Good morning. My name is Keith, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Valeant Third Quarter 2014 Earnings Conference Call. [Operator Instructions] Laurie Little, Head of Investor Relations, you may begin your conference.

Thank you, Keith. Good morning, everyone, and welcome to Valeant's Third Quarter 2014 Financial Results Conference Call. Presenting on the call today are J. Michael Pearson, Chairman and Chief Executive Officer; and Howard Schiller, Chief Financial Officer. In addition, Dr. Ari Kellen, Company Co-Chairman, will be available for questions. In addition to a live webcast, a copy of today's slide presentation can be found on our website under the Investor Relations section. Before we begin, our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking statement legend at the beginning of our presentation as it contains important information. In addition, this communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates to the exchange offer which Valeant has made to Allergan share stockholders. The exchange offer is being made pursuant to a tender offer statement on Schedule TO, including the offer to exchange the letter of election and transmittal and other related offer materials, and a registration statement on Form S-4 filed by Valeant with the SEC on June 18, 2014, and with the CSA as many -- as each may be amended from time to time. These materials contain important information, including the terms and conditions of the offer. In addition, Valeant has filed a preliminary proxy statement with the SEC on June 24, 2014, as may be amended from time to time. Pershing Square Capital Management has filed a definitive solicitation statement with the SEC on July 11, 2014, and a preliminary proxy statement on July 23, 2014. And Valeant and Pershing Square may file one or more additional proxy statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, prospectus…

Thank you, Laurie. Good morning, everyone, and thank you for joining us for our third quarter earnings call. We are pleased to report an exceptionally strong Q3. On our call today, I will review our results, highlight the key drivers of our successful performance across all our businesses and update you on recent and near-term product launches. Howard will then provide an update on our financial performance and update on our B+L integration and our expectations for the remainder of 2014. Finally, we will provide you a brief update on our offer for Allergan. After our remarks, Howard, Ari Kellen, and I will be available for Q&A. For the quarter, our total revenue was $2.1 billion, an increase of 33% over the prior year. This is our second best revenue quarter ever. Our cash EPS was $2.11, an increase of 48% over the prior year and well in excess of our guidance. Our adjusted cash flow from operations for the quarter was $771 million, an increase of 89% over the prior year. GAAP cash flow from operations was $619 million, a 207% increase over the prior year. This quarter's exceptionally strong cash flow generated -- generation resulted in a cash conversion of 107% of adjusted cash net income. Great execution by our employees around the world led to exceptional results this quarter. Our results are within or above the high end of our guidance for all key metrics. Our same-stores organic growth for the total company, including the full impact of generics, exceeded our early read in the quarter. Bausch + Lomb continued its outstanding performance and achieved double-digit organic growth, in line with our guidance for the second half of 2014. Our revenues are at the high end of our guidance even with a negative $31 million FX impact,…

Thank you, Mike. We are very excited to report exceptional Q3 results across all of our key businesses. Our revenue was again in excess of $2 billion, with our U.S. and emerging market businesses contributing strong double-digit same-store organic growth. In addition, while we have recently had a number of successful launches, they added only 3% to our organic growth this quarter. These products and the other products Mike just reviewed as near-term launches are expected to contribute significantly to organic growth in 2015 and 2016. Our impressive revenue growth of 33% and cash EPS growth of 48% in Q3 were off of a strong Q3 2013. If you recall, Q3 of last year was a very good quarter, but we suffered from the generitization of Zovirax, RAM and BenzaClin when comparing that quarter to Q3 2012. In addition, Q3 2012 was particularly strong given that we sold approximately $90 million of Zovirax, following the stock-out in Q2 of 2012. Our cost of goods sold improved in the third quarter primarily due to product mix, resulting in improved gross margins of 74% of sales. We're expecting a similar gross margin in the fourth quarter subject to foreign exchange movements. While SG&A percentage improved each quarter this year, SG&A remains above historical levels, as expected, at 24% of sales primarily due to costs associated with our numerous launch products. Excluding this launch cost, our SG&A would have been less than 22% of sales. The table on this page shows change in foreign exchange spot rates since our July 31 earnings call. The currency order is based on the financial impact of currency movement versus our Q3 guidance given on July 31. Most of the movement in currencies occurred in September as the dollar significantly strengthened versus most currencies around the world.…

[Operator Instructions] Your first question comes from the line of Andrew Finkelstein from Susquehanna Financial Group.

Maybe as a preliminary question, you can -- from all these results and the details across businesses you've been giving, what message should Allergan shareholders most take that might change views of the combined company for anyone who's not convinced about the staying power of the combined company? And then I have some follow-ups on individual details you've given.

Thanks for the question. I think from the very beginning, since we announced our offer to Allergan, they have always held out Q3 as -- in sort of a litmus test in terms of our ability to sustain growth. And that Q3 was the quarter where B+L annualized, and I think the message they gave to their shareholders was that the wheels are going to fall off the bus in terms of B+L and that the rest of the Valeant business would continue to decline. I think this quarter, through facts and through performance, we've demonstrated both those assertions are incorrect. So I think our hope is that the Allergan shareholders take -- just look at the numbers, look at the performance and see that the Valeant operating model does work and will continue to work. A combination of day-to-day strong execution and our R&D model and sourcing innovation, both inside and outside, leads to lots of new products and a very diversified business model, which -- both in terms of geographies and products. So we will just encourage the Allergan shareholders to take a look at our results and compare them to what Allergan has been asserting since the beginning.

Okay. And then if -- 2 other things. If you could talk a little bit about the lessons from the Jublia launch, what's worked well. And you mentioned some shifts in the spending away from Primary Care contract sales to additional in-house resources. But what's the Primary Care role for that product ultimately to maximize the opportunity? And then on the Bausch + Lomb side, very large organic growth rates from some new launches in the surgical business. Is there any details you can share on market share gains and what we should think about for that business in the near term?

Sure. In terms of the Jublia launch, our team has just done a fantastic job. Ari Kellen who's here and Deb Jorn who leads the business unit have just done a fabulous job. I think the keys to success so far have been the real stability and motivation of the sales representatives. They're doing a terrific job and making lots and lots of calls. They're excited by the product since it's such a great product. I think the digital marketing campaign has proved to be very, very effective. It's quite easy to measure an ROI in terms of -- on digital activity. And what we're most excited about is actually the TV that will soon be running. If you look at the impact of television on other dermatology launches, like EPIDUO and ACZONE, which is an Allergan product, you've seen huge increases when DTC goes on air. And that's the key to get to the Primary Care audience. I think what we found was detailed in them was that something to draw the patients into the offices. Probably it doesn't work as well as just getting the consumers, make the consumers aware of this product and have them come into the office. So it's only the start. But if you annualize the sales of Jublia based on our most recent week, it's somewhere between $70 million and $80 million a year already. And if we were to take away our $0 co-pay, which is at some point, we will, we're approaching $100 million of annual revenue even at today's run rate. So we extract that -- we expect that to be closer to $200 million by the end of this year. And we feel very, very good about the launch, and it's all due to the team we have in place. In terms of surgical market share, I think we've increased our market share about 3 percentage points across sort of all categories since we acquired B+L. Part of it is the new products, but part of it's, it's led by Andy Chang in the U.S. who's doing a great job. Well, I think there's just a lot more focus, and again, I think the sales force incentives have been fixed, and I think that the new frag approval for the VICTUS machine, coupled with some of the -- in addition, some of the CROMA products that we're going to bring into the U.S., is really going to really secure a sort of a bright future for that business.

Your next question comes from the line of Chris Schott from JPMorgan.

Just a couple of questions here. I mean, first, Valeant stock, it's -- on this revised guidance, it's 12x 2015 earnings. Obviously, very -- an expensive valuation. When we consider potential revisions or changes to your bid heading into December 18 meeting, is there a leverage ceiling we should think about at Valeant if -- I guess that just to me, it seems like it would be a lot cheaper to finance the deal with more debt versus equity at this point. The second question I had was just in your presentation, you talked about your ability to achieve more synergies with Allergan than anybody. Is there a minimum rate of return we should think about for large acquisitions, such as Allergan, to the extent that some other bidder emerges? I'm just trying to gauge your ability as -- if someone else emerges, you clearly have more synergies, your ability to -- is there some threshold at which point you just don't go any higher? And just I know you have specific numbers, but just how do we think about that if a process emerges?

Okay. In terms of -- if we were -- to improve our proposal, how would you think -- how we would think about it, I mean, clearly, with our stock, where it's at, we much prefer cash over stock, and we said that a number of times. And we're just balancing that with making sure that we come out of the merger with a incredibly strong balance sheet that will give us the flexibility that we want going forward. So we're looking at any -- we're looking at all options, but that's how we're balancing the 2. And as we said before, we would be willing to sit down and improve our offer. And when we do that, we'll make that decision. When we think it's the right time, we'll make that decision.

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Yes, I think that when -- as, Chris, you know that we're not -- we define winning as delivering value to our shareholders. And we have very high hurdles for how we deploy capital. In this case, we have significantly more synergies than anybody through a combination of the unique business overlap that we have, our emerging markets infrastructure and our operating model, which allows us to extract more synergies. And so that's all factored in. We will be disciplined. As you rightly said, we can't and won't give you a precise number, but we'll be disciplined. But again, we should own Allergan. We have the most synergies, and Allergan shareholders will benefit the most with the combination with Valeant.

All right. And just a really quick product follow-up. Vesneo, can you just -- I know that's one with peak sales. We've had some questions. Can you just elaborate a little bit more on the differentiation you see versus existing agents that get you comfortable with those peak sales assumptions? When you think of all the new product launches, that's the one where I get the most questions.

Yes. It's Ari Kellen. Vesneo, the first monotherapy that's statistically significantly better than latanoprost as we put out in our Phase II dose-ranging study. And the Phase III study, which we published, showed the lowering of 7.5 to 9.1 millimeters of mercury. Other prostaglandins, in particular, the Xalatan label, are more close to 6 to 8 millimeters of mercury drop in pressure from baseline. So we're also encouraged by the safety data that we have now. We also have additional secondary endpoints that we're discussing with the FDA that are unique, that will demonstrate the efficacy of our drug, but we're not able to share that at this time. The other point I'll add is that the -- our KOLs are excited at this drug, and the reception at the current AIO has been pretty positive. So we believe in the growth prospects of this differentiated compound.

[Operator Instructions] Your next question comes from the line of Alex Arfaei from BMO Capital Markets.

Howard, just a follow-up to your earlier comments about the synergy, having more synergies than the other combination. Are you getting a chance to make that comparative argument with Allergan shareholders? And could you comment on some of the feedback you've been receiving? And my follow-up is, how do you expect the breakup of the Shire-AbbVie deal to impact your prospects given the significant role we expect debenture of an investor to play heading into the special meeting?

Well, I don't think anyone has debated or disagreed with the fact that Valeant and Allergan, there's a unique business overlap. So I think there's general agreement. There is general agreement in our ability to extract the synergies and, again, through the business overlap and through our unique operating model. We've had some interesting debates with people about sources. Are they going to come from here or there? But generally, I think agreement that there will be significant synergies and more synergies from us than from any other players. So I -- we -- but there haven't been any pushback. In addition, we obviously have a differentiated tax rate as well. So we can't predict and protect ourselves against people from doing irrational things, but just focus on the economics and the facts. We clearly have the most to bring to the table. In terms of the impact that the Shire-AbbVie deal has, I mean, clearly, there was some losses taken by the event-driven people last week. I think that in Allergan's case, there's already a significant ownership by the hedge fund community and, I think, a growing sense that a transaction is going to happen. So I think that's all positive. And again, we're committed to getting this transaction done, which is important to that community, and we're going to march on.

Your next question comes from the line of David Steinberg from Jefferies.

I had some questions on Jublia. First thing is it looks like in the prescription graph that you added up the Wolters Kluwer data and the specialty pharmacy data. I'm just curious, what's the rough break out between the prescription audited information and that, that you get through your specialty pharmacy filodoor [ph]. And secondly, is sampling still a significant part of your program? And if so, perhaps how much would you understate true scripts by? And then could you give us an update on how managed care discussions are going on that product?

Sure, thanks, David. In terms of the breakdown, the specialty pharmacy channels are multiple specialty pharmacies throughout the United States. But the rough script breakdown is about 40% of volume is going through specialty pharma, and 60% is going through traditional pharmacies. Sampling is not -- is not a key part of what we're doing. One of the reasons is, you may recall that we have to shift manufacturers to our Japanese partner, which is doing a terrific job for us. But they only have trade size bottles at this point. And so until we get the smart sample bottles, with -- sampling is not something that we're doing, but we would expect to start sampling next year once we get the smart bottle, which will be one more thing that we think will help drive the growth. And the last question, managed care. Our conversation so far going well. I think we have -- we do have a unique product. And there's a strong consumer and physician demand for it. And I think that we are cautiously optimistic that we're going to get excellent managed care coverage.

Okay, just a quick follow. You had indicated your guidance for next year, $150 million, could be substantially exceeded, and the run rate, at the end of this year, could actually be close to that. Any thoughts on what perhaps a new number might look like?

In terms of next year's sales for Jublia. Well, if our run rate at the end of the year is sort of $200 million, then certainly, $150 million will be a little bit light as an estimate. So we haven't gone through, but it's probably closer to the $400 million range, $300 million to $400 million. But that's just a bit of an estimate.

Your next question comes from the line of Sachin Shah from Albert Fried.

So I just want to find out that there has been some speculation that you're going to, you may be considering improving your offer. I know you talked about that in various ways. But in light of the fact that the record date is coming up on the 30th, and shares, as you mentioned in the presentation, can be acquired on the 27th. So just wanted to find out, in light of kind of the market volatility and dislocation, is that something that you've been considering because of dislocation and just to kind of solidify the December 18 meeting?

Yes, we consider it everyday, as Howard said, that we do have some more dry powder. And at the appropriate time when the conditions are right. Again, our preference is to sit down with management, but I think we all know that's unlikely with the current management team on board. And so we want today to be all about earnings. But it's certainly saying that we're contemplating, and we may make that decision at any point in time.

Okay. So -- fine, today's about earnings, but as far as the record date is concerned, should we use that as a gauge or is that not important to you because you already have as much as 40% of the shareholders leaning into the December 18 meeting? Is that -- we just want to -- I just want to understand the level of importance for the shareholder meeting because you already have significant amount of support. Are you looking for more? Or is it that the boost -- potential boost that you're considering is -- for that reason and to make sure that you get to the finish line here?

Well, the record date is, obviously, an important date. And it's -- we've thought about in the context of the overall transaction. The -- I think the reality is that most of the shares have found their home already. The people that own them now, the institutions -- that -- the long only institutions that decided to take profits and sell have done so, the RFs and hedge funds are significant holders, Pershing has their stake and a number of institutions that are in it for the long haul have increased their stake. So it's -- the volumes are significantly down even on big news days are significantly down. There's always going to be some trading post a record date, then that's just reality. But for the most part, the shares have found the right home. And the people that own the shares are the people that are going to vote come December 18.

Okay. And just one last question if you don't mind. There's been some speculation by the media with your relationship with Ackman. Just -- can you confirm that, that relationship is solid going into the shareholder meeting?

No, absolutely. We continue a very good relationship with Bill Ackman and Pershing. And I think our interest are aligned. We both want to get this deal done. And we are both committed, and we'll work hard to make it happen.

Your next question comes from the line of Annabel Samimy from Stiefel.

Since this is an earnings call, I'll ask about earnings. So you have some very strong increased outlook, and I guess my question is, what's changed between last quarter and this quarter that's made this positive outlook so strong? We've pretty much known about the annualization of Bausch + Lomb and the annualization of the generics. So what is it that's the biggest driver of your increased outlook from this point forward?

I think it's primarily dermatology in the U.S., where we've had really complete turnaround. All the promoter brands are growing. We are very excited about our launch products, Jublia, RAM 08 and Luzu. We're increasingly optimistic about Anexten because of some of the unique data we have on that. And -- so I think that's the primary driver. But also every other business is quite frankly -- every business around the world, with the exception of maybe 1 or 2 small ones, are outperforming. With great momentum, we have a lot of smaller launches, everything from CeraVe to the surgical business. We just see significantly more upside. And we are -- so when you add all the numbers together, I think we can still give what is a conservative outlook, which is much improved from our previous one. We will be giving guidance for 2015 at our normal time, and I would expect that to be better than our outlook.

Okay, and just on that point of different businesses doing better than expected. I mean, I guess one of the questions we've also gotten often is the contact lens business. It seems to be occurring significantly higher than the overall market. And it seems -- it's a relatively segue market without that much market changes from quarter-to-quarter. So can help you us understand what's driving that growth the most?

Well, it's led by Mark McKenna who's just doing an excellent job. So he's brought real life to the franchise. We've upgraded our management team across the board with some new hires. We're increasing our sales force up to -- from 120 to 180. And we have some great new products, BioTrue Daily, which has not been focused on, which was launched maybe 1 year before we acquired B&L, we're doubling each quarter, doubling the growth of that brand. Ultra, the reception, has been terrific in terms of the doctors and it's just a question again of commercial lines up, which we will. But you also have to remember, it's off a very small base. Bausch + Lomb market share had fallen to like 6% in the United States. They'd been on a decline for 1 decade. So it's a lot easier to gain share if you're a very small player. And -- so we're doing it and we're doing it through -- it's all volume. We've kept our prices completely constant. We have not been discounting, and -- but we have not been taking any price. And we're just doing it through better products and a more focused team. We're also getting a bit -- the combination of having both Ultra and BioTrue Daily has changed the physician's image of Bausch + Lomb. And so we're very excited about the contact lens business.

Your next question comes from the line of Louise Chen from Guggenheim.

So I'm not suggesting that you should do this, but just curious because we obviously get a lot of questions on this. At what point Valeant is willing to walk away from the Allergan deal in terms of timing, valuation? How you think about that? You did say you were going to be diligent about assessing deals.

Look, we now have a record date. We have to fight long and hard, we had to win a bunch of court cases. We now have a record date. We've annualized the third quarter. We delivered a very strong third quarter. And basically have shown through performance that all the allegations made by Allergan are just wrong. They put out another note this morning, we've gone through it, again, they're all wrong. So I think that we're in very good position to win this thing, and we look forward to the upcoming vote. And there's no way we're going to walk away at this point. We're waiting until December 18.

Your next question comes from the line of Tim Chiang from CRT Capital.

I was looking at the pipeline chart and you have this product, Emerade. I mean, what's the limiting factor in getting an auto-injector for anaphylaxis in other market earlier than late 2016 in the U.S.? I mean what do you have to do between now and then to get this product on the market?

Yes, there's only 2 things. One, stability data. We have 36 months -- it's 36 months of dating on this product, which is one of many aspects that makes it a superior product to the current product on the market. And then there's sort of this time and motion study you have to do -- I forget the technical term, to show that it's easy enough for our patients to use. We'll hopefully beat that date. But this is a real sleeper for us. I know some people sort of said, pooh poohed this one. But the European Union is actually contemplating currently whether they just recommend this product across the board, given that significant benefits compared to what's out there in the market. So it's a major, major market in the U.S., it's over $1 billion alone. And we are doing everything to try to expedite that, get it approved.

Just one follow-up, Mike. I think you had originally highlighted for Jublia that you'd spend the about $80 million in the second half of '14. Given the changes with your marketing, I mean, does that number change materially?

We're actually -- we're spending more than we originally forecasted for Jublia. We're going to get TV much sooner than we thought. We thought it would not be till sort of early December. It's now going to be early November. We have -- we're adding more reps than we originally have thought given the initial success for that. So my guess is we're probably -- that more probably will be closer to $100 million that we're spending for that and Luzu which goes to the same markets and so my guess is we'll probably overspend, but we're also getting additional revenues that we didn't expect we're going to get additional profit that we had not built into our forecast either.

Your next question comes from the line of David Risinger from Morgan Stanley.

Your next question comes from the line of Gary Nachman from Goldman Sachs.

Mike, of the total organic growth of the company, could you break down the rough split between price and volume? You said more volume than price in the quarter, but maybe just quantify how much price contributed. And then, Howard, with the recent changes in tax policy, will that impact your ability to use your favorable tax structure at all with M&A, including the Allergan deal? I just want to confirm that.

Yes, I don't have -- Gary, I don't have the precise breakdown. And we'll get back to you, I guess, off-line. We'll have to get -- we delivered earnings early this quarter on purpose. We want to get it up for the record date. We do know we don't have all the numbers from around the world, but we do know that it's going to be definitely more volume than price.

Well maybe just comment on that. Where are you seeing the most pricing flexibility in your business?

Oh, that's clear. It's in the orphan -- the orphan category and some of our tail products. That's the main area. And a lot of our business we get no price. The vast majority of -- you're thinking contact lenses. There's no price in surgical, there's no price consumers. When I say no price, it's our low single-digit price, emerging markets, rest of the world, Europe, no price. And -- so it's concentrated in sort of tail products in the U.S.

In terms of tax policy, there's nothing that's been talked about like the treasury regulations would have no impact on us. We're not an inverted company. We're not doing these upstream loans the way some companies are, the hopscotch loans. And last week, the double Irish structures, we don't have any double Irish structures. Clearly, if the [indiscernible] would restrict interest expense deductions, that would have an impact. And we said that in the past, we're well below the Safe Harbor debt-to-equity ratio. If they were to change that and limit interest expense, and again our interest expense is real cash interest expense because our debt is almost all in the -- is essentially all in the U.S. But if that would limit, that will have an impact -- it wouldn't impact Allergan and the way we're looking at Allergan. We still think there's tax saving upsides if we're able to do diligence that we haven't factored in yet. But so the earning stripping rules have changed, could have some impact, not huge. We said the somewhere between 0% and 3%, depending on where they end up, but again, it's unclear where they're going to end up.

One other follow-up, Gary. In terms of our 2015 and 2016 outlooks that we put out, you might notice that our growth rates for the neuro and generics business were again most of the price have increased, opportunity is, was only 5%. So we're not assuming that we can continue to take prices. We look to the future to the extent we can, that's upside. So we're going to do what's the smart thing to do in the short term. But in terms of our long-term outlook on the business, it's probably composed of 80% to 90% volume and 10% to 20% price, and then to the extent we can take more price, that will be upside on our outlook.

Your next question comes from the line of Umer Raffat from ISI Group.

Mike, I just wanted to get into some numbers with you. So we've run our math on this, but want to get your take on it. So the same store growth for Valeant has been about 10% on an ex-generic basis for the past several quarters. And we know Bausch is growing about 10% as well. So to get to 19%, that's about $140 million in extra revenues. So can you help us quantify what that extra $140 million extra revenues is in Q3? And then, Howard, one for you very quickly. If the Allergan bid was raised again, will it continue to be a 20% plus IRR?

So the big delta in this quarter, one was probably a quarter of it is products that we just launched, Jublia, Luzu, RAM 0.08 and other PeroxiClear, so these are products that just didn't even exist, and so this quarter we have new launches. The second is an acceleration of products that have been launched but weren't -- like BioTrue Daily, it's probably another quarter which was growing quite slowly, but now we're growing them 100%. Again, all volume. So Trulign is another example of a product like that. And the number of -- we're installing is doubling. So we've accelerated the growth on a number of sort of launched brands from prior years when they were in the hands of Bausch + Lomb. And then we've just -- the business has just -- have done -- we've talked about dental growing 20%. We talked about generics, they've been growing over 20%. Businesses are just outperforming. The business is accelerating. So -- and we don't expect -- we're not going to report 19% every quarter. I am not projecting that. But we feel quite comfortable we'll be 10% plus for the foreseeable future.

Yes, and in terms of an increased -- potential increased proposal, I mean, for obvious reasons we're not going to get into what we're going to do and when -- I think we are pretty clear that we had more to offer and we would do it at the time we felt it was right and strategic. And I think you know us well enough to know -- again, we define success is delivering value to our shareholders. I think we're big believers that share prices will correlate with return on capital over time. There's points in time in the market where market falls in love with earnings accretion but that's not real value. And that's what we're focused on. And we're going to continue to be disciplined and watch carefully where we think the returns are. We're not going to do a transaction if we don't believe our shareholders are getting rewarded for the risk.

Your next question comes from the line of Gregg Gilbert from Deutsche Bank.

Howard, can you quantify the new launches' contribution in the quarter? And you mentioned wholesale inventory levels in the U.S. were stable. But can you talk about what that level is in terms of weeks?

The launches were around 3% this quarter. And again, going forward, when you roll it out to '15 and '16, that'll be a much more significant piece. And I think that's what gets us so excited about the '15 and '16. Mike, someone asked about the confidence level -- what gave us the confidence to increase the outlook. If you think about Jublia alone, $80 million equals about -- $82 million equals 1 percentage point of organic growth in 2015. And we had 150 for Jublia. Mike talked about potential for Jublia next year. You can see the potential for incremental organic growth. RAM is going to beat what we said RAM and anexdin [ph] would do together. So that's additional upside to organic growth. So I think starting next year, you're really going to see the potential of these launched products to drive organic growth. And as we also -- we've been asked because Allergan has raised issues with investors about inventory levels. Our inventory levels were exactly flat on a unit basis and actually declined on a dollar basis, and they've been basically flat for most of the year. And I don't have the exact number per wholesaler at this point. But they've been flat and declining. And I would expect we'll stay in these levels. We won't see any benefit of any additional channel add probably given the growth of a bunch of these products, we'll probably won't see any -- have them come down in the near term either.

Your next question comes from the line of Ram Selvaraju from Aegis Capital.

I want to ask about your feelings regarding Valeant's competitive positioning in the context of the new treasury regulations, which I think are likely to impact tax inversions going forward. So in the context of that, given that you're already in the tax advantage position, what do you think is likely to be the competitive edge that you have and enhancement of that competitive edge given the fact that maybe some of your competitors are now going to be less likely to be able to realize tax synergies and therefore, should enable you to continue to be competitive on pursuing future acquisitions?

I think you sort of answered the question. We're not an inverted company. We're not -- those treasury regulations have 0 impact on our tax status, our tax rate. And obviously, clearly if others are prevented from reducing their tax rate through an inversion, that gives us an advantage. But as Mike and I have said many, many times, our objective is not to compete away, pay away our tax advantage, and that's to preserve for our shareholders and to drive additional cash flows, to be able to redeploy to create more value. But we expect that advantage to continue. And again, the treasury regulations will have 0 impact on us.

And then just going forward, do you see disproportionate strength in a particular line of the Bausch + Lomb business? And if so, what specific line do you think is most likely to outperform going forward? Is that likely to be more in the contact lens side or on the surgical side?

I think it's going to be contact lenses and surgical. I think the pharma business was run quite well by Bausch + Lomb. I think they'll continue to do well, it's a great business. But contact lenses, we're very excited about the Ultra lens. Unfortunately, we won't have commercial capacity until the second quarter. But we've ordered 3 additional lines to the first line because we think this could be a very, very large product given the reception in the marketplace. And we're working from a very small base. So again, it's much easier to grow market share if you're a small player with superior products.

Your next question comes from the line of Alan Ridgeway from Paradigm Capital.

Howard, you mentioned that the stronger balance sheet or the improvements in the balance sheet would allow you guys the ability to do more BD and potentially return cash to shareholders through shareholder -- share buyback. Can you guys maybe talk about how you think about that? Do you have some kind of levels earmarked for one versus the other going forward? And would that change whether you do or don't get Allergan in an acquisition?

Well, I mean, Alan, as you'd expect, we have an internal model. We have a view as to what we believe we're worth. And whenever we look at an acquisition, we're asking ourselves whether this acquisition will create more value versus buying back our shares. And over the last year, I think we've been hamstrung a little bit our desire to delever and our commitment to delever, plus we tied up our balance sheet with Allergan. We've been frustrated in the fact that we haven't been able to repurchase shares given the levels our stocks traded at most of this year. And as we strengthened our balance sheet and reduced our leverage, we will have that flexibility to make those decisions. So we're just excited. If you look at the modeling we did back in July where I believe we'll have $6 billion to deploy capital for acquisitions, less if we were to repurchase shares because, of course, there's no EBITDA that comes in when you repurchase your shares. That gives us a significant amount of fire power and still maintaining a strong balance sheet and that, coupled with the organic growth we've talked about, we believe really allows us to drive the value for shareholders.

Your next question comes from the line of Marc Goodman from UBS.

Howard, can you just -- on Slide 7, I just want to make sure I understand this Bausch + Lomb growth rates. So are these growth rates for the 3 months that you owned them this year versus the 2 months that you owned them last year? Or have you made some type of alteration to that to figure out the 2 months versus 2 months or something like that? And then second question is, on Slide 23 you list all these new product acquisitions that you've made or about to make. Can you give us a sense of how this big these are? Maybe like annual sales for each one just really quickly, just so we have a sense of how much we should be adding in. And obviously, you raised sales guidance by a few hundred million for next year, so I'm trying to figure out what part of it comes from that and what part is from the base?

Sure. First of all, just to be crystal clear, the Q3 2014 is 100%. It's the 3 months versus the 3 months. So it's -- the actual 3 months, there's no adjustments for the August -- around August the 5 date. And since inception sort of day-to-day counting the sales for those days, those first 5 days in August and looking at the actual sales. And the only adjustments are for FX. So there's no adjustments -- there's no acquisitions in there, there's no adjustment for any divestitures or discontinuations. Bromday is -- the decline of Bromday is included in that. You know when we publish our organic growth, we're very clear that we adjust for discontinuations. In this slide, there's been no adjustments for anything other than FX.

So just to be clear, this is the 3 months that you owned it this year, and 2 months last year, plus the 1 month you didn't own it, but you made it 3 months so we got the actual 3 months versus 3 months.

Actual sales this year and the actual 3 months in 2013. No adjustments other than FX. And in terms of the acquisitions, there's really -- remember, these acquisitions, other than Croma. Croma, we knew was going to happen. We just -- what we thought it was -- we just hadn't signed it yet. All the other ones were included and they're quite small right now, both Bescon and Armoxindo are sort of $15 million, maybe a little bit less in terms of annual revenue. MedPharma is in the same kind of range. Zarracom is even smaller than that. CROMA was a little bit large but that was also included in the forecast. So in our 2015 outlook, there are no acquisitions built in, and all these small acquisitions have already been factored in.

And CROMA is how big?

CROMA is in the $40 million, $50 million range.

And in terms of the impact in this quarter, as you can see in the footnote, it was about $2 million of sales in Q3 from these acquisitions.

And the Precision company that was in the numbers this quarter, right? So you had revenues of -- what kind of revenues did that do this quarter?

I thought we were $20 million. It was between $15 million and $20 million.

And your next question comes from the line of Tony Reiner from Imperial Capital.

Can you please just squeeze quick 2 minutes on where you currently stand with Mr. Ackman on your earnings achievements and going forward?

I'm not sure I understand the question in terms of...

Well, there's been some reports that -- and it was on TV last week that you and Mr. Ackman weren't on the same page. So you want to talk about it on this forum?

Sure. I'm not sure -- I don't think -- well, there's so basis for those reports. We talk to him frequently. In fact, he was in our office yesterday for a while. So I think we're completely aligned. We're aligned that we are going to win this battle, that we are going to acquire Allergan. We feel that we're committed to marching forward in getting this deal done.

Are things proceeding as both you saw planned? It's obviously been a lengthy process with lots of stuff planned and stuff like that. But overall, would you say it's gone as you planned?

So I think we -- in terms of the timing, it's about where we thought -- I think early on, we thought that we'd probably get the special meeting in November. I think we communicate, but it's happening in December -- so maybe it slipped 1 month, but certainly no more. I think we've been a little surprised by sort of the baseless attacks that have been put on our company in terms of -- they're just not true. And so public companies usually don't put things up that are untrue. But anyways, I think our Q3 performance and our outlook is discrediting those attacks. And personally, I've been surprised by the Board of Directors that they've done no independent analysis. You would have thought one of them might -- when we continue to prove everything they said is wrong, one of them might have broken ranks, but they haven't and maybe the poor governance. But overall, I think we're happy with where we're at. We're happy in terms of -- that there is a record date. We are pleased with our legal victories, and we're very pleased with our performance.

The level -- where would you say the biggest left field and the thing you anticipated less more than anything what was that, during this process?

Again, I'm not sure -- could you...

Just over the time frame -- so yes, there's been -- you didn't anticipate the hostility, but overall you are where you want to be and you got the meeting and then you certainly deserve and you and Mr. Ackman will deserve a lot of credit for that. Where was the one -- the biggest left field in the last few months that you haven't anticipated? Was it just the hostile nature of them? Was it the leaks in the press? Was it talking down your company which, if you had to make one comment on where you saw or you didn't anticipate this happening during the process, what would it be?

Yes, I think I've answered that question, which is probably the attacks on us, the sort of viciousness of those attacks would probably the thing that -- at least...

Also but the false and misleading -- consistent false and misleading nature of the comments.

There are no further questions.

So thanks, everyone. I know it's a long call. I appreciate your patience, and we look forward to talking soon.

This concludes today's conference call. You may now disconnect.