionally, we distribute generic and certain select brand pharmaceutical products manufactured by third parties through our Anda Distribution segment. Our largest market is the United States of America (“U.S.”), followed by our key international markets including Europe, Canada, Australia, and Southeast Asia.

~~Net~~Acquisition ~~Revenues~~of Warner Chilcott

~~Our~~On May 19, ~~Actavis~~2013, ~~Specialty~~the ~~Brands~~Company ~~segment~~entered ~~includes~~into ~~our~~a ~~promoted~~definitive ~~products~~agreement ~~such~~to asacquire ~~Rapaflo®~~Warner Chilcott plc (“Warner Chilcott”) in a stock-for-stock transaction. At the close of the transaction, ~~Gelnique®~~which occurred on October 1, ~~Crinone®~~2013, ~~Trelstar®~~the Company and Warner Chilcott were combined under a new company incorporated in Ireland, ~~Generess®~~Actavis Feplc. Under the terms of the transaction, ~~Androderm®~~Warner ~~and~~Chilcott ashareholders ~~number~~ received 0.160 shares of ~~non-promoted~~Actavis ~~products~~plc, for each Warner Chilcott share they owned. At closing, the transaction value, including assumed debt, was approximately $9.1 billion.

~~Other~~In ~~revenues~~order to obtain regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the Warner Chilcott acquisition, Actavis ~~Specialty~~was ~~Brands~~required ~~segment~~to ~~consist~~divest ~~primarily~~certain ofassets. ~~co-promotion~~On ~~revenue~~October 1, ~~royalties~~ ~~and~~2013, ~~the~~four ~~recognition~~generic ofpharmaceutical ~~deferred~~products ~~revenue~~were ~~relating~~sold to ~~our~~Amneal Pharmaceuticals ~~obligation~~for consideration of $10.0 million, subject to ~~manufacture~~certain refunds of purchase price provisions. The divested products consisted of both commercial and ~~supply~~development ~~brand~~stage products toin ~~third~~both ~~parties~~oral contraceptive and osteoporosis treatment. ~~Other~~Net sales ~~revenues~~of ~~also~~divested ~~include~~products ~~revenue~~were ~~recognized~~$2.5 ~~from~~million ~~R&D~~and $2.7 million for the nine months ended September 30, 2013 and ~~licensing~~September 30, ~~agreements~~2012, respectively.

~~Net~~Acquisition ~~revenues within our Actavis Specialty Brands segment increased 21.4% or $25.5 million to $144.8 million for the three months ended June 30, 2013 compared to net revenues~~ of ~~$119.3~~Uteron ~~million in the prior year period. The increase in net revenues was due to sale of Kadian®~~Pharma, ~~acquired~~SA as part of the acquisition of the Actavis Group , and continued product sales growth from Generess® Fe and Rapaflo®. The quarter also included sales to Merck of launch quantities of Oxytrol OTC as they prepare to commercialize the product.

~~Cost~~On January 23, 2013, the Company completed the acquisition of Belgium-based Uteron Pharma, SA. The acquisition was consummated for a cash payment of $142.0 million, plus assumption of debt and other liabilities of $7.7 million and up to $155.0 ~~Sales~~million in potential future milestone payments. The acquisition expands our Specialty Brands’ pipeline of Women’s Health products including two potential near term commercial opportunities in contraception and infertility, and one oral contraceptive project projected to launch by 2018. Several additional products in earlier stages of development are also included in the acquisition.

~~Cost~~- of41 ~~sales includes production and packaging costs for the products we manufacture, third party acquisition costs for products manufactured by others, profit~~-~~sharing~~ or royalty payments for products sold pursuant to licensing agreements, inventory reserve charges and excess capacity utilization charges, where applicable. Cost of sales does not include amortization costs for acquired product rights or other acquired intangibles.

~~Table~~Acquisition of ~~Contents~~Actavis Group

~~Cost~~On ofOctober 31, ~~sales~~2012, ~~within~~Watson ~~our~~Pharmaceuticals, ~~Actavis~~Inc. ~~Specialty~~completed ~~Brands~~the ~~segment~~acquisition ~~increased 19.9%~~of orthe $5Actavis Group.~~7million~~ toThe ~~$34.4~~acquisition ~~million~~was consummated for ~~the~~a cash ~~three~~payment ~~months~~of ~~ended~~€4.2 ~~June 30~~billion, ~~2013~~or ~~compared~~approximately to $285.75 ~~million~~billion, inand ~~the~~a ~~prior~~contingent ~~year~~consideration ~~period.~~payment ~~The~~of ~~increase~~5.5 million ~~was~~newly ~~driven~~issued ~~mainly~~shares byof ~~increased~~Actavis, ~~product~~Inc. ~~volume~~common ~~from Generess® Fe and Rapaflo®~~stock. ~~Cost~~Actavis ofGroup ~~sales~~was as a ~~percentage~~privately ofheld ~~net~~generic ~~revenue~~pharmaceutical ~~decreased~~company specializing toin ~~23.8%~~the asdevelopment, ~~compared~~manufacture toand ~~24.1%~~sale inof ~~the~~generic ~~prior year period~~pharmaceuticals.

~~Research~~Acquisition ~~and~~of ~~Development~~Medicines360 ~~Expenses~~

~~R&D~~On ~~expenses~~June 11, ~~consist~~2013, ~~mainly~~the Company entered into an exclusive license agreement with Medicines360 to market, sell and distribute Medicines360 LNG20 intrauterine device (“LNG 20”) in the U.S and in Canada for a payment of ~~personnel~~approximately $52.3 million. The Company will also pay Medicines360 certain regulatory and sales based milestone payments totaling up to nearly $125.0 million plus royalties. Medicines360 retains the rights to market the product in the U.S. public sector, including family planning clinics that provide services to low-~~related~~income ~~costs~~women. LNG20, ~~contract~~originally ~~research~~developed by Uteron Pharma S.P.R.L. in Belgium, is designed to deliver 20 mcg of levonorgestrel per day for the indication of long term contraception, and is currently in Phase III clinical trials in the United States. Pending FDA approval, the LNG20 product could be launched in the U.S. as early as 2014. The transaction has been accounted for using the acquisition method of accounting. This method requires that assets acquired and ~~facilities~~liabilities ~~costs~~assumed ~~associated~~in ~~with~~a business combination be recognized at their respective fair values as of the acquisition date and that in-process research and development (“IPR&D”) be recorded at fair value on the balance sheet. In connection with the acquisition, the Company recorded $191.7 million in IPR&D, $6.7 million in prepaid R&D and contingent consideration of ~~our~~$146.1 ~~products~~million.

~~R&D~~Agreements expenses within our Actavis Specialty Brands segment increased 23.2% or $6.0 million to $31.9 million for the three months ended June 30, 2013 compared to $25.9 million in the prior year period. The increase in R&D expenses was primarily due to higher biosimilar product development costs ($7.4 million) and R&D costs incurred by Uteron, which was acquired during the first quarter of 2013, partially offset by lower U.S. clinical trial costs.

~~Selling~~Business ~~and~~Developments ~~Marketing Expenses~~

~~Selling~~The Company entered into an agreement with Endo Pharmaceuticals Inc. (“Endo”) and ~~marketing~~Teikoku ~~expenses~~Seiyaku ~~consist~~Co., ~~mainly~~Ltd ofto ~~personnel-~~settle all outstanding patent litigation related ~~costs~~to Actavis’ generic version of Lidoderm®. Per the terms of the agreement, on September 15, 2013, the Company launched its generic version of Lidoderm® (lidocaine topical patch 5%) to customers in the U.S. more than two years before the product’s ~~promotion~~patents ~~costs~~expire. Under applicable Hatch Wax, ~~distribution~~the ~~costs~~Company believes it is entitled to 180 days of marketing exclusivity. Lidoderm® is a local anesthetic indicated to relieve post-shingles pain. Additionally, ~~professional~~ ~~services~~under ~~costs~~the terms of the agreement, ~~insurance~~the Company has received and ~~depreciation~~distributed branded Lidoderm® product prior to the launch of the generic version of Lidoderm®.

~~Selling~~On ~~and~~August 1, ~~marketing~~2013, ~~expenses~~the ~~within~~Company ~~our~~entered ~~Actavis~~into ~~Specialty~~a ~~Brands segment~~purchase ~~increased~~agreement ~~10.6%~~with orPalau $4Pharma S.5A. ~~million~~(“Palau”) to ~~$47~~acquire worldwide product rights to develop and commercialize albaconazole for the treatment of candidiasis.0 ~~million~~The Company simultaneously entered into a manufacturing and supply agreement with Palau for the ~~three~~supply ~~months~~of ~~ended~~clinical ~~June 30~~and commercial quantities of the products. In connection with the execution of the agreements, ~~2013~~the ~~compared~~Company topaid an upfront non-refundable payment of €10.0 million, or $4213.54 million to Palau, which was recorded as research and development expense in the ~~prior~~third ~~year~~quarter ~~period~~of 2013. The agreement ~~increase~~also ~~related~~provides for certain future milestone payments up to ~~higher~~€18.0 million ~~product~~in ~~promotional~~aggregate ~~spending~~upon the successful completion of Phase III trials of the products, and regulatory approvals.

~~Anda~~On ~~Distribution~~May 1, ~~Segment~~2013, the Company entered into an agreement to acquire the worldwide rights to Valeant Pharmaceuticals International, Inc. (“Valeant”) metronidazole 1.3% vaginal gel antibiotic development product, a topical antibiotic for the treatment of bacterial vaginosis. Under the terms of the agreement, the Company will acquire the product upon FDA approval for approximately $57.0 million which includes upfront and certain milestone payments, and guaranteed royalties for the first three years of commercialization. Upon Food and Drug Administration (“FDA”) approval or receipt of product launch quantity, the Company will account for this transaction using the acquisition method of accounting. In the event of generic competition on metronidazole 1.3% and should the Company choose to launch an authorized generic product, the Company would share the gross profits of the authorized generic with Valeant.

~~Net Revenues~~- 42 -

~~Net~~On ~~revenues~~April 5, ~~within~~2013, ~~our~~the ~~Anda~~Company ~~Distribution~~and ~~segment~~Valeant ~~increased~~entered 14into an agreement for Actavis to be the exclusive marketer and distributor of the authorized generic version of Valeant’s Zovirax® ointment (acyclovir 5%) product. Under the terms of the agreement, Valeant will supply the Company with a generic version of Valeant’s Zovirax® ointment product and the Company will market and distribute the product in the U.S. Additionally, Valeant granted the Company the exclusive right to co-promote Zovirax® cream (acyclovir 5%) orto ~~$34~~obstetricians and gynecologists in the U.9S. ~~million~~and the Company granted Valeant the exclusive right to ~~$275~~co-promote Actavis Specialty Brands’ Cordran® Tape (flurandrenolide) product in the U.8S. ~~million~~Under ~~for~~terms of the ~~three~~agreement ~~months~~related ~~ended~~to ~~June 30~~the co-promotion of Zovirax® cream, ~~2013~~the ~~compared~~Company will utilize its existing Specialty Brands sales and marketing structure to ~~net~~promote ~~revenues~~the ofproduct ~~$240~~and will receive a co-promotion fee from sales generated by prescriptions written by its defined targeted physician group.9 ~~million~~The infees earned by Actavis under the ~~prior year~~Zovirax cream co-promotion arrangement will be recognized in other revenues in the period earned. ~~The~~Under ~~increase~~the ~~was~~terms ~~primarily~~of ~~due~~the toCordran® ~~increased~~Tape co-promotion agreement, Valeant will utilize its existing Dermatology sales ofand ~~third~~marketing ~~party~~structure ~~branded~~to ~~products~~promote ~~($29~~the product, and will receive a co-promotion fee on sales.4 ~~million)~~The fees paid by Actavis under the Cordran Tape arrangement will be recognized in the period incurred as selling and marketing expenses.

~~Cost~~Segments ~~of Sales~~

~~Cost~~Actavis, ofInc. ~~sales~~has ~~includes~~three ~~third~~reportable ~~party~~segments: ~~acquisition~~Actavis ~~costs~~Pharma, ~~profit~~Actavis Specialty Brands, and Anda Distribution. The Actavis Pharma segment includes off-~~sharing~~patent orpharmaceutical ~~royalty~~products ~~payments~~that ~~for~~are therapeutically equivalent to proprietary products. ~~sold~~The ~~pursuant~~Actavis Specialty Brands segment includes patent-protected products and certain trademarked off-patent products that Actavis sells and tomarkets ~~licensing~~as ~~agreements~~brand pharmaceutical products. The Anda Distribution segment distributes generic and ~~inventory~~brand ~~reserve~~pharmaceutical ~~charges~~products manufactured by third parties, ~~where~~as ~~applicable~~well as by Actavis, primarily to independent pharmacies, pharmacy chains, pharmacy buying groups and physicians’ offices. ~~Cost~~The ofAnda ~~sales~~Distribution ~~does~~segment ~~not~~operating ~~include~~results ~~amortization~~exclude ~~costs~~sales ~~for~~by ~~acquired~~Anda ~~product~~of ~~rights~~products developed, acquired, or ~~other~~licensed ~~acquired~~by ~~intangibles~~Actavis Pharma and Actavis Specialty Brands segments.

~~Cost~~The ofCompany ~~sales~~evaluates ~~within~~segment ~~our~~performance ~~Anda~~based ~~Distribution~~on segment ~~increased~~net ~~14.9%~~revenues orand ~~$30~~segment contribution.9 ~~million~~Segment tocontribution ~~$238.8~~represents ~~million~~segment ~~for~~net revenues ~~the~~less ~~three~~cost ~~months~~of ~~ended June 30,~~sales ~~2013~~(excludes ~~compared~~amortization), toR&D ~~$207.9~~expenses ~~million~~and inselling ~~the~~and ~~prior~~marketing ~~year period~~expenses. The ~~increase~~Company indoes ~~costs~~not ofreport ~~sales~~total ~~and~~assets, ~~costs~~capital ofexpenditures, ~~sales~~general asand aadministrative ~~percentage~~expenses, ofamortization, ~~net~~gains ~~revenues~~or ~~was~~losses ~~due~~on ~~to the higher~~ asset sales ofor ~~third~~disposal ~~party~~and ~~branded~~impairments ~~products.~~by ~~Cost~~segment ~~of sales~~ as anot ~~percentage~~all ~~of net~~such ~~revenue~~information ~~increased~~is ~~slightly~~accounted tofor ~~86.6%~~at ~~compared to 86.3% in~~ the ~~prior~~segment ~~year~~level, ~~period~~nor ~~primarily~~is ~~due~~such toinformation ~~the~~used ~~higher~~by ~~sales~~all ~~of third party branded products~~segments.

~~Selling~~- ~~and~~43 ~~Marketing~~- ~~Expenses~~

-Three 39Months -Ended September 30, 2013 Compared to Three Months Ended September 30, 2012

~~Table~~Results of ~~Contents~~operations, including segment net revenues, segment operating expenses and segment contribution information for the Company’s Actavis Pharma, Actavis Specialty Brands and Anda Distribution segments, consisted of the following (in millions):

Selling and marketing expenses within our Anda Distribution segment increased 21.5% or $4.9 million to $27.7 million for the three months ended June 30, 2013 compared to $22.8 million in the prior year period. The increase primarily related to higher freight costs.


	Three Months Ended September 30, 2013												Three Months Ended September 30, 2012
	Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total			Actavis Pharma			Actavis Specialty Brands			Anda Distribution			Total

Product sales	$	1,527.2		$	137.7		$	307.1		$	1,972.0		$	912.5		$	105.2		$	243.0		$	1,260.7
Other		24.9			16.1			—			41.0			8.4			16.1			—			24.5


Net revenues		1,552.1			153.8			307.1			2,013.0			920.9			121.3			243.0			1,285.2
Operating expenses:
Cost of sales (1)		774.3			41.4			267.2			1,082.9			487.5			30.3			206.3			724.1
Research and development		111.1			47.7			—			158.8			55.3			57.2			—			112.5
Selling and marketing		148.6			46.1			28.9			223.6			51.9			40.0			22.8			114.7

Contribution	$	518.1		$	18.6		$	11.0		$	547.7		$	326.2		$	(6.2	)	$	13.9		$	333.9

Contribution margin		33.4	%		12.1	%		3.6	%		27.2	%		35.4	%		(5.1	)%		5.7	%		26.0	%
General and administrative											232.1												110.1
Amortization											146.3												95.2
Loss on asset sales, impairments, and contingent consideration adjustment, net											13.6												39.6

Operating income (loss)										$	155.7											$	89.0

Operating margin											7.7	%											6.9	%

~~General~~(1) ~~and~~Excludes ~~Administrative~~amortization ~~Expenses~~of acquired intangibles, including product rights.

	Three Months Ended June 30,						Change
($ in millions):	2013			2012			Dollars		%
General and administrative expenses	$	225.8		$	121.8		$	104.0		85.4	%
as a % of net revenues		11.3	%		9.0	%

Actavis Pharma Segment

~~General~~Net ~~and~~Revenues administrative expenses consist mainly of personnel-related costs, facilities costs, insurance, depreciation, litigation and settlement costs and professional services costs which are general in nature and not directly related to specific segment operations.

~~General~~Our Pharma segment develops, manufactures, markets, sells and ~~administrative~~distributes ~~expenses~~generic, ~~increased~~branded ~~85.4%~~generic orand ~~$104~~OTC products.0 ~~million~~Generic products are the therapeutic equivalent to ~~$225.8~~their ~~million~~brand ~~for~~name ~~the~~counterparts ~~three~~and ~~months~~are ~~June 30,~~generally ~~2013~~sold ~~compared~~at toprices ~~$121~~significantly less than the brand product.8 ~~million~~As insuch, ~~the~~generic ~~prior~~products ~~year~~provide ~~period~~an ~~due~~effective and cost-efficient alternative to ~~higher international~~brand ~~costs~~products. ~~primarily~~When ~~from~~patents ~~the~~or ~~Actavis~~other ~~Group~~regulatory ~~acquisition~~exclusivity ~~($45.8~~no ~~million)~~longer protect a brand product, ~~higher~~or ~~domestic~~if ~~costs~~we asare successful in developing a bioequivalent, ~~result~~non-infringing version of ~~higher~~a ~~personnel~~brand product, ~~legal~~opportunities ~~and~~exist ~~other~~to ~~costs~~introduce ~~($25~~off-patent or generic counterparts to the brand product.5 ~~million)~~Additionally, ~~higher~~we ~~accruals~~distribute ~~for~~generic ~~legal~~versions ~~matters~~of third parties’ brand products (~~$25.5~~sometimes ~~million~~known as “authorized generics”) ~~and~~to ~~higher~~the ~~acquisition and~~extent ~~integration~~such ~~costs~~arrangements asare acomplementary ~~result~~to our core business. Our portfolio of ~~costs~~generic ~~related~~products toincludes ~~the~~products ~~pending~~we ~~Warner~~have ~~Chilcott~~internally ~~acquisition~~developed, ~~($11.0~~products ~~million)~~we have licensed from third parties, and products we distribute for third parties.

~~Amortization~~Net revenues in our Ac

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