Bausch & Lomb 1999 Annual Report

Other technologies – Of the remaining three projects, as
originally anticipated, one began to generate revenues in 1999
and two are expected to generate revenues in 2001. The expected
rate of revenue growth varies depending on the project and does
not vary materially from original projections. At the acquisition
date, the expected aggregate cost to complete the projects was
expected to be $5 and the actual amounts are not expected to
vary materially from these estimates. The discount rate used to
derive the IPR&D amounts was 15% for all projects with the
stage of completion ranging from 17% to 44%. Approximately
$2 in development costs remained at the end of 1999, all of
which is expected to be spent by the end of 2002.
Chiron Vision At the beginning of 1998, the company acquired
Chiron Vision for $298 cash. Chiron Vision researches, develops
and manufactures innovative products that improve results of
cataract and refractive surgeries and enhance the treatment of
progressive eye diseases. The allocation of $13 to IPR&D represented
its estimated fair value using the methodology described
above. The $13 was allocated to the following projects: IOL
technologies, $7; disposable keratome, $4, and other refractive
technology, $2. Each of these projects was assigned a discount
rate of 18% to calculate IPR&D.
See the future 18 Bausch & Lomb
IOL technologies – Revenues attributed to various IOL line
extension technologies were expected to be approximately $50
over the three years ending in 2002. At the acquisition date,
costs to complete these projects were expected to be $1. These
projects were estimated to be over 80% complete at the time of
acquisition. Development was completed in 1999. The actual
results to date for these projects in the aggregate are consistent in
all material respects with the assumptions at the time of acquisition.
Disposable keratome – Revenues attributed to a project to
develop a single-use keratome were expected to be $37 over the
five years beginning in 1999. At the acquisition date, costs to complete
the project were expected to be less than $1. This technology
did not meet management’s performance expectations. The loss of
these anticipated revenues are expected to be offset by the additional
revenues generated from the 1999 acquisition of Hansa
Research and Development, Inc., the maker of the Hansatome
microkeratome.
Other refractive technology – Revenues attributed to a new
type of refractive IOL are expected to begin in 2003 and generate
approximate annual revenues of $27 by around 2006. At the
acquisition date, costs to complete the R&D efforts were expected
to be approximately $6. Approximate expenditures over the next
five years are expected to average $1. The company believes
development costs and revenue projections made at the time of
the acquisition are still valid.