----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

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

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

**BAUSCH      & LOMB INCORPORATED**

| **NEW                YORK**                                                                 | **16-0345235**                                                    |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                EmployerIdentification                No.) |
|                                                                                        |                                                              |
| **ONE                BAUSCH & LOMB PLACE, ROCHESTER, NY**                               | **14604-2701**                                                    |
| (Address                of principal executive offices)                                     | (Zip                Code)                                         |

| Title                of each class           | Name                of each exchange on which registered |
|----------------------------------------------|----------------------------------------------------------|
| Common                Stock, $0.40 par value | New                York Stock Exchange                   |
|                                         |                                                     |
|                                         |                                                     |

----

**Part      III**

----

**Table      of Contents**

| **Part                I**        |                                                                                                                                                          | **Page**                                             |
|----------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|
|                             |                                                                                                                                                          |                                                 |
| Item                1.           | Business                                                                                                                                                      | 4                                                    |
|                             |                                                                                                                                                          |                                                 |
| Item                1A.          | Risk                Factors                                                                                                                                   | 8                                                    |
|                             |                                                                                                                                                          |                                                 |
| Item                1B.          | Unresolved                Staff Comments                                                                                                                      | 21                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                2.           | Properties                                                                                                                                                    | 21                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                3.           | Legal                Proceedings                                                                                                                              | 21                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                4.           | Submission                of Matters to a Vote of Security Holders                                                                                            | 25                                                   |
|                             |                                                                                                                                                          |                                                 |
| **Part                II**       |                                                                                                                                                          |                                                 |
|                             |                                                                                                                                                          |                                                 |
| Item                5.           | Market                for Bausch & Lomb Incorporated's Common Stock, Related Shareholder                Matters and Issuer Purchases of Equity Securities | 26                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                6.           | Selected                Financial Data                                                                                                                        | 28                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                7.           | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                           | 29                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                7A.          | Quantitative                and Qualitative Disclosures about Market Risk                                                                                     | 59                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                8.           | Financial                Statements and Supplementary Data                                                                                                    | 60                                                   |
|                             |                                                                                                                                                          |                                                 |
| Item                9.           | Changes                in and Disagreements with Accountants on Accounting and Financial                Disclosure                                            | 107                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                9A.          | Controls                and Procedures                                                                                                                        | 107                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                9B.          | Other                Information                                                                                                                              | 111                                                  |
|                             |                                                                                                                                                          |                                                 |
| **Part                III**      |                                                                                                                                                          |                                                 |
|                             |                                                                                                                                                          |                                                 |
| Item                10.          | Directors,                Executive Officers and Corporate Governance                                                                                         | 113                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                11.          | Executive                Compensation                                                                                                                         | 118                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                12.          | Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters                                  | 144                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                13.          | Certain                Relationships and Related Transactions, and Director                Independence                                                       | 146                                                  |
|                             |                                                                                                                                                          |                                                 |
| Item                14.          | Principal                Accounting Fees and Services                                                                                                         | 147                                                  |
|                             |                                                                                                                                                          |                                                 |
| **Part                IV**       |                                                                                                                                                          |                                                 |
|                             |                                                                                                                                                          |                                                 |
| Item                15.          | Exhibits                and Financial Statement Schedules                                                                                                     | 148                                                  |
|                             |                                                                                                                                                          |                                                 |
| **Signatures**                   |                                                                                                                                                          | 149                                                  |
| **Exhibit                Index** |                                                                                                                                                          | 153                                                  |
| **Exhibits**                     |                                                                                                                                                          | (Attached                to the Report on Form 10-K) |

----

**Item      1.**
**Business**

**(a)      Restatement of Previously Issued Financial Statements**

*Item      8. Financial Statements and Supplementary Data*
*Note      2 — Restatement *
*Item      8. Financial Statements and Supplementary Data*
*Note      20 — Quarterly Results, Stock Prices and Selected Financial Data      (Unaudited)*

**(b)      General Development of Business**

**(c)      Financial Information about Operating Segments**

*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations *
*Net      Sales and Income by Business Segment and Geographic Region*
*Item      8. Financial Statements and Supplementary Data*
*Note      4 — Business Segment and Geographic Information*

----

**(d)      Narrative Description of Business**

**Operating      Segments**
* *

**Products**

***Contact      Lenses***
*Bausch      & Lomb*
*Boston*
*Medalist,*
*PureVision*
*SofLens*
*SofLens*
*PureVision*

*PureVision*
*SofLens*
*PureVision*
*MoistureLoc*

*PureVision*
*PureVision*
*SofLens*
*PureVision*
*SofLens*
*Medalist*
*PureVision*
*PureVision*
*SofLens*

***Lens      Care***
*ReNu*
*MoistureLoc*
*MoistureLoc*
*ReNu*
*Boston*

----

*MoistureLoc*
*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations*
*Item      8. Financial Statements and Supplementary Data *
*Note      21 — *
*Market      Withdrawal of MoistureLoc Lens Care Solution*

***Pharmaceuticals***
*Bausch      & Lomb*
*Alaway*
*Alrex,*
*Indocollyre,      Liposic*
*Lotemax*
*Moisten*
*Mioclear*
*Ocuvite*
*PreserVision*
*Retisert*
*Zylet*

*Retisert*

*Alaway*
*Lotemax*
*Ocuvite*

***Cataract      and Vitreoretinal Surgery***
*Bausch      & Lomb*
*Akreos,      AMVISC*
*Millennium*
*SofPort*
*Storz*

*Stellaris*

*SofPort*
*Akreos*
*Akreos*
*Stellaris,      *

----

***Refractive      Surgery***
*Hansatome*
*Technolas*
*Zyoptix*

*Zyoptix*
*Zyoptix*
*Zyoptix*

**Suppliers      and Customers**

**Patents      and Licenses**
*PureVision*

**Trademarks**
*Akreos,      Alaway, Alrex, AMVISC, Bausch & Lomb Advanced Eye Relief, Boston, Hansatome,      Indocollyre, Liposic, Lotemax, Medalist, Millennium, Mioclear, Moisten,      MoistureLoc, Ocuvite, PreserVision, PureVision, ReNu, ReNu MultiPlus, Retisert,      SofLens, SofPort, Stellaris, Storz, Technolas, Zylet *
*Zyoptix*

**Seasonality      and Working Capital**

**Competition      and Markets**

**Research      and Development**

**Government      Regulation**

----

**Environment**

**Employee      Relations**

**(e)      Financial Information about Foreign and Domestic      Operations**

*Geographic      Region*
*Item      8. Financial Statements and Supplementary Data*
*Note      4 — Business Segment and Geographic Information*

**(f)      Available Information**

**Item      1A.**
**Risk      Factors**

----

**(a)      Risks Related to Our Business and Industry**

**The      markets for our eye care products are intensely competitive and new medical      and      technological developments may reduce the need for our      products.**

**Resources      devoted to research and development may not yield new products that achieve      commercial success**

**Market      acceptance of our products requires, in many cases, that users of our products      obtain adequate reimbursement from third-party payers.**

----

**Federal,      state and non-U.S. laws pertaining to healthcare fraud and abuse could      materially adversely affect our business and results of      operations.**

**Healthcare      initiatives and other cost-containment pressures could cause us to sell our      products at lower prices, resulting in less revenue to us.**

**Economic      conditions and price competition may cause sales of our products used in      elective surgical procedures to decline and reduce our      profitability.**

**If      we fail to maintain our relationships with healthcare providers, including      ophthalmologists, optometrists, opticians, hospitals, ambulatory surgical      centers, corporate optometry chains and group purchasing organizations,      customers may not buy our products and our revenue and profitability may      decline.**

----

**The      majority of our business is conducted outside the United States, subjecting      us      to additional business risks, including increased costs, market and currency      fluctuations, business interruption and changing demands, all of which may      result in fluctuations and declines in our sales and      profits.**

| ·   | unexpected                changes in foreign regulatory                requirements; |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | differing                local product preferences and product                requirements; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | political                and economic instability; |
|--------------------|----------------------------------------------------|

| ·   | changes                in foreign medical reimbursement and coverage policies and                programs; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | diminished                protection of intellectual property in some countries outside the                United                States; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | trade                protection measures and import or export licensing                requirements; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | potential                tax costs associated with repatriating cash from our non-U.S.                subsidiaries; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | difficulty                in staffing and managing foreign                operations; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | differing                labor regulations; and |
|--------------------|-------------------------------------------------|

| ·   | potentially                negative consequences from changes in tax                laws. |
|--------------------|-------------------------------------------------------------------------------------------|

**An      interruption of our manufacturing operations could have an impact on our      business.**

**We      rely on independent suppliers for raw materials and we could experience      inventory shortages if we were required to use an alternative supplier on short      notice. **

----

**If      we fail to attract, hire and retain qualified personnel, we may not be able      to      design, develop, market or sell our products or successfully manage our      business.**

**(b)      Risks Related to Our Financial Condition**

**Our      indebtedness could adversely affect our financial health.**

| ·   | increase                our vulnerability to general adverse economic and industry                conditions; |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | require                us to dedicate a substantial portion of our cash flow from operations                to                payments on our indebtedness, thereby reducing the availability of                our                cash flow to fund working capital, capital expenditures, acquisitions,                research and development efforts and other general corporate                purposes; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limit                our flexibility in planning for, or reacting to, changes in our business                and the industry in which we                operate; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | place                us at a competitive disadvantage if any of our competitors has less                debt; |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | limit                our ability to borrow additional funds;                and |
|--------------------|---------------------------------------------------------------------------------|

| ·   | make                it more difficult for us to satisfy our obligations with respect                to our                debt, including our obligation to repay amounts borrowed under our                credit                facilities or repurchase outstanding public debentures under certain                circumstances. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations*
*Item      8. Financial Statements and Supplementary Data *
*Note      11 — Debt*

**We      are vulnerable to interest rate risk with respect to our debt.**

----

**The      market price of our Common stock has been volatile and may continue to be      volatile, and the value of any investment may decline.**

| ·   | our                business performance and financial                results; |
|--------------------|-------------------------------------------------------------------------------|

| ·   | changes                in our markets; |
|--------------------|----------------------------------------|

| ·   | pending                and threatened litigation against                us; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | the                Audit Committee's and/or other Company investigations; and |
|--------------------|-------------------------------------------------------------------------------|

| ·   | our                assessment of our internal control over financial                reporting. |
|--------------------|------------------------------------------------------------------------------------------------|

**We      incur substantial costs with respect to pension benefits and providing      healthcare for our employees.**

**Changes      in accounting may affect our reported earnings and operating income.**

**Catastrophic      events may disrupt our business.**

**Acquisitions      and joint ventures may have an adverse effect on our      business.**

| ·   | difficulties                in the integration of the operations, technologies, products and                personnel                of the acquired company and establishment of appropriate accounting                controls and reporting procedures and other regulatory compliance                procedures; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | risks                of entering markets in which we have no or limited prior                experience; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | potential                loss of employees; |
|--------------------|---------------------------------------------|

| ·   | an                inability to identify and consummate future acquisitions on favorable                terms or at all; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | diversion                of management’s attention away from other business                concerns; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | expenses                of any unknown or potential liabilities of the acquired                company; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | expenses,                including restructuring expenses, to shut down our own locations                and/or                terminate our employees; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | dilution                of earnings per share; and |
|--------------------|----------------------------------------------------|

| ·   | risks                inherent in accounting allocations and consequences                thereof. |
|--------------------|--------------------------------------------------------------------------------------------------|

----

**We      are continuing to upgrade certain of our management information systems and      we      cannot ensure that there will not be associated excessive costs or disruption      of      our business.**

**Spending      to address the **
***MoistureLoc***
**recall,      our investigations and consent solicitations and bank waiver matters could      negatively affect our financial performance.**
*MoistureLoc*
*MoistureLoc*
*(d)      Risks Related to Regulatory Matters*
*MoistureLoc*

*MoistureLoc*

**We      have made certain assumptions and could experience other risks concerning our      financial performance.**
*ReNu      MultiPlus*
*ReNu      MPS*
*MoistureLoc*

----

**(c)      Risks Related to Litigation, Actions, Claims, Investigations, Internal Control      Deficiencies, the Restatement of Our Financial Statements, the Delay in Filing      Our Periodic Reports and Intellectual Property**

**Unfavorable      results in pending and future claims and litigation matters as well as the      outcome of pending or future investigations could have a material adverse effect      on our business, financial condition and results of      operations.**
*Item      3. Legal Proceedings*

*Item      3. Legal Proceedings*

**We      may not have sufficient insurance to cover our liability in our pending      litigation claims and future claims either due to coverage limits or as a result      of insurance carriers seeking to deny coverage of such claims, which in either      case could have a material adverse effect on our business, financial condition      and results of operations.**

**Our      potential indemnification obligations and limitations of our director and      officer liability insurance could have a material adverse effect on our      business, financial condition and results of operations.**

----

**Our      potential liability relating to a Notice of Final Partnership Administrative      Adjustment from the Internal Revenue Service **
**could      have a material adverse effect on our business, financial condition and results      of operations**
**.**

**Management      has identified material weaknesses in our internal control over financial      reporting.**
*Item      9A.*
*Controls      and Procedures*
*Item      9A. Controls and Procedures*

**We      may face risks related to the recent restatement of certain of our financial      statements.**

*Item      3. Legal Proceedings*
*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations; Legal Matters*
*Item      8. Financial Statements and Supplementary Data *
*Note      19 — Other Matters*

----

**We      expect to continue to incur significant expenses related to our internal control      over financial reporting and the preparation of our financial      statements.**
* *

**We      have postponed the filing of this Annual Report and of our Quarterly Reports      on      Form 10-Q for the quarters ended September 24, 2005, April 1, 2006, July 1,      2006      and September 30, 2006. As a result, we will be limited in our ability to      register our securities for offer and sale until we are deemed a current filer      with the SEC.**

**As      a result of the delays in filing our periodic reports, we required certain      waivers in connection with the delivery of financial statements and related      matters under financing arrangements for our public and bank debt. We may      require additional waivers in the future, and failure to obtain the necessary      waivers could have a material adverse effect on our business, financial      condition and results of operations.**

----

**We      depend on proprietary technologies, and may not be able to protect our      intellectual property rights adequately.**

| ·   | cease                selling or using any of our products that incorporate the challenged                intellectual property, which would adversely affect our                revenue; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | obtain                a license from the holder of the intellectual property right alleged                to                have been infringed, which license may not be available on reasonable                terms, if at all; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | redesign                or, in the case of trademark claims, rename our products to avoid                infringing the intellectual property rights of third parties, which                may                not be possible and could be costly and time consuming if it is possible                to do so. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Our      products could be subject to claims of infringement. **

| ·   | be                expensive and time consuming to                defend; |
|--------------------|--------------------------------------------------------------------------|

| ·   | cause                us to cease making, licensing or using products that incorporate                the                challenged intellectual property; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | require                us to redesign or reengineer our products, if                feasible; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | divert                management’s attention and resources;                or |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | require                us to enter into royalty or licensing agreements in order to obtain                the                right to use a necessary product, component or                process. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**(d)      Risks Related to Regulatory Matters**

**We      are subject to extensive government regulation that increases our costs and      could prevent us from selling our products**

| ·   | inability                to attract clinical investigators for                trials; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | inability                to recruit patients at the expected                rate; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | failure                of the trials to demonstrate a product's safety or                efficacy; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | unavailability                of FDA or other regulatory agencies' accelerated approval                processes; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | inability                to follow patients adequately after                treatment; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | changes                in the design or formulation of a                product; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | inability                to manufacture sufficient quantities of materials to use for clinical                trials; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | unforeseen                governmental or regulatory delays; |
|--------------------|--------------------------------------------------------------|

| ·   | failure                of manufacturing facilities to meet regulatory requirements;                or |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | failure                of clinical trial management, oversight or implementation to meet                regulatory requirements. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

----

**We      have undertaken, and may in the future conduct, a product recall or voluntary      market withdrawal, or could be required by a governmental authority to do so,      and could be exposed to significant product liability claims; we may have to      pay      significant amounts to those harmed and may suffer from adverse publicity as      a      result.**
*MoistureLoc*

**Our      worldwide voluntary withdrawal of **
***MoistureLoc***
**      has had an adverse effect on our business, which could continue longer than      previously estimated, even permanently**
*MoistureLoc*
*MoistureLoc*
*MoistureLoc*
*MoistureLoc,*
*MoistureLoc*
*Item      1A. Risk Factors*
*Item      7. Management’s Discussion and Analysis of Financial Condition and Results of      Operations*
*Item      8. Financial Statements and Supplementary Data *
*Note      19 — Other Matters*

**Our      activities involve hazardous materials and emissions and may subject us to      environmental liability**

----

**We      may incur increased costs or suffer competitive disadvantage as a result of      changes in laws and regulations.**

**Item      1B.**
**Unresolved      Staff Comments**

**Item      2.**
**Properties**

**Item      3.**
**Legal      Proceedings**

**Legal      Matters **
*MoistureLoc*
*Product      Liability Lawsuits*

***Shareholder      Securities Class Actions***
*In      re      Bausch & Lomb Incorporated Securities Litigation*
*MoistureLoc*

----

***ERISA-Based      Class Actions***
* *
*In      re      Bausch & Lomb Incorporated ERISA Litigation,*
*MoistureLoc*

***Shareholder      Derivative Actions***
*MoistureLoc*

*In      re      Bausch & Lomb Incorporated Derivative Litigation,*

----

*MoistureLoc*
*Little      v. Zarrella*
*Pinchuck      v. Zarrella*
*MoistureLoc*

*Pinchuck*
*Pinchuck*
*Little*

***Product      Liability Lawsuits***
* *
*ReNu*
*ReNu*
*MoistureLoc*

***Material      Intellectual Property Litigation***
*Rembrandt      Vision Technologies, L.P. v. Bausch & Lomb Incorporated and CIBA Vision      Corporation*
*PureVision*

----

***Material      Tax Litigation***
*Item      8. Financial Statements and Supplementary Data *
*Note      10 — Provision for Income Taxes*

**General      Litigation Statement**

----

**Item      4.**
**Submission      of Matters to a Vote of Security Holders**

----

**Part      II**

**Item      5.**
**Market      for Bausch & Lomb Incorporated's Common Stock, Related Shareholder Matters      and Issuer Purchases of Equity Securities**

*Dividends*
*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations *

*Quarterly      Stock Prices *
*Item      8. Financial Statements and Supplementary Data*
*Note      20 — Quarterly Results, Stock Prices and Selected Financial Data      (Unaudited)*

**Equity      Compensation Plan Information**

|     Plan                Category                  |   |  Number                of Securities to be Issued Upon Exercise of Outstanding Options,                Warrants                and Rights |                       | Weighted                Average Exercise Price of Outstanding Options, Warrants and                Rights |   |   Number                of Securities Remaining Available for Future Issuance |   |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
| **Options**                                                           |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Equity                compensation plans approved by shareholders     |   |                                                                                                                                           | 5,217,314                1 |                                                                                                      | $      | 50.70                                                                                   |   |   | 6,419,933                1 |   |
|                                                                  |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Equity                compensation plans not approved by shareholders |   |                                                                                                                                           | 436,566                2   |                                                                                                      | $      | 40.28                                                                                   |   |   | -                2 |   |
|                                                                  |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Total                Options                                          |   |                                                                                                                                           | 5,653,880                  |                                                                                                      | $      | 49.90                                                                                   |   |   | 6,419,933 |   |
|                                                                  |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| **Restricted                Stock Awards**                            |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Equity                compensation plans approved by shareholders     |   |                                                                                                                                           | 567,278                3   |                                                                                                      |   |                                                                                    |   |   | - |   |
|                                                                  |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Equity                compensation plans not approved by shareholders |   |                                                                                                                                           | -                2         |                                                                                                      |   |                                                                                    |   |   | - |   |
|                                                                  |   |                                                                                                                                           |                       |                                                                                                      |   |                                                                                    |   |   |   |   |
| Total                Restricted Stock Awards                          |   |                                                                                                                                           | 567,278                    |                                                                                                      |   |                                                                                    |   |   | - |   |

| 1 | Represents                awards issued under the 1990 Stock Incentive Plan and the 2003 Long-Term                Incentive Plan. Shares remaining available for issuance consist of                6,350,232 from the 2003 Plan of which no more than 1,572,164 shares                may be                issued as grants other than options and SARs and 69,701 shares are                available under the Annual Retainer Stock Plan for Non-Employee Directors.                There are no shares available under the 1990 Stock Incentive                Plan. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | The                2001 Stock Incentive Plan was approved by the Board of Directors                on                January 22, 2001. The Plan provided for an annual pool of shares                for grant                of options and restricted shares equal to two percent of outstanding                shares. Eligible participants include all employees but not officers                or                directors. Options granted under the Plan have an option price equal                to                100 percent of the fair market value of the stock on the date of                grant and                a term of ten years. The options typically vest ratably over three                years                and restricted shares typically vest 50 percent after two years and                50                percent after three years with vesting contingent upon a continued                employment relationship with the Company. Effective January 1, 2003,                the                Board amended this Plan to allow for no further awards under this                Plan. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Included                in this number are performance share awards that were granted under                the                1990 Stock Incentive Plan which upon achievement of performance goals                may                be distributed immediately or deferred under the Restricted Stock                Deferred                Compensation Plan as elected by the participant. At December 30,                2006,                318,442 shares had been deferred and will be paid out in shares based                on                the election made by the                participant. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Issuer      Purchases of Equity Securities**

|       Period           |   |    Total                Number of Shares Purchased 1 |   |     Average                Price Paid Per Share |   |  Total                Number of Shares Purchased as Part of Publicly Announced Programs                2,                3 |   | Maximum                Number of Shares that May Yet Be Purchased Under the Programs 2,                3 |   |
|------------------------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|
| October                1, 2006 - October 28, 2006    |   |                                                                | 2,043  |                                                                | $      | 52.93                                                                                                                           |   |                                                                                                     | 1,732  |   |   | 2,186,448 |   |
| October                29, 2006 - November 25, 2006  |   |                                                                | 8,260  |                                                                | $      | 52.04                                                                                                                           |   |                                                                                                     | 370    |   |   | 2,186,078 |   |
| November                26, 2006 - December 30, 2006 |   |                                                                | 773    |                                                                | $      | 53.44                                                                                                                           |   |                                                                                                     | 773    |   |   | 2,185,305 |   |
| Total                                                |   |                                                                | 11,076 |                                                                | $      | 52.31                                                                                                                           |   |                                                                                                     | 2,875  |   |   | 2,185,305 |   |

| 1 | Shares                purchased during the fourth quarter ended December 30, 2006 include                purchases pursuant to a publicly announced repurchase program (see                footnote 2 below), stock compensation plans and deferred compensation                plans. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | On                January 27, 2004, the Board of Directors authorized a program to                repurchase up to two million shares of the Company's outstanding                Common                stock. There is no expiration date for this program. During the fourth                quarter ended December 30, 2006, 2,875 shares were repurchased at                an                average price of $53.01. Shares repurchased after November 2005 were                primarily through private transactions with the rabbi trust for the                Company's Deferred Compensation                Plan. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | On                July 26, 2005, the Board of Directors approved the purchase of up                to an                additional two million shares of the Company's outstanding Common                stock.                There is no expiration date for this program, and since its approval                no                shares have been repurchased. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Comparison      of Five-Year Cumulative Total Shareholder Return **
**1**

**—      December 2001 through December 2006**

|  Date              |   |  Bausch                & Lomb Incorporated  |   |  S&P                Healthcare Index  |   |     S&P                500  |   |  S&P                Healthcare Equipment Index  |   |
|------------------------------|--------|-----------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                         |   |                                                      |   |                                                |   |                                                     |   |                                                          |   |
| December                2001 |   | $                                                         | 100.00 |                                                | $      | 100.00                                                   |   | $                                                             | 100.00 |   | $ | 100.00 |   |
| December                2002 |   |                                                      | 97.25  |                                                |   | 81.22                                                    |   |                                                          | 77.95  |   |   | 87.34 |   |
| December                2003 |   |                                                      | 142.01 |                                                |   | 93.42                                                    |   |                                                          | 100.27 |   |   | 115.32 |   |
| December                2004 |   |                                                      | 177.82 |                                                |   | 94.98                                                    |   |                                                          | 111.15 |   |   | 129.84 |   |
| December                2005 |   |                                                      | 188.60 |                                                |   | 101.11                                                   |   |                                                          | 116.60 |   |   | 129.92 |   |
| December                2006 |   |                                                      | 146.02 |                                                |   | 108.70                                                   |   |                                                          | 134.97 |   |   | 135.27 |   |

**Item      6.**
**Selected      Financial Data**

*Selected      Financial Data *
*Item      8. Financial Statements and Supplementary Data*
*Note      20 — Quarterly Results, Stock Prices and Selected Financial Data      (Unaudited)*

----

**Item      7.**
**Management's      Discussion and Analysis of Financial Condition and Results of      Operations**

*Recent      Developments*
*Item      8. Financial Statements and Supplementary Data*
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*
*ReNu*
*MoistureLoc*
*MoistureLoc*

**Business      Overview**

*Bausch      & Lomb*

*Item      8. Financial Statements and Supplementary Data*
*Note      1 — Significant Accounting Policies*

----

| ·   | focusing                on research and development programs to yield a robust                pipeline; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | expanding                the geographic reach of key products, especially in under-penetrated                markets; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | enhancing                our organizational capabilities by further implementing disciplined                business processes in all areas, particularly sales;                and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | protecting                the equity represented by the *Bausch                & Lomb*                brand. In the shorter term, this will include activities to rebuild                that                equity in certain markets where brand image has suffered following                the                outbreak of fungal infections among contact lens wearers and the                *MoistureLoc*                recall. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                continued focus on faster growing business segments and the launch                of                higher-margin new products in each of our product                categories; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | favorable                demographic trends, such as the aging of the population and an increase                in                the incidence of myopia and presbyopia;                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | opportunities                to further implement Lean manufacturing techniques and other cost                improvements to enhance margins, particularly for contact lenses                and                intraocular lenses. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Recent      Developments**

**Market      Withdrawal of **
***MoistureLoc***
** **
*MoistureLoc*

*MoistureLoc*
*Item      3. Legal Proceedings*
*Item      8. Financial Statements and Supplementary Data*
*Note*
*19—      Other Matters *
*Legal      Matters*

*MoistureLoc*
*MoistureLoc*
*Item      8. Financial Statements and Supplementary Data *
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*

**Brazilian      Tax Assessment**

**Legal      Matters**
*MoistureLoc*
*Product      Liability Lawsuits*

----

***Shareholder      Securities Class Actions***
*In      re      Bausch & Lomb Incorporated Securities Litigation*
*MoistureLoc*

***ERISA-Based      Class Actions***
*In      re      Bausch & Lomb Incorporated ERISA Litigation,*
*MoistureLoc*

***Shareholder      Derivative Actions***
*MoistureLoc*

*In      re      Bausch & Lomb Incorporated Derivative Litigation*

----

*MoistureLoc*
*Little      v. Zarrella*
*Pinchuck      v. Zarrella*
*MoistureLoc*

*Pinchuck*
*Pinchuck*
*Little*

***Product      Liability Lawsuits***
*ReNu*
*ReNu*
*MoistureLoc*

----

***Material      Intellectual Property Litigation***
*Rembrandt      Vision Technology, L.P. v. Bausch & Lomb Incorporated and CIBA Vision      Corporation*
*PureVision*

***Material      Tax Litigation***
*Item      8. Financial Statements and Supplementary Data*
*Note      10 — Provision for Income Taxes*

*Item      3. Legal Proceedings*
* *
*Item      8. Financial Statements and Supplementary Data *
*Note      19 — Other Matters*
*.*

**Financial      Overview**

| ·   | A                valuation allowance against deferred income tax assets which reduced                reported net income by $149, or $2.67 per share, recorded in the                third                quarter. The need for the allowance resulted from anticipated losses                in                early future periods attributed to the U.S. entities to which the                deferred                tax assets relate and uncertainties surrounding when we will return                to                U.S. profitability. The expected losses resulted from, among other                things,                the costs associated with the *MoistureLoc*                recall and its impact on 2006 financial                results; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Incremental                income tax expense of $9, or $0.17 per share, recorded in the third                quarter associated with our repatriating foreign earnings under the                American Jobs Creation Act of 2004 (AJCA);                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Amortization                of inventory step-up totaling $2 before taxes ($1 or $0.03 per share                after                taxes) related to purchase accounting adjustments associated with                the 2005                acquisition of Freda. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*      Income Taxes*
*      Item      8. Financial Statements and Supplementary Data*
*Note      10 — Provision for Income Taxes*

**Net      Sales and Income by Business Segment and Geographic Region**

**Geographic      Net Sales**

|                           |   |     Net                Sales |        | PercentIncrease/(Decrease)ActualDollars |   | PercentIncrease/DecreaseConstantCurrency |   |  Percent                ofTotalCompany                NetSales |   |
|--------------------------------|--------|--------------------------------------------------|-------------|-----------------------------------------|--------|------------------------------------------|--------|---------------------------------------------------------------------|--------|
| **2006**                       |   |                                             |        |                                    |   |                                     |   |                                                                |   |
| Non-U.S.                       |   | **$**                                            | **1,403.9** |                                    |   | **(4**                                   | **)%** |                                                                | **(4** | **)%** |   | **61** | **%** |
| U.S.                1          |   |                                             | **888.5**   |                                    |   | **-**                                    | **%**  |                                                                | **-**  | **%** |   | **39** | **%** |
| Total                Company 2 |   | **$**                                            | **2,292.4** |                                    |   | **(3**                                   | **)%** |                                                                | **(3** | **)%** |   |  |   |
|                           |   |                                             |        |                                    |   |                                     |   |                                                                |   |   |   |   |   |
| 2005                           |   |                                             |        |                                    |   |                                     |   |                                                                |   |   |   |   |   |
| Non-U.S.                       |   | $                                                | 1,462.8     |                                    |   | 7                                        | %      |                                                                | 6      | % |   | 62 | % |
| U.S.                1          |   |                                             | 891.0       |                                    |   | 3                                        | %      |                                                                | 3      | % |   | 38 | % |
| Total                Company 2 |   | $                                                | 2,353.8     |                                    |   | 5                                        | %      |                                                                | 5      | % |   |  |   |
|                           |   |                                             |        |                                    |   |                                     |   |                                                                |   |   |   |   |   |
| 2004                           |   |                                             |        |                                    |   |                                     |   |                                                                |   |   |   |   |   |
| Non-U.S.                       |   | $                                                | 1,370.0     |                                    |   | 14                                       | %      |                                                                | 6      | % |   | 61 | % |
| U.S.                1          |   |                                             | 863.5       |                                    |   | 6                                        | %      |                                                                | 6      | % |   | 39 | % |
| Total                Company   |   | $                                                | 2,233.5     |                                    |   | 11                                       | %      |                                                                | 6      | % |   |  |   |

| 2 | Amounts                reflect the impact of the voluntary recall of *MoistureLoc*                discussed in *Recent                Developments*                above and in*Item 8. Financial Statements and Supplementary Data*                under *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution*of                this Annual Report on Form 10-K. Charges associated with the recall                reduced 2005 U.S. net sales by $12.0, and reduced non-U.S. net sales                by                $19.1 and $5.1 in 2006 and 2005,                respectively. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Business      Segment**
**      Net Sales **

----

*Financial      Overview*

|                                               |   | **2006**1                |        | 2005                2                                              |   | 2004             |   |
|----------------------------------------------------|--------|--------------------------|-------------|--------------------------------------------------------------------|--------|------------------|--------|
|                                               |   |  **As****Reported** |        | **Percent                of****Total                Net****Sales** |   |  AsReported |   | Percent                ofTotal                NetSales |   |  AsReported |   | Percent                ofTotal                NetSales |   |
| **Net                Sales**                       |   |                     |        |                                                               |   |             |   |   |   |   |   |   |   |
| Americas                                           |   | **$**                    | **1,007.5** |                                                               |   | **44**           | **%**  | $ | 1,005.3 |   |   | 43 | % | $ | 960.2 |   |   | 43 | % |
| Europe                                             |   |                     | **831.9**   |                                                               |   | **36**           | **%**  |   | 859.9 |   |   | 36 | % |   | 818.9 |   |   | 37 | % |
| Asia                                               |   |                     | **453.0**   |                                                               |   | **20**           | **%**  |   | 488.6 |   |   | 21 | % |   | 454.4 |   |   | 20 | % |
|                                               |   | **$**                    | **2,292.4** |                                                               |   |             |   | $ | 2,353.8 |   |   |   |   | $ | 2,233.5 |   |   |   |   |
|                                               |   |                     |        |                                                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                Income (Costs)**        |   |                     |        |                                                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Americas                                           |   | **$**                    | **323.6**   |                                                               |   |             |   | $ | 333.0 |   |   |   |   | $ | 326.1 |   |   |   |   |
| Europe                                             |   |                     | **210.4**   |                                                               |   |             |   |   | 250.8 |   |   |   |   |   | 251.2 |   |   |   |   |
| Asia                                               |   |                     | **60.7**    |                                                               |   |             |   |   | 123.6 |   |   |   |   |   | 128.5 |   |   |   |   |
| Research                & Development          |   |                     | **(223.2**  | **)**                                                              |   |             |   |   | (200.5 | ) |   |   |   |   | (180.6 | ) |   |   |   |
| Global                Operations & Engineering |   |                     | **(159.2**  | **)**                                                              |   |             |   |   | (131.7 | ) |   |   |   |   | (157.2 | ) |   |   |   |
| **Segment                Income**                  |   | **$**                    | **212.3**   |                                                               |   |             |   | $ | 375.2 |   |   |   |   | $ | 368.0 |   |   |   |   |
| Corporate                Administration 3          |   |                     | **(98.3**   | **)**                                                              |   |             |   |   | (89.8 | ) |   |   |   |   | (88.9 | ) |   |   |   |
| Other                significant charges 4         |   |                     | **-**       |                                                               |   |             |   |   | (1.9 | ) |   |   |   |   | - |   |   |   |   |
| **Operating                Income**                |   | **$**                    | **114.0**   |                                                               |   |             |   | $ | 283.5 |   |   |   |   | $ | 279.1 |   |   |   |   |

| 1 | 2006                amounts reflect the impact of the voluntary recall of *MoistureLoc*                discussed in *Recent                Developments*                above and in *Item                8. Financial Statements and Supplementary Data*under                *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution*in                this Annual Report on Form 10-K. Charges associated with the recall                reduced Americas region net sales and operating income by $0.6 and                $0.8,                respectively; Europe region net sales and operating income by $18.0                and                $23.4, respectively; Asia region net sales and operating income by                $0.5                and $1.2, respectively; and increased Global Operations & Engineering                operating costs by $1.3. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | 2005                amounts reflect the impact of the voluntary recall of *MoistureLoc*                discussed in *Recent                Developments*                above and in *Item                8. Financial Statements and Supplementary Data*under                *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution*in                this Annual Report on Form 10-K. Charges associated with the recall                reduced Americas region net sales and operating income by $12.4 and                $25.0,                respectively; Asia region net sales and operating income by $4.7                and                $11.0, respectively; increased Global Operations & Engineering                operating costs by $1.2; and increased corporate administration expense                by                $1.7. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Operating      Costs and Expenses*

| 4 | Other                significant charges represent purchase accounting adjustments related                to                the acquisition of Freda. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|                         |   |                       |        |                   |   | **2006                vs. 2005**           |   |                                          |   | 2005                vs. 2004 |   |
|------------------------------|--------|----------------------------|-------------|------------------------|--------|--------------------------------------------|--------|-----------------------------------------------|--------|------------------------------|--------|
|                         |   |    **2006** |        |    2005 |   | **Percent****Change****Actual****Dollars** |   | **Percent****Change****Constant****Currency** |   |    2004       |   | PercentChangeActualDollars |   | PercentChangeConstantCurrency |   |
|                         |   |                       |        |                   |   |                                       |   |                                          |   |                         |   |   |   |   |   |
| Americas                     |   | **$**                      | **1,007.5** |                   | $      | 1,005.3                                    |   |                                          | **-**  | **%**                        |   | **-** | **%** | $ | 960.2 |   |   | 5 | % |   | 4 | % |
| Europe                       |   |                       | **831.9**   |                   |   | 859.9                                      |   |                                          | **(3** | **)%**                       |   | **(4** | **)%** |   | 818.9 |   |   | 5 | % |   | 5 | % |
| Asia                         |   |                       | **453.0**   |                   |   | 488.6                                      |   |                                          | **(7** | **)%**                       |   | **(5** | **)%** |   | 454.4 |   |   | 8 | % |   | 7 | % |
| Total                Company |   | **$**                      | **2,292.4** |                   | $      | 2,353.8                                    |   |                                          | **(3** | **)%**                       |   | **(3** | **)%** | $ | 2,233.5 |   |   | 5 | % |   | 5 | % |

----

**2006      Versus 2005**
*MoistureLoc*
*Item      8. Financial Statements and Supplementary Data*
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*
* *
*MoistureLoc*
*MoistureLoc*

| ·   | Americas                segment net sales were essentially flat with 2005. Current-year figures                include $1 in sales return and customer rebate provisions associated                with                the *MoistureLoc*                recall, whereas 2005 amounts included $12 of such provisions. Excluding                those items, Americas segment net sales declined 1 percent on a reported                basis, and 2 percent in constant currency in 2006, with gains in                contact                lenses, pharmaceuticals and cataract surgery products essentially                offset                by declines in the lens care and refractive surgery categories. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Europe                segment net sales decreased 3 percent on a reported basis and 4 percent                in                constant-currency, largely reflecting $18 in provisions related to                the                *MoistureLoc*                recall in 2006 compared to no such provisions in the prior year,                and                revenues of $7 from Woehlk in 2005 and no corresponding revenues                in 2006.                Excluding these effects, Europe net sales were essentially flat with                2005                on a reported basis, and down 1 percent in constant currency, with                higher                sales of pharmaceuticals essentially offset by lower sales of vision                care                products. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Asia                segment net sales decreased 7 percent compared to 2005, or 5 percent                in                constant currency. Current-year figures include $1 in sales return                and                customer rebate provisions associated with the *MoistureLoc*                recall, whereas prior-year figures included $5 of such provisions.                Both                years also include incremental sales from Freda ($60 in 2006 and                $18 in                2005). Excluding those items from both periods, sales declined 17                percent,                or 16 percent on a constant-currency basis, reflecting lower sales                of                vision care and surgical products. The Asia region, particularly                China,                has experienced the most significant negative impact on our non-lens                care                product lines as a result of the *MoistureLoc*                recall. We have initiated brand rebuilding programs to specifically                address this situation in order to recoup as much lost market share                and                distribution as possible and rebuild the reputation of the *Bausch                & Lomb*                brand. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2005      Versus 2004**
*MoistureLoc*
*Item      8. Financial Statements and Supplementary Data*
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*
* *
*MoistureLoc*

| ·   | Americas                segment net sales increased 5 percent from 2004, or 4 percent in                constant                currency. Those figures include $12 in sales return and consumer                rebate                provisions associated with the *MoistureLoc*recall.                Excluding those items, Americas segment net sales grew 6 percent,                or 5                percent in constant currency. Gains were led by above-market performance                for contact lenses and higher sales of cataract surgery                products. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Europe                segment net sales increased 5 percent on both a reported and                constant-currency basis. Gains were led by higher sales of pharmaceutical                and vision care products, which more than offset declines for the                refractive surgery category and the impact of our divesting our German                Woehlk contact lens business in the 2005 third quarter. The *MoistureLoc*                product recalled in Europe was both manufactured and sold in 2006;                therefore, sales return and customer rebates of $18 associated with                the                recall were not recorded in the Europe segment in 2005, but were                expensed                in 2006. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Asia segment reported net sales gains of 8 percent compared to 2004,                or 7                percent in constant currency. Those figures include $5 in sales return                and                consumer rebate provisions associated with the *MoistureLoc*                recall as well as $18 in incremental sales associated with the acquisition                of Freda. Excluding those items, Asia segment net sales grew 5 percent,                or                4 percent in constant currency, with gains led by higher sales of                contact                lenses and cataract surgery                products. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Americas**

|                                      |   | **2006                vs. 2005****Percent                Increase (Decrease)** |    | 2005                vs. 2004Percent                Increase (Decrease) |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------------|---------|------------------------------------------------------------------------|--------|
|                                      |   | **Actual                Dollars**                                         |    | **Constant                Currency**                                   |   | Actual                Dollars  |   | Constant                Currency |   |
| Contact                Lens               |   |                                                                           | **8**   | **%**                                                                  |   | **7** | **%** |   | 15 | % |   | 14 | % |
| Lens                Care                  |   |                                                                           | **(12** | **)%**                                                                 |   | **(13** | **)%** |   | - | % |   | (1 | )% |
| Pharmaceuticals                           |   |                                                                           | **6**   | **%**                                                                  |   | **6** | **%** |   | 3 | % |   | 3 | % |
| Cataract                and Vitreoretinal |   |                                                                           | **2**   | **%**                                                                  |   | **2** | **%** |   | 7 | % |   | 6 | % |
| Refractive                                |   |                                                                           | **(5**  | **)%**                                                                 |   | **(6** | **)%** |   | (4 | )% |   | (6 | )% |
| Total                Americas             |   |                                                                           | **-**   | **%**                                                                  |   | **-** | **%** |   | 5 | % |   | 4 | % |

**2006      Versus 2005**

| ·   | Contact                lens category growth** **in                2006 was mainly due to sales of the *PureVision*                brand of silicone hydrogel contact lenses, which more than doubled                from                2005. Sales benefited from the introduction of *PureVision*                Toric lenses for people with astigmatism and *PureVision*                Multi-Focal for people with presbyopia in the United States and from                higher shipments of *PureVision*                SVS lenses as the market continues to convert to silicone hydrogel                platforms. Somewhat offsetting those gains were expected declines                in sales                of the *SofLens*                Toric and *SofLens*                Multi-Focal lines, and our older technology two-week disposable offerings,                reflecting market shifts to silicone hydrogel lenses, combined with                higher                promotional activities (recorded as an offset to revenues) for silicone                hydrogel lenses. Fourth-quarter Americas contact lens revenues declined                5                percent on a reported basis and 6 percent in constant currency, following                three quarters of growth. While we increased our U.S. market share                of                patient fits slightly in the fourth quarter as compared to the prior                year,                fourth-quarter sales trends reflected slower market growth in the                second                half of 2006, combined with declining sales of older soft contact                lens                offerings as consumers transition to silicone hydrogel                products. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lens                care net sales in 2005 were reduced by $12 in provisions for sales                returns                and consumer rebates associated with the *MoistureLoc*                recall, whereas 2006 net sales were reduced by $1 for such provisions                (see                *Item                8. Financial Statements and Supplementary Data*                under *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution** *of                this Annual Report on Form 10-K for further discussion). Excluding                these                charges from both years, Americas region lens care sales declined                15                percent in 2006, or 16 percent on a constant-currency basis, reflecting                the lack of *MoistureLoc*                sales in 2006, and market share losses for our lines of multipurpose                solutions following the product recall. Promotional program activities                (recorded as an offset to revenues) were also higher in 2006, as                we                executed a variety of brand rebuilding programs in an effort to regain                market share and convert former *MoistureLoc*                users to our *ReNu                MultiPlus*                and *ReNu*                Multipurpose lines. We estimate that our unit share of the U.S.                multipurpose solutions market declined from approximately 30 percent                prior                to the recall to approximately 18 percent exiting 2006. We will continue                to support our lens care category with a variety of advertising and                promotion efforts in 2007 and expect to continue to regain some of                our                lost U.S. market share. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pharmaceuticals                revenue gains were mainly due to higher sales of ocular vitamins,                continued prescription growth for our lines of steroid drops containing                loteprednol etabonate and increased revenues from *Retisert*                drug delivery implants. These trends were partly offset by declines                in                sales of OTC general eye care products and certain non-ophthalmic                generic                drugs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                gains for cataract and vitreoretinal products were led by our lines                of                IOLs, mainly reflecting higher shipments of premium-priced aspheric                silicone IOL offerings. In total, constant-currency IOL sales grew                approximately 8 percent, with silicone IOL sales up more than 10                percent.                Sales gains were also reported for our lines of handheld surgical                instruments. The trends in IOLs and instruments more than offset                declines                for our lines of phacoemulsification equipment, which reflected fewer                systems placements in 2006 as our customers await the launch of our                next-generation microsurgical platform, *Stellaris*,                which we expect to be commercially available in the first half of                2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | In                the refractive category, sales of per-procedure cards increased about                5                percent on a constant-currency basis in 2006, as did revenues associated                with service contracts. These gains were more than offset by lower                sales                of microkeratome blades, reflecting overall market declines in procedures                combined with inroads by competitive femtosecond technologies, and                by                lower sales of lasers and diagnostic                equipment. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2005      Versus 2004**

| ·   | Contact                lens category growth** **reflected                the reintroduction of the *PureVision*                brand of silicone hydrogel contact lenses in the United States as                well as                continued growth for *SofLens*                Toric and *SofLens*                Multi-Focal contact lenses. Moderating that performance was a continued                decline in sales of our older, conventional hydrogel two-week contact                lenses, reflecting the overall market shift to silicone hydrogel                materials. Sales of *SofLens*Toric                contact lenses increased more than 10 percent from 2004. As expected,                dollar growth for this product has begun to moderate, reflecting                the                competitive impact of new silicone hydrogel toric offerings. We launched                *PureVision*                Toric contact lenses in the United States on a limited basis in October                2005 and reached full commercial distribution in the second quarter                of                2006. Sales of *SofLens*                Multi-Focal contact lenses grew more than 30 percent in the Americas                region in 2005, reflecting our continued leading market                position. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                in the lens care category were essentially flat mainly due to sales                returns and consumer rebate provisions associated with our voluntary                recall of *MoistureLoc*                which was reflected as a subsequent event. Excluding the impact of                the                recall, Americas region constant-currency lens care sales increased                3                percent, reflecting U.S. market share gains for our lines of multipurpose                solutions and higher sales of *Boston*                lens care solutions for RGP contact                lenses. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pharmaceuticals                sales increases were mainly attributable to incremental sales of                *Zylet*                combination eye drops, as well as higher sales of *Lotemax*                steroid eye drops. Those gains were largely offset by expected declines                in                sales of two non-ophthalmic drugs in our multisource pharmaceuticals                portfolio. Prescriptions for our lines of steroid eye drops containing                loteprednol etabonate continued to trend positively throughout 2005,                with                *Lotemax*                and *Alrex*                prescriptions reaching all-time highs. Our vitamins business grew                1                percent in constant currency. As expected, we faced difficult comparisons                to the prior year, when we launched *PreserVision*                soft gels and customers were carrying inventories of both tablets                and gel                formulations. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                gains for cataract and vitreoretinal products were led by our lines                of                silicone IOLs, which increased more than 15 percent. That performance                was                mainly due to our *SofPort*                lines of silicone IOLs, which grew at an even faster rate and benefited                from market share gains and strong market acceptance for the *SofPort                AO*                IOL featuring an aspheric optics design. Phacoemulsification product                sales                increased more than 5 percent, reflecting an increase in revenues                for                *Millennium*                microsurgical systems and disposable products used in cataract surgery                procedures. The increase in *Millennium*                net sales reflects primarily a change in the type of system placements                in                2005 as compared to the prior year. We placed more units under direct                sales agreements in 2005 compared to 2004, when we placed more units                under                operating lease arrangements requiring revenue to be recognized over                a                longer period of time. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                declines in the refractive category were mainly due to lower sales                of                lasers and microkeratome blades. These declines were partially offset                by                higher sales of per-procedure cards, especially those used for                *Zyoptix*                personalized vision correction                procedures. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Europe**

|                                      |   | **2006                vs. 2005****Percent                Increase (Decrease)** |    | 2005                vs. 2004Percent                Increase (Decrease) |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------------|---------|------------------------------------------------------------------------|--------|
|                                      |   | **Actual                Dollars**                                         |    | **Constant                Currency**                                   |   | Actual                Dollars  |   | Constant                Currency |   |
| Contact                Lens               |   |                                                                           | **(6**  | **)%**                                                                 |   | **(7** | **)%** |   | 5 | % |   | 5 | % |
| Lens                Care                  |   |                                                                           | **(21** | **)%**                                                                 |   | **(22** | **)%** |   | 6 | % |   | 8 | % |
| Pharmaceuticals                           |   |                                                                           | **5**   | **%**                                                                  |   | **4** | **%** |   | 11 | % |   | 11 | % |
| Cataract                and Vitreoretinal |   |                                                                           | **1**   | **%**                                                                  |   | **-** | **%** |   | 2 | % |   | 2 | % |
| Refractive                                |   |                                                                           | **(1**  | **)%**                                                                 |   | **(2** | **)%** |   | (13 | )% |   | (13 | )% |
| Total                Europe               |   |                                                                           | **(3**  | **)%**                                                                 |   | **(4** | **)%** |   | 5 | % |   | 5 | % |

**2006      Versus 2005**

| ·   | Lower                net sales of contact lenses were mainly due to *SofLens*                One Day lenses (reflecting recent competitive entries in the segment)                and                certain older lines that we are in the process of discontinuing as                the                market transitions to silicone hydrogel platforms. We recently launched                in                Europe our new aspheric daily disposable offering, *SofLens*                Daily Disposable contact lenses. Based on very enthusiastic reaction                to                this lens by both eye care practitioners and consumers, we believe                the                *SofLens*                Daily Disposable brand will contribute to growth in our contact lens                business in the region in 2007. Our *PureVision*                line of silicone hydrogel contact lenses continues to perform strongly                in                Europe, with the brand posting gains of more than 30 percent in 2006.                That                growth was due to incremental sales from *PureVision*                Multi-Focal lenses combined with double-digit gains for both *PureVision*                SVS and *PureVision*                Toric lenses. In addition, 2005 contact lens sales figures include                $7 in                revenues from our Woehlk business in Germany, which we divested in                the                third quarter of that year. Excluding Woehlk results from the prior                year,                Europe region contact lens sales decreased 4 percent in                2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lens                care sales declines in 2006 reflect the impact of the *MoistureLoc*                recall and include $18 of sales returns and consumer coupon provisions                associated with the recall (see *Item                8. Financial Statements and Supplementary Data*                under *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution** *of                this Annual Report on Form 10-K for further discussion). Excluding                these                items, year-to-date European lens care sales were down approximately                6                percent from the prior year, due to declines in our lines of multipurpose                solutions, which more than offset gains for our lines of hydrogen                peroxide                and RGP solutions in the region. The lower sales of multipurpose                solutions                mainly reflect the lack of *MoistureLoc*                sales following the recall. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Constant-currency                European pharmaceuticals sales growth in 2006 was primarily attributable                to our lines of ocular vitamins and dry eye                medications. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                the cataract and vitreoretinal category, higher sales of IOLs and                ancillary products used in cataract surgery (such as disposables                and                custom packs and trays) were essentially offset by lower placements                of                phacoemulsification equipment. Higher sales of IOLs were mainly due                to our                *Akreos*                line of acrylic offerings, which grew more than 15 percent on a                constant-currency basis. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                the refractive surgery category, higher sales of per-procedure cards,                microkeratome components and lasers were more than offset by lower                sales                of diagnostic equipment, microkeratome blades and service revenue. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2005      Versus 2004**

| ·   | Contact                lens sales comparisons were impacted by the Woehlk divestiture in                the                third quarter of 2005. Excluding that impact, contact lens net sales                would                have grown approximately 8 percent on a reported basis and 9 percent                in                constant currency. Gains were mainly due to our lines of specialty                products and*PureVision*                silicone hydrogel spherical contact lenses. Monthly replacement toric                contact lens revenues increased more than 20 percent, with gains                coming                from a combination of expanded distribution for the *PureVision*                Toric line and high-single-digit growth for*SofLens*                Toric contact lenses. Our multifocal product also posted strong growth,                and we continued to gain market                share. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Increased                lens care sales reflected market share gains, especially for our                lines of                multipurpose solutions, which grew approximately 10 percent on the                continued market acceptance of *MoistureLoc*                solution prior to the market                recall. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | European                pharmaceuticals sales growth was mainly attributable to our lines                of dry                eye products, ocular nutritionals and anti-infective drugs, coupled                with                expansion into new geographic                markets. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Higher                cataract and vitreoretinal sales reflected overall strong performance                in                most markets with the exception of the United Kingdom, where the                number of                procedures declined in 2005 following government initiatives in the                prior                year to decrease the number of patients waiting to have the procedure.                On                a total region basis, growth was largely due to the *Akreos*                line, as well as higher sales of                viscoelastics. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Declines                in sales of refractive surgery products in Europe were consistent                with                overall market trends. Lower sales of equipment and microkeratome                blades                more than offset increased sales of *Zyoptix*                treatment cards. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Asia**

|                                      |   | **2006                vs. 2005****Percent                Increase (Decrease)** |    | 2005                vs. 2004Percent                Increase (Decrease) |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------------|---------|------------------------------------------------------------------------|--------|
|                                      |   | **Actual                Dollars**                                         |    | **Constant                Currency**                                   |   | Actual                Dollars  |   | Constant                Currency |   |
| Contact                Lens               |   |                                                                           | **(7**  | **)%**                                                                 |   | **(5** | **)%** |   | 8 | % |   | 7 | % |
| Lens                Care                  |   |                                                                           | **(39** | **)%**                                                                 |   | **(38** | **)%** |   | (5 | )% |   | (7 | )% |
| Pharmaceuticals                1          |   |                                                                           | **NM**  |                                                                   |   | **NM** |   |   | NM |   |   | NM |   |
| Cataract                and Vitreoretinal |   |                                                                           | **(2**  | **)%**                                                                 |   | **(2** | **)%** |   | 16 | % |   | 13 | % |
| Refractive                                |   |                                                                           | **(27** | **)%**                                                                 |   | **(28** | **)%** |   | (7 | )% |   | (9 | )% |
| Total                Asia                 |   |                                                                           | **(7**  | **)%**                                                                 |   | **(5** | **)%** |   | 8 | % |   | 7 | % |

| 1 | NM                denotes “not meaningful.” Pharmaceuticals category sales include revenues                from the acquisition of Freda in the 2005 fourth quarter ($60.2 in                2006                and $17.8 in 2005), resulting in a calculated growth rate of more                than 100                percent. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2006      Versus 2005**

| ·   | Asian                contact lens revenue declines were primarily due to the negative                collateral impact resulting from the *MoistureLoc*                situation, particularly in China, although that business began to                show                signs of recovery late in the year due to a variety of initiatives                we                undertook to regain lost distribution and market share following                the                *MoistureLoc*                recall; and lower sales of two-week spherical contact lenses in Japan.                Partially offsetting these declines was a benefit associated with                the                recognition of approximately $7 in previously deferred revenue associated                with two Japanese distributors of vision care products. Shipments                to these                distributors were previously recorded as consignment sales because                they                did not meet all of our criteria for revenue recognition as discussed                in                *Item                8. Financial Statements and Supplementary Data*under                *Note                1 — Significant Accounting Policies*.                Based on changes in circumstances in 2006, including reductions in                the                amount of inventory carried by these distributors, beginning in the                fourth                quarter of 2006 revenues associated with shipments to these distributors                are recorded at the time of delivery and are no longer being                deferred. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Lens                care sales reflect charges associated with the *MoistureLoc*                recall (see *Item                8. Financial Statements and Supplementary Data*                under *Note                21 — Market Withdrawal of MoistureLoc Lens Care Solution** *of                this Annual Report on Form 10-K for further discussion) totaling                less than                $1 in 2006 and $5 in 2005. Excluding those charges, sales were down                approximately 40 percent, with declines in most markets in the region.                In                markets other than Japan, declines reflected negative publicity and                consumer concern resulting from the *MoistureLoc*                recall. We withdrew all multipurpose solutions in Hong Kong and Singapore                through the end of 2006, but resumed sales of *ReNu                MultiPlus*                solutions in Hong Kong in the first quarter of 2007, and anticipate                a                relaunch in Singapore in 2007. The most significant negative impact                from                the *MoistureLoc*                situation has been seen in China, despite no confirmed reported infections                in that market. We have initiated brand rebuilding programs to                specifically address this situation in order to regain distribution                and                market share and as noted above, have begun to see signs of recovery.                Constant-currency lens care revenues also declined in Japan in 2006,                mainly reflecting significant pricing activity by a local competitor                and                overall market shifts to one-day contact lenses (which do not require                the                use of lens care solutions). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Asia                region pharmaceuticals sales reflect the fourth-quarter 2005 acquisition                of Freda, which contributed approximately $60 in 2006 and $18 in                2005.                Excluding Freda, our Asian pharmaceuticals revenues grew about 10                percent,                largely due to gains from ocular vitamins. Fourth-quarter pharmaceuticals                revenues declined 7 percent from the prior year on a reported basis                and 9                percent in constant currency, mainly reflecting lower sales of                non-ophthalmic products at Freda. We have adopted a distributor selling                model for these non-strategic products, resulting in a lower realized                price than if we had continued to sell them directly to the end                customer. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cataract                and vitreoretinal category constant-currency sales declines were                mainly                due to lower placements of phacoemulsification equipment, which more                than                offset 10-percent higher sales of IOLs. Increased IOL sales were                due to                ongoing geographic expansion and market share gains for the *Akreos*line                of acrylic IOLs, which posted growth in excess of 30 percent in the                region                in 2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Refractive                category sales declines were primarily due to lower laser placements,                partially offset by increased service                fees. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2005      Versus 2004**

| ·   | Contact                lens sales growth in Asia reflected gains for our lines of specialty                and                silicone hydrogel lenses, including incremental sales from the launch                in                Japan of our latest conventional hydrogel two-week disposable lenses.                Throughout much of the year, our Chinese contact lens sales growth                was                lower than historical trends and internal expectations, reflecting,                in                part, trade disruption following changes we made in some of our                distributor programs early in 2005. That business rebounded in the                fourth                quarter, posting constant-currency growth of approximately 15 percent                compared to the same period in                2004. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lens                care sales declines reflect the sales returns and customer rebate                provisions associated with the *MoistureLoc*recall.                Excluding the impact of the recall, Asian constant-currency lens                care                sales were down 3 percent. Declines in China, due to the same distributor                issues discussed above, more than offset 1 percent constant-currency                gains                in Japan, reflecting the market introduction of *ReNu                MultiPlus*                solution. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Historically                we have not had a significant pharmaceuticals business in Asia. In                the                fourth quarter of 2005 we acquired a controlling interest in Freda.                The                acquisition should help accelerate our expansion into the rapidly                growing                Chinese ophthalmic pharmaceuticals market and provide a national                pharmaceuticals sales and distribution network. Further information                with                respect to the Freda acquisition can be found in *Item                8. Financial Statements and Supplementary Data*                under *Note                2 — Acquisitions*                of                this Annual Report on Form 10-K. Excluding the Freda acquisition,                our                Asian pharmaceuticals revenues grew about 20 percent on a                constant-currency basis, led by gains for ocular nutritional                products. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Growth                in the cataract and vitreoretinal category was mainly driven by gains                for                our lines of IOL and phacoemulsification products. IOL revenues were                up                strongly, largely due to the continued rollout of the *Akreos*line                of acrylic IOLs throughout the                year. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lower                sales in the refractive category in Asia reflected declines in laser                and                diagnostic equipment sales. Part of this decline was expected, as                prior-year results included revenues associated with initial customer                adoption of our *Zyoptix*                laser platform. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   |     Net                Sales |        | PercentIncrease(Decrease)ActualDollars |   | PercentIncrease(Decrease)ConstantCurrency |   |
|-------------------------------------------|--------|--------------------------------------------------|-------------|----------------------------------------|--------|-------------------------------------------|--------|
| **2006**                                  |   |                                             |        |                                   |   |                                      |   |
| Contact                Lens               |   | **$**                                            | **710.0**   |                                   |   | **(3**                                    | **)%** |   | **(2** | **)%** |
| Lens                Care                  |   |                                             | **413.8**   |                                   |   | **(21**                                   | **)%** |   | **(21** | **)%** |
| Pharmaceuticals                           |   |                                             | **658.4**   |                                   |   | **13**                                    | **%**  |   | **12** | **%** |
| Cataract                and Vitreoretinal |   |                                             | **381.9**   |                                   |   | **1**                                     | **%**  |   | **1** | **%** |
| Refractive                                |   |                                             | **128.3**   |                                   |   | **(9**                                    | **)%** |   | **(10** | **)%** |
|                                      |   | **$**                                            | **2,292.4** |                                   |   | **(3**                                    | **)%** |   | **(3** | **)%** |
|                                      |   |                                             |        |                                   |   |                                      |   |   |   |   |
| 2005                                      |   |                                             |        |                                   |   |                                      |   |   |   |   |
| Contact                Lens               |   | $                                                | 728.5       |                                   |   | 9                                         | %      |   | 9 | % |
| Lens                Care                  |   |                                             | 522.2       |                                   |   | -                                         | %      |   | (1 | )% |
| Pharmaceuticals                           |   |                                             | 584.8       |                                   |   | 11                                        | %      |   | 11 | % |
| Cataract                and Vitreoretinal |   |                                             | 377.8       |                                   |   | 6                                         | %      |   | 5 | % |
| Refractive                                |   |                                             | 140.5       |                                   |   | (8                                        | )%     |   | (9 | )% |
|                                      |   | $                                                | 2,353.8     |                                   |   | 5                                         | %      |   | 5 | % |
|                                      |   |                                             |        |                                   |   |                                      |   |   |   |   |
| 2004                                      |   |                                             |        |                                   |   |                                      |   |   |   |   |
| Contact                Lens               |   | $                                                | 671.0       |                                   |   | 13                                        | %      |   | 7 | % |
| Lens                Care                  |   |                                             | 523.3       |                                   |   | 5                                         | %      |   | 2 | % |
| Pharmaceuticals                           |   |                                             | 528.2       |                                   |   | 12                                        | %      |   | 7 | % |
| Cataract                and Vitreoretinal |   |                                             | 358.2       |                                   |   | 10                                        | %      |   | 5 | % |
| Refractive                                |   |                                             | 152.8       |                                   |   | 17                                        | %      |   | 13 | % |
|                                      |   | $                                                | 2,233.5     |                                   |   | 11                                        | %      |   | 6 | % |

**2006      Versus 2005**
*MoistureLoc*
*Item      8. Financial Statements and Supplementary Data*
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*
* *
*MoistureLoc*

| ·   | Overall                strong double-digit growth in our *PureVision*                lines of silicone hydrogel contact lenses was more than offset by                lower                sales of two-week spherical contact lenses in Japan (reflecting overall                market trends), *SofLens*                Toric disposable contact lenses (resulting from the continued roll-out                of                *PureVision*                Toric in the U.S. market), collateral negative impact on our Asian                contact                lens business resulting from the *MoistureLoc*                situation, and lower sales of older technology products (reflecting                ongoing product rationalization                initiatives). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Excluding                the provisions related to the *MoistureLoc*                recall from current-year and 2005 results, lens care sales declined                20                percent in 2006, primarily reflecting the lack of *MoistureLoc*                sales and lost market share following the                recall. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pharmaceutical                net sales growth includes the impact of the Freda acquisition, as                well as                higher sales of ocular vitamins, allergy, dry eye, anti-inflammatory                and                combination medications, combined with incremental sales of *Retisert*                drug delivery implants, partially offset by lower sales of certain                OTC                products and non-ophthalmic generic drugs. Excluding revenues from                Freda,                pharmaceuticals category growth was approximately 6 percent (5 percent                in                constant currency). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Cataract                and vitreoretinal product category gains were led by higher sales                of IOLs,                which were up more than 5 percent from the prior year, and hand-held                surgical instruments. Overall, revenues from phacoemulsification                products                declined slightly, as higher sales of disposable products were offset                by                lower equipment sales, as customers await the launch of our next                generation microsurgical platform, *Stellaris*,                in 2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net                sales declines in the refractive category reflected lower equipment                and                microkeratome blade sales, partially offset by service revenues and                per-procedure fees. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2005      Versus 2004**
*MoistureLoc*

| ·   | Contact                lens sales growth was led by our specialty and silicone hydrogel                spherical                offerings, which offset continued declines for older technology products.                Excluding sales from Woehlk in both periods, contact lens net sales                would                have grown approximately 10                percent. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sales                in the lens care category, which were flat with the prior year, mainly                reflected the impact of the *MoistureLoc*                recall. Excluding that impact, lens care sales grew 3 percent on                a                reported basis and 2 percent in constant currency, with gains for                multi-purpose solutions in Europe and the Americas region partially                offset                by declines in Asia. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Full-year                pharmaceutical net sales growth includes the impact of the Freda                acquisition. Excluding revenues from Freda, growth was approximately                7                percent on both a reported and constant-currency basis. That reflects                incremental sales of *Zylet*                combination ophthalmic drops in the United States, combined with                higher                global sales of ocular vitamins and *Lotemax*                steroid drops containing loteprednol etabonate. Those gains were                somewhat                offset by sales declines for two non-ophthalmic drugs in our multisource                pharmaceuticals portfolio. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cataract                and vitreoretinal product category growth was led by gains in IOLs                of more                than 10 percent on the strength of our *SofPort*                and *Akreos*                lines of foldable IOLs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net                sales declines in the refractive category reflected lower equipment                and                microkeratome blade sales in all regions, partially offset by higher                service revenues and sales of per-procedure                cards. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Segment      Income**

**2006      Versus 2005**
*MoistureLoc*
*MoistureLoc*

*MoistureLoc*

**2005      Versus 2004**
*MoistureLoc*

----

**Operating      Costs and Expenses**

|                                               |   | **2006**                               |     | 2005  |   | 2004 |   |
|----------------------------------------------------|--------|----------------------------------------|----------|-------|--------|------|--------|
|                                               |   | Percentage                of Net Sales |     |
| Cost                of Products Sold               |   |                                   | **43.8** | **%** |   | 41.8 | %      |   | 41.6 | % |
| Selling,                Administrative and General |   |                                   | **42.6** | **%** |   | 38.6 | %      |   | 38.6 | % |
| Research                and Development            |   |                                   | **8.6**  | **%** |   | 7.5  | %      |   | 7.3 | % |

*MoistureLoc*
*MoistureLoc*
*MoistureLoc*

*MoistureLoc*
*MoistureLoc*

**Non-Operating      Income and Expense**

**Other      Income and Expense**

*Sources*
*of*
*Liquidity*
*Note      3 — Earnings Per Share*
*Access      to Financial Markets*

----

**Income      Taxes**

**Minority      Interest**
*MoistureLoc*

----

**Liquidity      and Financial Resources**

*MoistureLoc*

**Cash      Flows from Operating Activities**
*MoistureLoc*

**Cash      Flows from Investing Activities**
*Note      2 — Acquisitions*
*Alaway*

*      PureVision*

**Cash      Flows from Financing Activities**

**Sources      of Liquidity**

*Legal      Matters*

----

***Credit      Facilities***

***Bank      Term Loans***
*Item      8. Financial Statements and Supplementary Data*
*Note      10 — Provision for Income Taxes*

----

***Capital      Markets Offerings***

***Access      to Financial Markets***

***Working      Capital***

***Dividends***

***Return      on Equity and Capital***
*MoistureLoc*
*Segment      Income*
*Operating      Costs and Expenses*
*MoistureLoc*

----

**Contractual      Cash Obligations**

|                                                      |   |   Total |   |  Less                than 1 Year |   |   1-3                Years |   |   3-5                Years |   | More                than 5 Years |   |
|-----------------------------------------------------------|--------|-------------------|--------|---------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|----------------------------------|--------|
| **Contractual                Obligations****1**           |   |              |   |                                  |   |                                 |   |                                 |   |                             |   |
| Long-term                debt (including current portion) |   | $                 | 833    |                                  | $      | 134                                  |   | $                                    | 51     |                             | $      | 583 |   | $ | 65 |   |
| Purchase                obligations 2                     |   |              | 82     |                                  |   | 36                                   |   |                                 | 22     |                             |   | 14 |   |   | 10 |   |
| Minimum                operating lease commitments        |   |              | 90     |                                  |   | 26                                   |   |                                 | 33     |                             |   | 19 |   |   | 12 |   |
| Total                3,                4                  |   | $                 | 1,005  |                                  | $      | 196                                  |   | $                                    | 106    |                             | $      | 616 |   | $ | 87 |   |

| 1 | We                had no capital lease obligations at December 30, 2006. |
|---|--------------------------------------------------------------------------|

| 2 | Purchase                obligations include minimum obligations to purchase goods and services,                or                to make royalty payments, under agreements that are enforceable and                legally binding on us. The amounts above include payments due under                a                utility contract that can be terminated in 2007 with the payment                of $2. If                we choose to terminate the utility contract, the total payments due                would                decrease by $19. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Funding                requirements for our pension and other benefit liabilities have not                been                determined, therefore, they have not been included. We expect to                contribute approximately $15 and $8, respectively, to our U.S. defined                benefit pension plan and postretirement benefit plan in 2007. Based                on the                U.S. defined benefit pension plan's current assets and liabilities                and                using the current statutory minimum funding requirements and interest                rates, including the provisions of the Pension Protection Act of                2006, no                employer contribution would be required in 2007. The minimum required                employer contributions for the years 2008-2011 are estimated to range                from                $4 to $7 per year. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | The                future cash outflows of the long-term liabilities presented in                *Item                8. Financial Statements and Supplementary Data, Balance                Sheets*                are uncertain and are therefore excluded from this                table. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance      Sheet Arrangements**

*MoistureLoc      *
*Item      8. Financial Statements and Supplementary Data*
*Note      17 — Commitments and Contingencies*

**Market      Risk**

*Item      8. Financial Statements and Supplementary Data*
*Note      13 — Financial Instruments*

----

**Critical      Accounting Policies**

**Revenue      Recognition**

----

*Item      8. Financial Statements and Supplementary Data*
*Note      1 — Significant Accounting Policies*

**Provisions      for Uncollectible Trade Receivables**

----

**Inventory      Allowances**
*Statements      of Income*

**Fair      Value of Assets**
*Goodwill      and Intangible Assets*
*Accounting      for the Impairment or Disposal of Long-Lived Assets *
*Item      8. Financial Statements and Supplementary Data*
*Note      1 — Significant Accounting Policies*

**Stock-Based      Compensation**
*Accounting      for Stock Issued to Employees*
*Accounting      for Stock-Based Compensation*
*Statements      of Income*
*Notes      to the Financial Statements*

----

*Share-Based Payment*

*Item      8. Financial Statements and Supplementary Data*
*Note      15 — Employee Stock Plans*

**Deferred      Tax Assets and Reserves**

----

**Employee      Benefits**
*Item      8. Financial Statements and Supplementary Data*
*Note      14 — Employee Benefits*

----

**Derivative      Financial Instruments and Hedging Activity**
*Accounting      for Derivative Instruments and Hedging Activities*

**Other      Matters**

**Environment**

**New      Accounting Guidance **
*Accounting      for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109      *
*Balance      Sheet*

*Fair      Value Measurements *
*. *
* *
*.      *
*Accounting      for Derivative Instruments and Hedging Activities*

----

*Employers’      Accounting for Defined Benefit Pension and Other Postretirement Plans, an      amendment of FASB Statements No. 87, 88, 106 and 132(R) *
*.*

|                                                                                |   | Before                Adoption ofSFAS                No. 158 |   | SFAS                No. 158 AdoptionAdjustments |   | After                Adoption of SFASNo.                158 |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|-------------------------------------------------|--------|-------------------------------------------------------------|--------|
| Other                long-term assets                                               |   | $                                                            | 3      |                                            | $      | (1                                                          | )      | $ | 2 |   |
| Deferred                tax assets                                                  |   |                                                         | 20     |                                            |   | 4                                                           |   |   | 24 |   |
| Accrued                compensation                                                 |   |                                                         | (38    | )                                               |   | 35                                                          |   |   | (3 | ) |
| Pension                and other benefit liabilities                                |   |                                                         | (80    | )                                               |   | (70                                                         | )      |   | (150 | ) |
| Accumulated                other comprehensive loss,                net of tax |   |                                                         | 51     |                                            |   | 32                                                          |   |   | 83 |   |

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

*The      Fair Value Option for Financial Assets and Financial Liabilities *
*.*

----

**Information      Concerning Forward-Looking Statements**
*Item      1-A. Risk Factors*

----

**Item      7A.**
**Quantitative      and Qualitative Disclosures about Market Risk**

*Market      Risk*
*Item      7. Management's Discussion and Analysis of Financial Condition and Results      of      Operations*

----

**Item      8.**
**Financial      Statements and Supplementary Data**

**Statements      of Income**

| For                the Years EndedDecember                30, 2006, December 31, 2005 and December 25, 2004Dollar                Amounts in Millions - Except Per Share Data |   | **2006** |        | 2005   |   | 2004    |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|--------|---------|--------|
| **Net                Sales**                                                                                                                                                 |   | **$**    | **2,292.4** |   | $      | 2,353.8 |   | $ | 2,233.5 |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
| *Costs                and Expenses*                                                                                                                                          |   |     |        |   |   |    |   |   |   |   |
| Cost                of products sold                                                                                                                                         |   |     | **1,004.5** |   |   | 983.1   |   |   | 929.2 |   |
| Selling,                administrative and general                                                                                                                           |   |     | **977.3**   |   |   | 909.7   |   |   | 862.7 |   |
| Research                and development                                                                                                                                      |   |     | **196.6**   |   |   | 177.5   |   |   | 162.5 |   |
|                                                                                                                                                                         |   |     | **2,178.4** |   |   | 2,070.3 |   |   | 1,954.4 |   |
| **Operating                Income**                                                                                                                                          |   |     | **114.0**   |   |   | 283.5   |   |   | 279.1 |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
| *Other                (Income) Expense*                                                                                                                                      |   |     |        |   |   |    |   |   |   |   |
| Interest                and investment income                                                                                                                                |   |     | **(31.3**   | **)**  |   | (20.1   | )      |   | (13.8 | ) |
| Interest                expense                                                                                                                                              |   |     | **72.1**    |   |   | 52.8    |   |   | 49.6 |   |
| Foreign                currency, net                                                                                                                                         |   |     | **5.7**     |   |   | 4.4     |   |   | 0.6 |   |
|                                                                                                                                                                         |   |     | **46.5**    |   |   | 37.1    |   |   | 36.4 |   |
| *Income                before Income Taxes and Minority Interest*                                                                                                            |   |     | **67.5**    |   |   | 246.4   |   |   | 242.7 |   |
| Provision                for income taxes                                                                                                                                    |   |     | **53.8**    |   |   | 221.4   |   |   | 83.8 |   |
| Minority                interest in subsidiaries                                                                                                                             |   |     | **(1.2**    | **)**  |   | 5.8     |   |   | 5.0 |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
| **Net                Income**                                                                                                                                                |   | **$**    | **14.9**    |   | $      | 19.2    |   | $ | 153.9 |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
| **Basic                Earnings Per Share**                                                                                                                                  |   | **$**    | **0.28**    |   | $      | 0.36    |   | $ | 2.94 |   |
| Average                Shares Outstanding - Basic (000s)                                                                                                                     |   |     | **53,837**  |   |   | 53,146  |   |   | 52,433 |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
|                                                                                                                                                                         |   |     |        |   |   |    |   |   |   |   |
| **Diluted                Earnings Per Share**                                                                                                                                |   | **$**    | **0.27**    |   | $      | 0.35    |   | $ | 2.83 |   |
| Average                Shares Outstanding - Diluted (000s)                                                                                                                   |   |     | **55,119**  |   |   | 55,684  |   |   | 54,504 |   |

----

**Balance      Sheets**

| December                30, 2006 and December 31, 2005Dollar                Amounts in Millions - Except Per Share Data                                             |   | **2006** |        | 2005   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|--------|--------|
| **Assets**                                                                                                                                                          |   |     |        |   |   |
| Cash                and cash equivalents                                                                                                                            |   | **$**    | **499.9**   |   | $      | 720.6 |   |
| Trade                receivables, less allowances of $17.0 and $16.2,                respectively                                                                   |   |     | **444.7**   |   |   | 491.7 |   |
| Inventories,                net                                                                                                                                     |   |     | **237.4**   |   |   | 219.8 |   |
| Other                current assets                                                                                                                                 |   |     | **160.0**   |   |   | 124.6 |   |
| Deferred                income taxes                                                                                                                                |   |     | **60.1**    |   |   | 71.2 |   |
| Total                Current Assets                                                                                                                                 |   |     | **1,402.1** |   |   | 1,627.9 |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| Property,                Plant and Equipment, net                                                                                                                   |   |     | **633.2**   |   |   | 604.4 |   |
| Goodwill                                                                                                                                                            |   |     | **846.2**   |   |   | 799.0 |   |
| Other                Intangibles, net                                                                                                                               |   |     | **278.2**   |   |   | 273.8 |   |
| Other                Long-Term Assets                                                                                                                               |   |     | **102.4**   |   |   | 100.3 |   |
| Deferred                Income Taxes                                                                                                                                |   |     | **16.7**    |   |   | 11.0 |   |
| **Total                Assets**                                                                                                                                     |   | **$**    | **3,278.8** |   | $      | 3,416.4 |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| **Liabilities                and Shareholders' Equity**                                                                                                             |   |     |        |   |   |   |   |
| Notes                payable                                                                                                                                        |   | **$**    | **2.7**     |   | $      | 0.2 |   |
| Current                portion of long-term debt                                                                                                                    |   |     | **134.4**   |   |   | 161.2 |   |
| Accounts                payable                                                                                                                                     |   |     | **83.2**    |   |   | 88.1 |   |
| Accrued                compensation                                                                                                                                 |   |     | **118.5**   |   |   | 126.0 |   |
| Accrued                liabilities                                                                                                                                  |   |     | **386.5**   |   |   | 495.5 |   |
| Federal,                state and foreign income taxes payable                                                                                                      |   |     | **145.7**   |   |   | 137.7 |   |
| Deferred                income taxes                                                                                                                                |   |     | **0.8**     |   |   | 1.5 |   |
| Total                Current Liabilities                                                                                                                            |   |     | **871.8**   |   |   | 1,010.2 |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| Long-Term                Debt, less current portion                                                                                                                 |   |     | **698.3**   |   |   | 831.2 |   |
| Pension                and Other Benefit Liabilities                                                                                                                |   |     | **176.0**   |   |   | 137.9 |   |
| Other                Long-Term Liabilities                                                                                                                          |   |     | **10.5**    |   |   | 8.0 |   |
| Deferred                Income Taxes                                                                                                                                |   |     | **110.2**   |   |   | 120.7 |   |
| **Total                Liabilities**                                                                                                                                |   |     | **1,866.8** |   |   | 2,108.0 |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| Minority                Interest                                                                                                                                    |   |     | **17.2**    |   |   | 24.5 |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| Commitments                and Contingencies (Note 17)                                                                                                              |   |     |        |   |   |   |   |
|                                                                                                                                                                |   |     |        |   |   |   |   |
| Common                Stock, par value $0.40 per share, 200 million shares authorized 60,457,108                shares issued (60,427,172 shares in 2005)           |   |     | **24.1**    |   |   | 24.1 |   |
| Class                B Stock, par value $0.08 per share, 15 million shares authorized,                187,694                shares issued (253,699 shares in 2005) |   |     | **-**       |   |   | - |   |
| Capital                in Excess of Par Value                                                                                                                       |   |     | **117.9**   |   |   | 102.4 |   |
| Common                and Class B Stock in Treasury, at cost, 6,715,647 shares (6,741,731                shares                in 2005)                             |   |     | **(354.7**  | **)**  |   | (356.3 | ) |
| Retained                Earnings                                                                                                                                    |   |     | **1,458.3** |   |   | 1,471.6 |   |
| Accumulated                Other Comprehensive Income                                                                                                               |   |     | **149.2**   |   |   | 50.9 |   |
| Other                Shareholders' Equity                                                                                                                           |   |     | **-**       |   |   | (8.8 | ) |
| **Total                Shareholders' Equity**                                                                                                                       |   |     | **1,394.8** |   |   | 1,283.9 |   |
| **Total                Liabilities and Shareholders' Equity**                                                                                                       |   | **$**    | **3,278.8** |   | $      | 3,416.4 |   |

----

**Statements      of Cash Flows**

| For                the Years EndedDecember                30, 2006, December 31, 2005 and December 25, 2004Dollar                Amounts in Millions |   | **2006** |       | 2005   |   | 2004   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|--------|--------|
| **Cash                Flows from Operating Activities**                                                                                              |   |     |       |   |   |   |   |
| Net                Income                                                                                                                            |   | **$**    | **14.9**   |   | $      | 19.2   |   | $ | 153.9 |   |
| *Adjustments                to Reconcile Net Income to Net Cash Provided by Operating                Activities*                                     |   |     |       |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                         |   |     | **100.5**  |   |   | 98.5   |   |   | 99.4 |   |
| Amortization                                                                                                                                         |   |     | **30.1**   |   |   | 27.3   |   |   | 24.9 |   |
| Deferred                income taxes                                                                                                                 |   |     | **(11.4**  | **)**  |   | 93.2   |   |   | (21.4 | ) |
| Stock-based                compensation expense                                                                                                      |   |     | **8.1**    |   |   | 5.3    |   |   | 10.2 |   |
| Tax                benefits associated with exercise of stock options                                                                                |   |     | **-**      |   |   | 16.9   |   |   | 16.1 |   |
| Gain                from sale of investments available-for-sale                                                                                      |   |     | **(0.4**   | **)**  |   | -      |   |   | (0.3 | ) |
| Loss                on divestiture of German Woehlk contact lens business                                                                            |   |     | **-**      |   |   | 2.3    |   |   | - |   |
| Loss                on retirement of fixed assets                                                                                                    |   |     | **0.8**    |   |   | 2.4    |   |   | 11.0 |   |
| *Changes                in Assets and Liabilities**1*                                                                                                |   |     |       |   |   |   |   |   |   |   |
| Trade                receivables                                                                                                                     |   |     | **67.6**   |   |   | 5.4    |   |   | (18.9 | ) |
| Inventories                                                                                                                                          |   |     | **(8.4**   | **)**  |   | (16.3  | )      |   | 11.9 |   |
| Other                current assets                                                                                                                  |   |     | **(28.9**  | **)**  |   | (17.2  | )      |   | 11.9 |   |
| Other                long-term assets, including equipment on operating lease                                                                        |   |     | **(7.4**   | **)**  |   | (2.7   | )      |   | (21.6 | ) |
| Accounts                payable and accrued liabilities                                                                                              |   |     | **(63.3**  | **)**  |   | (31.9  | )      |   | 59.3 |   |
| Income                taxes payable                                                                                                                  |   |     | **5.1**    |   |   | 27.7   |   |   | (24.4 | ) |
| Other                long-term liabilities                                                                                                           |   |     | **18.0**   |   |   | 9.3    |   |   | (27.5 | ) |
| **Net                Cash Provided by Operating Activities****1**                                                                                    |   |     | **125.3**  |   |   | 239.4  |   |   | 284.5 |   |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                              |   |     |       |   |   |   |   |   |   |   |
| Capital                expenditures                                                                                                                  |   |     | **(107.7** | **)**  |   | (116.0 | )      |   | (118.9 | ) |
| Net                cash paid for acquisition of businesses and other intangibles                                                                     |   |     | **(50.8**  | **)**  |   | (236.7 | )      |   | (2.1 | ) |
| Purchase                of available-for-sale securities                                                                                             |   |     | **-**      |   |   | -      |   |   | (43.4 | ) |
| Cash                received from sale of investments available-for-sale                                                                             |   |     | **0.6**    |   |   | -      |   |   | 44.0 |   |
| Other                                                                                                                                                |   |     | **1.4**    |   |   | (0.4   | )      |   | (1.3 | ) |
| **Net                Cash Used in Investing Activities**                                                                                             |   |     | **(156.5** | **)**  |   | (353.1 | )      |   | (121.7 | ) |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                              |   |     |       |   |   |   |   |   |   |   |
| Repurchases                of Common and Class B shares                                                                                              |   |     | **(3.2**   | **)**  |   | (45.1  | )      |   | (79.0 | ) |
| Exercise                of stock options                                                                                                             |   |     | **0.4**    |   |   | 69.6   |   |   | 77.8 |   |
| Net                repayments of notes payable                                                                                                       |   |     | **0.1**    |   |   | (2.1   | )      |   | 0.3 |   |
| Repayment                of long-term debt                                                                                                           |   |     | **(161.7** | **)**  |   | (325.7 | )      |   | (196.6 | ) |
| Proceeds                from issuance of debt                                                                                                        |   |     | **1.3**    |   |   | 676.7  |   |   | 0.1 |   |
| Net                distributions to minority interests                                                                                               |   |     | **(6.3**   | **)**  |   | (3.8   | )      |   | (4.2 | ) |
| Payment                of dividends                                                                                                                  |   |     | **(28.8**  | **)**  |   | (28.1  | )      |   | (27.6 | ) |
| **Net                Cash Provided by (Used in) Financing Activities**                                                                               |   |     | **(198.2** | **)**  |   | 341.5  |   |   | (229.2 | ) |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| Effect                of exchange rate changes on cash and cash equivalents                                                                          |   |     | **8.7**    |   |   | (9.0   | )      |   | 5.6 |   |
| **Net                Change in Cash and Cash Equivalents**                                                                                           |   |     | **(220.7** | **)**  |   | 218.8  |   |   | (60.8 | ) |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| **Cash                and Cash Equivalents, Beginning of Year**                                                                                      |   |     | **720.6**  |   |   | 501.8  |   |   | 562.6 |   |
| **Cash                and Cash Equivalents, End of Year**                                                                                            |   | **$**    | **499.9**  |   | $      | 720.6  |   | $ | 501.8 |   |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| **Supplemental                Cash Flow Disclosures**                                                                                                |   |     |       |   |   |   |   |   |   |   |
| Cash                paid for interest (net of portion capitalized)                                                                                   |   | **$**    | **53.6**   |   | $      | 44.9   |   | $ | 48.3 |   |
| Net                cash payments for income taxes                                                                                                    |   |     | **88.9**   |   |   | 82.1   |   |   | 115.2 |   |
|                                                                                                                                                 |   |     |       |   |   |   |   |   |   |   |
| **Supplemental                Schedule of Non-Cash Financing Activities**                                                                            |   |     |       |   |   |   |   |   |   |   |
| Dividends                declared but not paid                                                                                                       |   | **$**    | **7.1**    |   | $      | 7.1    |   | $ | 6.9 |   |

----

**St    Statements      of      Changes in Shareholders' Equity**

|                                                                                                                                                                              |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| For                the Years EndedDecember                30, 2006, December 31, 2005 and                   December 25, 2004 Dollar                Amounts in Millions |   | Total |   | Common                and Class B Stock 1,                2 |   | Capital                in Excess of Par |   | Treasury                Stock |   | Retained                Earnings |   | Accumulated                Other Compre-hensive (Loss)Income |   | Other                Shareholders' Equity |   |
| **Balance                at December 27, 2003**                                                                                                                                   |   | $ | 1,160.8 |   | $ | 24.1 |   | $ | 109.4 |   | $ | (426.2 | ) | $ | 1,354.1 |   | $ | 107.5 |   | $ | (8.1 | ) |
| Components                of comprehensive income                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                         |   |   | 153.9 |   |   | - |   |   | - |   |   | - |   |   | 153.9 |   |   | - |   |   | - |   |
| Currency                translation adjustments                                                                                                                                   |   |   | 63.7 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 63.7 |   |   | - |   |
| Reclassification                adjustment into net income for net loss on cash flow                hedges                                                                        |   |   | 1.9 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1.9 |   |   | - |   |
| Minimum                additional pension liability                                                                                                                               |   |   | (5.3 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (5.3 | ) |   | - |   |
| Total                comprehensive income                                                                                                                                         |   |   | 214.2 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                change in shares under employee plans (45,300 shares)                                                                                                          |   |   | (6.3 | ) |   | - |   |   | (4.1 | ) |   | - |   |   | - |   |   | - |   |   | (2.2 | ) |
| Treasury                shares issued under employee plan (1,986,353 shares)                                                                                                      |   |   | 97.6 |   |   | - |   |   | - |   |   | 97.6 |   |   | - |   |   | - |   |   | - |   |
| Treasury                shares repurchased (1,293,625 shares)                                                                                                                     |   |   | (79.2 | ) |   | - |   |   | - |   |   | (79.2 | ) |   | - |   |   | - |   |   | - |   |
| Activity                related to deferred stock awards held by the rabbi trust under a                deferred                compensation program                              |   |   | (1.1 | ) |   | - |   |   | 0.3 |   |   | (1.4 | ) |   | - |   |   | - |   |   | - |   |
| Amortization                of unearned compensation                                                                                                                              |   |   | 4.4 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 4.4 |   |
| Dividends                3                                                                                                                                                        |   |   | (27.6 | ) |   | - |   |   | - |   |   | - |   |   | (27.6 | ) |   | - |   |   | - |   |
| **Balance                at December 25, 2004**                                                                                                                                   |   | $ | 1,362.8 |   | $ | 24.1 |   | $ | 105.6 |   | $ | (409.2 | ) | $ | 1,480.4 |   | $ | 167.8 |   | $ | (5.9 | ) |
| Components                of comprehensive income                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                         |   |   | 19.2 |   |   | - |   |   | - |   |   | - |   |   | 19.2 |   |   | - |   |   | - |   |
| Currency                translation adjustments                                                                                                                                   |   |   | (100.2 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (100.2 | ) |   | - |   |
| Reclassification                adjustment into net income for net loss on cash flow                hedges                                                                        |   |   | 3.3 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 3.3 |   |   | - |   |
| Minimum                additional pension liability                                                                                                                               |   |   | (20.0 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (20.0 | ) |   | - |   |
| Total                comprehensive income                                                                                                                                         |   |   | (97.7 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                change in shares under employee plans (89,750 shares)                                                                                                          |   |   | (10.1 | ) |   | - |   |   | (3.8 | ) |   | - |   |   | - |   |   | - |   |   | (6.3 | ) |
| Treasury                shares issued under employee plans (1,790,096 shares)                                                                                                     |   |   | 100.9 |   |   | - |   |   | - |   |   | 100.9 |   |   | - |   |   | - |   |   | - |   |
| Treasury                shares repurchased (600,464 shares)                                                                                                                       |   |   | (44.9 | ) |   | - |   |   | - |   |   | (44.9 | ) |   | - |   |   | - |   |   | - |   |
| Activity                related to deferred stock awards held by the rabbi trust under a                deferred                compensation program                              |   |   | (2.5 | ) |   | - |   |   | 0.6 |   |   | (3.1 | ) |   | - |   |   | - |   |   | - |   |
| Amortization                of unearned compensation                                                                                                                              |   |   | 3.4 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 3.4 |   |
| Dividends                3                                                                                                                                                        |   |   | (28.0 | ) |   | - |   |   | - |   |   | - |   |   | (28.0 | ) |   | - |   |   | - |   |

----

| **Balance                at December 31, 2005**                                                                                                        |   | **$**  | **1,283.9** |   | **$**  | **24.1**    |   | **$**  | **102.4** |   | **$**  | **(356.3** | **)**  | **$**  | **1,471.6** |   | **$**  | **50.9****5**  |   | **$**  | **(8.8** | **)**  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-----------|--------|--------|------------|--------|--------|-------------|--------|--------|----------------|--------|--------|----------|--------|
| Components                of comprehensive income                                                                                                      |   |   |        |   |   |        |   |   |      |   |   |       |   |   |        |   |   |           |   |   |     |   |
| Net                income                                                                                                                              |   |   | **14.9**    |   |   | **-**       |   |   | **-**     |   |   | **-**      |   |   | **14.9**    |   |   | **-**          |   |   | **-**    |   |
| Currency                translation adjustments                                                                                                        |   |   | **111.7**   |   |   | **-**       |   |   | **-**     |   |   | **-**      |   |   | **-**       |   |   | **111.7**      |   |   | **-**    |   |
| Reclassification                adjustment into net income for net loss on cash flow                hedges                                             |   |   | **2.3**     |   |   | **-**       |   |   | **-**     |   |   | **-**      |   |   | **-**       |   |   | **2.3**        |   |   | **-**    |   |
|                    Unrealized holding gain on available-for-sale securities                                                             |   |   | **3.5**     |   |   |  **-** |   |   | **-**     |   |   | **-**      |   |   | **-**       |   |   | **3.5**        |   |   | **-**    |   |
| Minimum                additional pension liability                                                                                                    |   |   | **12.7**    |   |   | **-**       |   |   | **-**     |   |   | **-**      |   |   | **-**       |   |   | **12.7**       |   |   | **-**    |   |
| Total                comprehensive income 4                                                                                                            |   |   | **145.1**   |   |   |        |   |   |      |   |   |       |   |   |        |   |   |           |   |   |     |   |
| Adjustment                to adopt SFAS No. 158                                                                                                        |   |   | **(31.9**   | **)**  |   | **-**       |   |   | **-**     |   |   | **-**      |   |   |  **-** |   |   | **(31.9**      | **)**  |   | **-**    |   |
| Adjustment                to adopt SFAS No. 123(R)                                                                                                     |   |   | **-**       |   |   | **-**       |   |   | **(8.8**  | **)**  |   | **-**      |   |   | **-**       |   |   | **-**          |   |   | **8.8**  |   |
| Net                change in shares under employee plans (57,000 shares)                                                                               |   |   | **(2.2**    | **)**  |   | **-**       |   |   | **(2.2**  | **)**  |   | **-**      |   |   | **-**       |   |   | **-**          |   |   | **-**    |   |
| Recognition                of share-based compensation in accordance with SFAS No.                123(R)                                               |   |   | **13.8**    |   |   | **-**       |   |   | **13.8**  |   |   | **-**      |   |   | **-**       |   |   | **-**          |   |   | **-**    |   |
| Treasury                shares issued under employee plans (158,718 shares)                                                                            |   |   | **8.4**     |   |   | **-**       |   |   | **-**     |   |   | **8.4**    |   |   | **-**       |   |   | **-**          |   |   | **-**    |   |
| Treasury                shares repurchased (132,634 shares)                                                                                            |   |   | **(6.8**    | **)**  |   | **-**       |   |   | **-**     |   |   | **(6.8**   | **)**  |   | **-**       |   |   | **-**          |   |   | **-**    |   |
| Activity                related to deferred stock awards held by the rabbi trust under a                deferred                compensation program 6 |   |   | **12.7**    |   |   | **-**       |   |   | **12.7**  |   |   | **-**      |   |   | **-**       |   |   | **-**          |   |   | **-**    |   |
| Dividends                3                                                                                                                             |   |   | **(28.2**   | **)**  |   | **-**       |   |   | **-**     |   |   | **-**      |   |   | **(28.2**   | **)**  |   | **-**          |   |   | **-**    |   |
| **Balance                at December 30, 2006**                                                                                                        |   | **$**  | **1,394.8** |   | **$**  | **24.1**    |   | **$**  | **117.9** |   | **$**  | **(354.7** | **)**  | **$**  | **1,458.3** |   | **$**  | **149.2****5** |   | **$**  | **-**    |   |

| 1 | There                are also 10 thousand shares of $100 par value 4 percent cumulative                preferred stock authorized, none of which has been                issued. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Total                comprehensive income was reported net of any related tax effects.                The                income tax benefit for minimum additional pension liability for the                year                ended December 30, 2006 was $23.7. There was no income tax benefit                or                expense related to currency translation adjustments and reclassification                adjustments for net loss on cash flow hedges as a result of the Company                incurring a U.S. net operating loss in                2006. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Accumulated                other comprehensive income was $149.2 at December 30, 2006 and included                the following accumulated income (loss) amounts: currency translation                adjustment, $227.9; net unrealized holding gain, $4.1; minimum additional                pension liability, $(82.8). Accumulated other comprehensive income                was                $50.9 at December 31, 2005 and included the following accumulated                income                (loss) amounts: currency translation adjustment, $116.2; net loss                on cash                flow hedges, $(1.7); and minimum additional pension liability,                $(63.6). |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Reflects                the reclassification of the deferred compensation liability into                equity as                a result of the May 2006 Plan amendment requiring all future distributions                of participant deferrals be settled only in                shares. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes      to Financial Statements**

**1.**
**Significant      Accounting Policies**

**Company      Operations **

**Principles      of Consolidation**
*Balance*
*Sheets*
*Statements      of Income*

**Segment      Reporting**
*Disclosures      about Segments of an Enterprise and Related Information*

**Use      of Estimates**

**Cash      Equivalents**

**Inventories**

**Property,      Plant and Equipment**
*Accounting      for the Impairment or Disposal of Long-Lived Assets*

----

**Goodwill      and Other Intangibles**
*Business      Combinations*
*Goodwill      and Intangible Assets *

*Note      21 — *
*Market      Withdrawal of MoistureLoc Lens Care Solution*
*MoistureLoc*
*MoistureLoc*

**Revenue      Recognition and Related Provisions and Allowances**
*Revenue      Recognition, corrected copy*
*Accounting      for Revenue Arrangements with Multiple Deliverables*
*Software      Revenue Recognition, *

| ·   | persuasive                evidence of an arrangement exists; |
|--------------------|--------------------------------------------------------------|

| ·   | delivery                has occurred or services have been                rendered; |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | the                Company's price to its customers is fixed or determinable;                and |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | collection                of the resulting receivable is reasonably                assured. |
|--------------------|---------------------------------------------------------------------------------------------|

----

*Balance      Sheets*
*Balance      Sheets*
*Cataract      and Vitreoretinal, *
*      Refractive*

*Revenue      Recognition When Right of Return Exists*

*Accounting      for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's      Products*

*Accounting      for Shipping and Handling Fees and Costs*

***Lens      and Lens Care***

----

***Pharmaceuticals***

***Cataract      and Vitreoretinal, and Refractive***
*Accounting      for Leases*
*Accounting      for Contingencies*

**Advertising      Expense**
*MoistureLoc*
*Note      21 — Market Withdrawal of MoistureLoc Lens Care Solution*

**Research      and Development Costs**
*Note      7 — Acquired Intangible Assets*

**Legal      Fees**

**Stock-Based      Compensation**
*Share-Based      Payment*
*Accounting for      Stock-Based Compensation*

----

*Note      15 — Employee Stock Plans *

**Comprehensive      Income**
*Statements      of Changes in Shareholders' Equity*

**Foreign      Currency**

**Derivative      Financial Instruments and Hedging Activity**
*Accounting      for Derivative Instruments and Hedging Activities*

----

**Deferred      Tax Assets and Reserves**

----

**Minority      Interest**
*Balance      Sheets*
*Statements      of Income*

**New      Accounting Guidance**
*Accounting      for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.      109*
*Balance      Sheet*

*Fair      Value Measurements *
*. *
* *
*.      *
*Accounting      for Derivative Instruments and Hedging Activities*

*Employers’      Accounting for Defined Benefit Pension and Other Postretirement Plans, an      amendment of FASB Statements No. 87, 88, 106 and 132(R)*

|                                                                                |   | Before                Adoption of SFAS No. 158 |   | SFAS                No. 158 Adoption Adjustments |   | After                Adoption of SFAS No. 158 |   |
|-------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|--------------------------------------------------|--------|-----------------------------------------------|--------|
| Other                long-term assets                                               |   | $                                              | 2.6    |                                             | $      | (0.9                                          | )      | $ | 1.7 |   |
| Deferred                tax assets                                                  |   |                                           | 19.3   |                                             |   | 4.4                                           |   |   | 23.7 |   |
| Accrued                compensation                                                 |   |                                           | (37.4  | )                                                |   | 34.7                                          |   |   | (2.7 | ) |
| Pension                and other benefit liabilities                           |   |                                           | (79.7  | )                                                |   | (70.1                                         | )      |   | (149.8 | ) |
| Accumulated                other comprehensive loss, net                of tax |   |                                           | 50.8   |                                             |   | 31.9                                          |   |   | 82.7 |   |

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

*The      Fair Value Option for Financial Assets and Financial Liabilities*

----

**Reclassifications**

**2.**
**Acquisitions**

*Business Combinations*
*Goodwill and Other Intangible Assets*

| Current                Assets (includes $6.4 of cash acquired) 1 |   | $      | 26.4   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|
| Property,                Plant & Equipment                   |   |   | 23.8   |   |
| Other                Long-Term Assets                            |   |   | 0.9    |   |
| Intangible                Assets Subject to Amortization 2       |   |   |   |   |
| Distributor                Relationships                         |   |   | 57.9   |   |
| Tradenames                                                       |   |   | 23.7   |   |
| Technology                                                       |   |   | 7.1    |   |
| Non-Compete                Agreements                            |   |   | 1.8    |   |
| Goodwill                                                         |   |   | 160.5  |   |
| Total                Assets Acquired                             |   |   | 302.1  |   |
|                                                             |   |   |   |   |
| Current                Liabilities                               |   |   | 20.2   |   |
| Long-Term                Liabilities                             |   |   | 14.0   |   |
| Minority                Interest                                 |   |   | 7.8    |   |
| Total                Liabilities Assumed                         |   |   | 42.0   |   |
|                                                             |   |   |   |   |
| Net                Assets Acquired                               |   | $      | 260.1  |   |

| 1 | Includes                a purchase accounting adjustment of $1.9 associated with the step-up                of                inventory which was fully amortized in the fourth quarter of                2005. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Weighted                average remaining useful life of acquired intangible assets was as                follows: distributor relationships - 16 years; tradenames - 24 years;                technology - 19 years; and non-compete agreements - 3                years. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**3.**
**Earnings      Per Share**

*Note      11 — Debt*

*The      Effect of Contingently Convertible Debt on Diluted Earnings per      Share*

|                                                                                               |   | **2006** |       | 2005   |   | 2004   |   |
|----------------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|--------|--------|
| Net                Income                                                                          |   | **$**    | **14.9**   |   | $      | 19.2   |   | $ | 153.9 |   |
|                                                                                               |   |     |       |   |   |   |   |   |   |   |
| Weighted                Average Basic Shares Outstanding (000s)                                    |   |     | **53,837** |   |   | 53,146 |   |   | 52,433 |   |
| Effect                of Dilutive Shares                                                           |   |     | **1,215**  |   |   | 1,981  |   |   | 2,004 |   |
| Effect                of Convertible Senior Notes Shares (Old Notes)                               |   |     | **67**     |   |   | 67     |   |   | 67 |   |
| Effect                of 2004 Senior Convertible Securities Shares (New                Securities) |   |     | **-**      |   |   | 490    |   |   | - |   |
| Weighted                Average Diluted Shares Outstanding (000s)                                  |   |     | **55,119** |   |   | 55,684 |   |   | 54,504 |   |
|                                                                                               |   |     |       |   |   |   |   |   |   |   |
| Basic                Earnings Per Share                                                            |   | **$**    | **0.28**   |   | $      | 0.36   |   | $ | 2.94 |   |
|                                                                                               |   |     |       |   |   |   |   |   |   |   |
| Diluted                Earnings Per Share                                                          |   | **$**    | **0.27**   |   | $      | 0.35   |   | $ | 2.83 |   |

----

**4.**
**Business      Segment and Geographic Information**

----

**Business      Segment**

|                                               |   | Net                Sales |        | Operating                Income |   | Depreciation                and Amortization |   | Capital                Expenditures |      | Assets |   |
|----------------------------------------------------|--------|--------------------------|-------------|---------------------------------|--------|----------------------------------------------|--------|-------------------------------------|-----------|--------|--------|
| **2006**                                           |   |                     |        |                            |   |                                         |   |                                |      |   |   |
| Americas                                           |   | **$**                    | **1,007.5** |                            | **$**  | **323.6**                                    |   | **$**                               | **6.6**   |   | **$**  | **3.8** |   | **$** | **311.0** |   |
| Europe                                             |   |                     | **831.9**   |                            |   | **210.4**                                    |   |                                | **9.4**   |   |   | **2.2** |   |   | **382.8** |   |
| Asia                                               |   |                     | **453.0**   |                            |   | **60.7**                                     |   |                                | **10.6**  |   |   | **3.3** |   |   | **242.6** |   |
| Research                & Development          |   |                     | **-**       |                            |   | **(223.2**                                   | **)**  |                                | **8.0**   |   |   | **28.5** |   |   | **76.0** |   |
| Global                Operations & Engineering |   |                     | **-**       |                            |   | **(159.2**                                   | **)**  |                                | **78.5**  |   |   | **66.7** |   |   | **1,420.8** |   |
|                                               |   |                     | **2,292.4** |                            |   | **212.3**                                    |   |                                | **113.1** |   |   | **104.5** |   |   | **2,433.2** |   |
| Corporate                administration            |   |                     | -           |                            |   | **(98.3**                                    | **)**  |                                | **17.5**  |   |   | **3.2** |   |   | **845.6** |   |
|                                               |   | **$**                    | **2,292.4** |                            | **$**  | **114.0**                                    |   | **$**                               | **130.6** |   | **$**  | **107.7** |   | **$** | **3,278.8** |   |
|                                               |   |                     |        |                            |   |                                         |   |                                |      |   |   |   |   |   |   |   |
| 2005                                               |   |                     |        |                            |   |                                         |   |                                |      |   |   |   |   |   |   |   |
| Americas                                           |   | $                        | 1,005.3     |                            | $      | 333.0                                        |   | $                                   | 8.3       |   | $      | 3.5 |   | $ | 327.9 |   |
| Europe                                             |   |                     | 859.9       |                            |   | 250.8                                        |   |                                | 10.4      |   |   | 3.9 |   |   | 359.9 |   |
| Asia                                               |   |                     | 488.6       |                            |   | 123.6                                        |   |                                | 7.6       |   |   | 4.8 |   |   | 297.8 |   |
| Research                & Development          |   |                     | -           |                            |   | (200.5                                       | )      |                                | 5.3       |   |   | 24.9 |   |   | 54.7 |   |
| Global                Operations & Engineering |   |                     | -           |                            |   | (131.7                                       | )      |                                | 73.3      |   |   | 70.8 |   |   | 1,344.8 |   |
|                                               |   |                     | 2,353.8     |                            |   | 375.2                                        |   |                                | 104.9     |   |   | 107.9 |   |   | 2,385.1 |   |
| Corporate                administration            |   |                     | -           |                            |   | (89.8                                        | )      |                                | 20.9      |   |   | 8.1 |   |   | 1,031.3 |   |
| Other                significant charges 1         |   |                     | -           |                            |   | (1.9                                         | )      |                                | -         |   |   | - |   |   | - |   |
|                                               |   | $                        | 2,353.8     |                            | $      | 283.5                                        |   | $                                   | 125.8     |   | $      | 116.0 |   | $ | 3,416.4 |   |
|                                               |   |                     |        |                            |   |                                         |   |                                |      |   |   |   |   |   |   |   |
| 2004                                               |   |                     |        |                            |   |                                         |   |                                |      |   |   |   |   |   |   |   |
| Americas                                           |   | $                        | 960.2       |                            | $      | 326.1                                        |   | $                                   | 8.7       |   | $      | 3.5 |   |   |   |   |
| Europe                                             |   |                     | 818.9       |                            |   | 251.2                                        |   |                                | 16.5      |   |   | 2.8 |   |   |   |   |
| Asia                                               |   |                     | 454.4       |                            |   | 128.5                                        |   |                                | 5.9       |   |   | 3.7 |   |   |   |   |
| Research                & Development          |   |                     | -           |                            |   | (180.6                                       | )      |                                | 5.4       |   |   | 12.5 |   |   |   |   |
| Global                Operations & Engineering |   |                     | -           |                            |   | (157.2                                       | )      |                                | 69.3      |   |   | 69.4 |   |   |   |   |
|                                               |   |                     | 2,233.5     |                            |   | 368.0                                        |   |                                | 105.8     |   |   | 91.9 |   |   |   |   |
| Corporate                administration            |   |                     | -           |                            |   | (88.9                                        | )      |                                | 18.5      |   |   | 27.0 |   |   |   |   |
|                                               |   | $                        | 2,233.5     |                            | $      | 279.1                                        |   | $                                   | 124.3     |   | $      | 118.9 |   |   |   |   |

| 1 | Other                significant charges in 2005 represent purchase accounting adjustments                related to the acquisition of Freda (see *Note                2 — Acquisitions*). |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Note      1 — Significant Accounting Policies; Revenue Recognition*

|                                      |   | Net                Sales |        |
|-------------------------------------------|--------|--------------------------|-------------|
|                                      |   | **2006**                 |        | 2005 |   | 2004 |   |
| Contact                Lens               |   | **$**                    | **710.0**   |   | $ | 728.5 |   | $ | 671.0 |   |
| Lens                Care                  |   |                     | **413.8**   |   |   | 522.2 |   |   | 523.3 |   |
| Pharmaceuticals                           |   |                     | **658.4**   |   |   | 584.8 |   |   | 528.2 |   |
| Cataract                and Vitreoretinal |   |                     | **381.9**   |   |   | 377.8 |   |   | 358.2 |   |
| Refractive                                |   |                     | **128.3**   |   |   | 140.5 |   |   | 152.8 |   |
|                                      |   | **$**                    | **2,292.4** |   | $ | 2,353.8 |   | $ | 2,233.5 |   |

----

**Geographic      Region**

|                                           |   | Non-U.S. |        | U.S.   |   | Consolidated |   |
|------------------------------------------------|--------|----------|-------------|--------|--------|--------------|--------|
| **2006**                                       |   |     |        |   |   |         |   |
| Sales                to unaffiliated customers |   | **$**    | **1,403.9** |   | **$**  | **888.5**    |   | **$** | **2,292.4** |   |
| Long-lived                assets               |   |     | **302.8**   |   |   | **330.4**    |   |   | **633.2** |   |
|                                           |   |     |        |   |   |         |   |   |   |   |
| 2005                                           |   |     |        |   |   |         |   |   |   |   |
| Sales                to unaffiliated customers |   | $        | 1,462.8     |   | $      | 891.0        |   | $ | 2,353.8 |   |
| Long-lived                assets               |   |     | 275.5       |   |   | 328.9        |   |   | 604.4 |   |
|                                           |   |     |        |   |   |         |   |   |   |   |
| 2004                                           |   |     |        |   |   |         |   |   |   |   |
| Sales                to unaffiliated customers |   | $        | 1,370.0     |   | $      | 863.5        |   | $ | 2,233.5 |   |

**5.**
**Net      Investment in Sales-Type and Operating Leases**

*Accounting      for Leases*

|                                                                                                            |   | **December                30, 2006** |     | December                31, 2005 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|----------------------------------|--------|
| **Net                Investment in Sales-Type Leases**                                                          |   |                                 |     |                             |   |
| Total                minimum lease payments to be received 1                                                    |   | **$**                                | **24.9** |                             | $      | 30.6 |   |
| Less                amounts due from service agreements included in total minimum lease                payments |   |                                 | **(1.3** | **)**                            |   | (2.5 | ) |
| Less                allowance for doubtful accounts 1                                                           |   |                                 | **(2.3** | **)**                            |   | (0.4 | ) |
| Net                minimum lease payments receivables                                                           |   |                                 | **21.3** |                             |   | 27.7 |   |
| Less                unearned income 2                                                                           |   |                                 | **(1.6** | **)**                            |   | (2.1 | ) |
| Net                investment in sales-type leases                                                              |   | **$**                                | **19.7** |                             | $      | 25.6 |   |

| 1 | The                current portion of minimum lease payments receivable and the related                allowance for doubtful accounts are included in Trade receivables                on the                *Balance                Sheets*.                Minimum lease payments receivable and the related allowance for doubtful                accounts due after one year are included with Other Long-Term                Assets. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | The                current portion of unearned income is included in Accrued liabilities                on                the *Balance                Sheets*.                Unearned income due after one year is included with Other Long-Term                Liabilities. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | **December                30, 2006** |     | December                31, 2005 |   |
|-------------------------------------------------------|--------|--------------------------------------|----------|----------------------------------|--------|
| **Net                Investment in Operating Leases** |   |                                 |     |                             |   |
| Equipment                on operating lease           |   | **$**                                | **18.1** |                             | $      | 14.4 |   |
| Less                accumulated depreciation          |   |                                 | **(9.6** | **)**                            |   | (7.6 | ) |
| Equipment                on operating lease, net      |   | **$**                                | **8.5**  |                             | $      | 6.8 |   |

----

*Balance      Sheets*
*Note      1 — Significant Accounting Policies; Property, Plant and      Equipment*

**6.**
**Goodwill**

*Note      2 — Acquisitions*

|                                               |   | Americas |     | Europe |   | Asia     |   | Global                Operations & Engineering |     | Research                & Development |   | Total     |   |
|----------------------------------------------------|--------|----------|----------|--------|--------|----------|--------|----------------------------------------------------|----------|-------------------------------------------|--------|-----------|--------|
| Balance                as of December 25, 2004     |   | $        | 38.3     |   | $      | 63.9     |   | $                                                  | 13.2     |                                      | $      | 566.8     |   | $ | - |   | $ | 682.2 |   |
| Acquisition                of Freda                |   |     | -        |   |   | -        |   |                                               | 5.6      |                                      |   | 154.9     |   |   | - |   |   | 160.5 |   |
| Other                (primarily currency)          |   |     | -        |   |   | (5.8     | )      |                                               | (0.7     | )                                         |   | (37.2     | )      |   | - |   |   | (43.7 | ) |
| Balance                as of December 31, 2005     |   | $        | 38.3     |   | $      | 58.1     |   | $                                                  | 18.1     |                                      | $      | 684.5     |   | $ | - |   | $ | 799.0 |   |
| Other                (primarily currency)          |   |     | (0.1     | )      |   | 5.6      |   |                                               | 0.5      |                                      |   | 41.2      |   |   | - |   |   | 47.2 |   |
| **Balance                as of December 30, 2006** |   | **$**    | **38.2** |   | **$**  | **63.7** |   | **$**                                              | **18.6** |                                      | **$**  | **725.7** |   | **$** | **-** |   | **$** | **846.2** |   |

**7.**
**Acquired      Intangible Assets**

*Alaway,*
*Alaway*
*Alaway*
*Alaway*

----

*Note      2 — Acquisitions*

*Retisert*
*Note      8 — Related Party Transaction*

*Zylet*
*Lotemax*

|                                                         |   | **December                30, 2006**     |      | December                31, 2005            |   |
|--------------------------------------------------------------|--------|------------------------------------------|-----------|---------------------------------------------|--------|
|                                                         |   | **Gross                Carrying Amount** |      | **Accumulated                Amortization** |   | Gross                Carrying Amount |   | Accumulated                Amortization |   |
| Tradenames                                                   |   | **$**                                    | **121.5** |                                        | **$**  | **55.0** |   | $ | 117.7 |   | $ | 44.3 |   |
| Technology                and patents                        |   |                                     | **115.0** |                                        |   | **79.9** |   |   | 96.1 |   |   | 74.5 |   |
| Developed                technology                          |   |                                     | **83.3**  |                                        |   | **26.4** |   |   | 77.6 |   |   | 20.7 |   |
| Distributor                relationships                     |   |                                     | **59.8**  |                                        |   | **4.6** |   |   | 57.9 |   |   | 0.9 |   |
| License                agreements                            |   |                                     | **43.4**  |                                        |   | **23.5** |   |   | 36.2 |   |   | 18.4 |   |
| Intellectual                property                         |   |                                     | **39.1**  |                                        |   | **14.3** |   |   | 38.2 |   |   | 10.6 |   |
| Physician                information & customer database |   |                                     | **24.2**  |                                        |   | **5.2** |   |   | 21.8 |   |   | 3.9 |   |
| Non-Compete                agreements                        |   |                                     | **1.9**   |                                        |   | **1.1** |   |   | 1.8 |   |   | 0.2 |   |
|                                                         |   | **$**                                    | **488.2** |                                        | **$**  | **210.0** |   | $ | 447.3 |   | $ | 173.5 |   |

| Fiscal                Year Ending |   | Amount |   |
|-----------------------------------|--------|--------|--------|
| December                29, 2007  |   | $      | 31.5   |   |
| December                27, 2008  |   |   | 28.0   |   |
| December                26, 2009  |   |   | 25.3   |   |
| December                25, 2010  |   |   | 23.2   |   |
| December                31, 2011  |   |   | 23.0   |   |

**8.**
**Related      Party Transaction**

*Retisert*
*Retisert      *

----

*Retisert*
*Retisert*

*Accounting      for Certain Investments in Debt and Equity Securities*
*Note      9 — Other Short- and Long-Term Investments*

**9.**
** **
**Other      Short- and Long-Term Investments**

*Statements      of Income*
*Balance      Sheets*

*Balance      Sheet*

*Note      8 — Related Party Transaction*
*Accounting      for Certain Investments in Debt and Equity Securities*
*Balance      Sheets*
*Statements      of Changes in Shareholders' Equity*

----

**10.**
**Provision      for Income Taxes**

|                                                                       |   |  **2006** |      |  2005 |   |  2004 |   |
|----------------------------------------------------------------------------|--------|----------------|-----------|------------|--------|------------|--------|
| **(Loss)                income before income taxes and minority interest** |   |           |      |       |   |       |   |
| U.S.                                                                       |   | **$**          | **(67.2** | **)**      | $      | (12.3      | )      | $ | (24.8 | ) |
| Non-U.S.                                                                   |   |           | **134.7** |       |   | 258.7      |   |   | 267.5 |   |
|                                                                       |   | **$**          | **67.5**  |       | $      | 246.4      |   | $ | 242.7 |   |
| **Provision                for income taxes**                              |   |           |      |       |   |       |   |   |   |   |
| Federal                                                                    |   |           |      |       |   |       |   |   |   |   |
| Current                                                                    |   | **$**          | **5.3**   |       | $      | 46.8       |   | $ | 28.3 |   |
| Deferred                                                                   |   |           | **(2.1**  | **)**      |   | 77.2       |   |   | (27.9 | ) |
| State                                                                      |   |           |      |       |   |       |   |   |   |   |
| Current                                                                    |   |           | **4.6**   |       |   | 4.7        |   |   | 2.4 |   |
| Deferred                                                                   |   |           | **0.3**   |       |   | 18.9       |   |   | (2.2 | ) |
| Foreign                                                                    |   |           |      |       |   |       |   |   |   |   |
| Current                                                                    |   |           | **52.1**  |       |   | 70.8       |   |   | 74.5 |   |
| Deferred                                                                   |   |           | **(6.4**  | **)**      |   | 3.0        |   |   | 8.7 |   |
|                                                                       |   | **$**          | **53.8**  |       | $      | 221.4      |   | $ | 83.8 |   |

----

|                                                    |   | **Deferred                Taxes****December                30, 2006** |       | Deferred                TaxesDecember                31, 2005 |   |
|---------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|---------------------------------------------------------------|--------|
|                                                    |   | **Assets**                                                            |       | **Liabilities**                                               |   | Assets |   | Liabilities |   |
| **Current:**                                            |   |                                                                  |       |                                                          |   |   |   |   |   |
| Sales                and allowance accruals             |   | **$**                                                                 | **26.5**   |                                                          | **$**  | **-** |   | $ | 45.1 |   | $ | - |   |
| Employee                benefits and compensation       |   |                                                                  | **41.0**   |                                                          |   | - |   |   | 41.9 |   |   | - |   |
| Inventories                                             |   |                                                                  | **12.7**   |                                                          |   | **-** |   |   | 12.5 |   |   | - |   |
| Unrealized                foreign exchange transactions |   |                                                                  | **3.1**    |                                                          |   | **-** |   |   | - |   |   | 1.6 |   |
| Other                accruals                           |   |                                                                  | **19.8**   |                                                          |   | **-** |   |   | 24.0 |   |   | - |   |
| Valuation                allowance                      |   |                                                                  | **(43.8**  | **)**                                                         |   | **-** |   |   | (52.2 | ) |   | - |   |
|                                                    |   | **$**                                                                 | **59.3**   |                                                          | **$**  | **-** |   | $ | 71.3 |   | $ | 1.6 |   |
| **Non-current:**                                        |   |                                                                  |       |                                                          |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization            |   | **$**                                                                 | **174.9**  |                                                          | **$**  | **74.7** |   | $ | 152.5 |   | $ | 82.7 |   |
| Tax                loss and credit carryforwards        |   |                                                                  | **114.8**  |                                                          |   | **-** |   |   | 76.3 |   |   | - |   |
| Employee                benefits and compensation       |   |                                                                  | **55.1**   |                                                          |   | **-** |   |   | 51.1 |   |   | - |   |
| Other                accruals                           |   |                                                                  | **-**      |                                                          |   | **27.2** |   |   | 3.8 |   |   | 16.7 |   |
| Valuation                allowance                      |   |                                                                  | **(178.7** | **)**                                                         |   | **-** |   |   | (136.9 | ) |   | - |   |
| Intercompany                investments                 |   |                                                                  | **-**      |                                                          |   | **157.7** |   |   | - |   |   | 157.1 |   |
|                                                    |   |                                                                  | **166.1**  |                                                          |   | **259.6** |   |   | 146.8 |   |   | 256.5 |   |
|                                                    |   | **$**                                                                 | **225.4**  |                                                          | **$**  | **259.6** |   | $ | 218.1 |   | $ | 258.1 |   |

|                                                                |   |  **2006** |     |  2005 |   |  2004 |   |
|---------------------------------------------------------------------|--------|----------------|----------|------------|--------|------------|--------|
| Statutory                U.S. tax rate                              |   |           | **35.0** | **%**      |   | 35.0       | %      |   | 35.0 | % |
| Rate                impact of changes in valuation allowances       |   |           | **45.7** |       |   | 49.3       |   |   | 8.8 |   |
| Research                tax credit                                  |   |           | **(6.8** | **)**      |   | (1.5       | )      |   | (1.2 | ) |
| Foreign,                including earnings taxed at different rates |   |           | **4.6**  |       |   | 5.6        |   |   | (6.1 | ) |
| Nontaxable                income                                    |   |           | **(5.3** | **)**      |   | (0.4       | )      |   | (0.8 | ) |
| State,                net of federal benefit                        |   |           | **(4.1** | **)**      |   | 2.7        |   |   | 0.7 |   |
| Tax                return and audit adjustments                     |   |           | **12.5** |       |   | 1.1        |   |   | 1.8 |   |
| Orphan                drug credit                                   |   |           | **-**    |       |   | (0.4       | )      |   | (2.2 | ) |
| Other                                                               |   |           | **(1.9** | **)**      |   | (1.5       | )      |   | (1.6 | ) |
| **Effective                tax rate**                               |   |           | **79.7** | **%**      |   | 89.9       | %      |   | 34.4 | % |

----

*Foreign,      including earnings taxed at different rates*

----

**11.**
**Debt**

*.*

*Note      2 — Acquisitions *

*Note      17 — Commitments and Contingencies*

----

|                                                 |   |           |    | **December                30, 2006**            |   | December                31, 2005      |   |
|------------------------------------------------------|--------|----------------|---------|-------------------------------------------------|--------|---------------------------------------|--------|
|  Type                                           |   |  Maturity |    | **Effective                Interest Rate****1** |   | **Amount                Outstanding** |   | Effective                Interest Rate1 |   | Amount                Outstanding |   |
| Notes                2,                3             |   |           | 2007    |                                            |   | **8.63**                              | **%**  |   | **133.2** |   |   | 8.63 | % |   | 150.0 |   |
| Notes                2,                4             |   |           | 2008    |                                            |   | **9.65%***                            |   |   | **50.0** |   |   | 7.87%* |   |   | 50.0 |   |
| Debentures                2                          |   |           | 2028    |                                            |   | **7.19**                              | **%**  |   | **66.4** |   |   | 7.19 | % |   | 183.9 |   |
| Convertible                Notes 5                   |   |           | 2023    |                                            |   | **5.62%***                            |   |   | **4.1** |   |   | 5.90%* |   |   | 4.1 |   |
| Convertible                Securities 5              |   |           | 2023    |                                            |   | **5.62%***                            |   |   | **155.9** |   |   | 6.14%* |   |   | 155.9 |   |
| Bank                Term Loan                        |   |           | 2010    |                                            |   | **0.66%***                            |   |   | **47.3** |   |   | 0.50%* |   |   | 48.1 |   |
| Bank                Term Loan                        |   |           | 2010    |                                            |   | **5.59%***                            |   |   | **375.0** |   |   | 5.10%* |   |   | 375.0 |   |
| Other                6                               |   |           | Various |                                            |   | **Various**                           |   |   | **0.8** |   |   | Various |   |   | 25.4 |   |
|                                                 |   |           |    |                                            |   |                                  |   |   | **832.7** |   |   |   |   |   | 992.4 |   |
| Less                current portion                6 |   |           |    |                                            |   |                                  |   |   | **(134.4** | **)** |   |   |   |   | (161.2 | ) |
|                                                 |   |           |    |                                            |   |                                  |   | **$** | **698.3** |   |   |   |   | $ | 831.2 |   |

| 1 | The                effective interest rate includes the impact of interest rate, derivative                instruments and debt issuance                costs. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | The                Company, at its option, may call these notes/debentures at any time                pursuant to a make-whole redemption provision, which would compensate                holders for any changes in interest rate levels of the notes/debentures                upon early extinguishment. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | In                May 2002, the Company entered into an interest rate lock agreement                to                hedge the benchmark interest rate associated with this debt issue.                Losses                associated with the hedge have been deferred to other comprehensive                income                and are being amortized to interest expense over the remaining life                of the                debt. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | In                August 2003, simultaneous with the issuance of this debt maturing                in 2008,                an interest rate swap agreement converted this note to a variable-rate                liability at a rate of six-month LIBOR plus 2.37 percent. Also in                May                2002, the Company entered into an interest rate lock agreement to                hedge                the benchmark interest rate associated with this debt issue. Losses                associated with the hedge have been deferred to other comprehensive                income                and are being amortized to interest expense over the debt                term. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Notes                contain put/call options exercisable at 100 percent of par in 2010,                2013                and 2018. These notes accrue interest at six-month LIBOR plus 0.5                percent,                with the rate reset on a semi-annual basis in advance. The effective                rate                for 2005 includes the impact of the write-off of unamortized debt                issuance                costs for the convertible notes and securities due to the triggering                of                the conversion option, which resulted in an increase of $3.0 in interest                expense for 2005. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | The                amounts outstanding under other and current portion at December 31,                2005                include the $26.8 of outstanding borrowings under non-U.S. credit                facilities, which was repaid in January                2006. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Note      10 — Provision for Income Taxes*

*Note      10 —*
*Provision      for Income Taxes*

----

**12.**
**Accounting      for Derivatives and Hedging Activities**

*Accounting      for Derivative Instruments and Hedging Activities, *

**Fair      Value Hedges **
*Note      11 — Debt*

**Cash      Flow Hedges **
*Note      11 — Debt*

**Net      Investment Hedges **

----

**13.**
**Financial      Instruments**

|                                                                |   | **December                30, 2006** |       | December                31, 2005 |   |
|---------------------------------------------------------------------|--------|--------------------------------------|------------|----------------------------------|--------|
|                                                                |   | **Carrying                Value**    |       | **Fair****Value**                |   | Carrying                Value |   | FairValue |   |
| **Non-derivatives**                                                 |   |                                 |       |                             |   |   |   |   |   |
| Available-for-sale                securities                        |   | **$**                                | **3.5**    |                             | **$**  | **3.5** |   | $ | 0.2 |   | $ | 0.2 |   |
| Other                investments 1                                  |   |                                 | **6.4**    |                             |   | **N/A** |   |   | 5.7 |   |   | N/A |   |
| Long-term                debt, including current portion            |   |                                 | **(832.7** | **)**                            |   | **(862.6** | **)** |   | (992.4 | ) |   | (1,065.7 | ) |
|                                                                |   |                                 |       |                             |   |   |   |   |   |   |   |   |   |
| **Derivatives                held for purposes other than trading** |   |                                 |       |                             |   |   |   |   |   |   |   |   |   |
| Foreign                exchange instruments                         |   |                                 |       |                             |   |   |   |   |   |   |   |   |   |
| Other                current assets                                 |   | **$**                                | **10.2**   |                             | **$**  | **10.2** |   | $ | 2.4 |   | $ | 2.4 |   |
| Accrued                liabilities                                  |   |                                 | **(2.4**   | **)**                            |   | **(2.4** | **)** |   | (4.2 | ) |   | (4.2 | ) |
| Net                foreign exchange instruments                     |   | **$**                                | **7.8**    |                             | **$**  | **7.8** |   | $ | (1.8 | ) | $ | (1.8 | ) |
|                                                                |   |                                 |       |                             |   |   |   |   |   |   |   |   |   |
| **Interest                rate instruments**                        |   |                                 |       |                             |   |   |   |   |   |   |   |   |   |
| Accrued                liabilities                                  |   | **$**                                | **(1.3**   | **)**                            | **$**  | **(1.3** | **)** | $ | (1.6 | ) | $ | (1.6 | ) |

*Note      9 — Other Short- and Long-Term Investments *
*),      *
*Balance      Sheets) *

*Balance      Sheets*

**14.**
**Employee      Benefits**

----

**Pension      and Postretirement Benefit Plans **
*Net      Periodic Benefit Cost*

*Net      Periodic Benefit Cost*

*Accounting      and Disclosure Requirements Related to the Medicare Prescription Drug,      Improvement and Modernization Act*

*Item      7.*
*Management’s      Discussion and Analysis - Critical Accounting Policies; Employee Benefits*

----

**Net      Periodic Benefit Cost **

|                                                 |   | Pension                Benefit Plans |      | Postretirement                Benefit Plan |   |
|------------------------------------------------------|--------|--------------------------------------|-----------|--------------------------------------------|--------|
|                                                 |   | **2006**                             |      | 2005                                       |   | 2004 |   | **2006** |   | 2005 |   | 2004 |   |
| Service                cost **1**                    |   | **$**                                | **9.3**   |                                       | $      | 8.0 |   | $ | 15.4 |   | **$** | **1.2** |   | $ | 1.3 |   | $ | 1.6 |   |
| Interest                cost                         |   |                                 | **20.4**  |                                       |   | 19.9 |   |   | 19.4 |   |   | **5.7** |   |   | 5.4 |   |   | 4.9 |   |
| Expected                return on plan assets        |   |                                 | **(22.8** | **)**                                      |   | (22.0 | ) |   | (20.3 | ) |   | **(3.3** | **)** |   | (3.4 | ) |   | (3.1 | ) |
| Amortization                of transition obligation |   |                                 | **0.1**   |                                       |   | 0.1 |   |   | 0.1 |   |   | **-** |   |   | - |   |   | - |   |
| Amortization                of prior-service cost    |   |                                 | **0.2**   |                                       |   | - |   |   | 0.5 |   |   | **(0.2** | **)** |   | (0.3 | ) |   | (0.1 | ) |
| Amortization                of net loss              |   |                                 | **8.1**   |                                       |   | 8.6 |   |   | 6.6 |   |   | **2.1** |   |   | 0.9 |   |   | - |   |
| Special                termination benefits          |   |                                 | **0.8**   |                                       |   | 0.2 |   |   | 0.4 |   |   | **-** |   |   | - |   |   | - |   |
| Curtailment                loss (gain)               |   |                                 | **-**     |                                       |   | - |   |   | 1.1 |   |   | **-** |   |   | - |   |   | (0.7 | ) |
| Settlement                loss (gain)                |   |                                 | **0.2**   |                                       |   | (6.6 | ) |   | - |   |   | **-** |   |   | - |   |   | - |   |
|                                                 |   |                                 |      |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic benefit cost             |   | **$**                                | **16.3**  |                                       | $      | 8.2 |   | $ | 23.2 |   | **$** | **5.5** |   | $ | 3.9 |   | $ | 2.6 |   |

| 1 | The                decline in service cost in 2005 for the pension benefit plans was                primarily due to the freezing of the Company's U.S. defined benefit                pension plan effective December 31,                2004. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Weighted      Average Assumptions Used to Determine Net Periodic Benefit      Cost**

|                                          |   | Pension                Benefit Plans |     | Postretirement                Benefit Plan |   |
|-----------------------------------------------|--------|--------------------------------------|----------|--------------------------------------------|--------|
|                                          |   | **2006**                             |     | 2005                                       |   | 2004 |   | **2006** |   | 2005 |   | 2004 |   |
| **U.S.                Plans**                 |   |                                 |     |                                       |   |   |   |   |   |   |   |   |   |
| Discount                rate                  |   |                                 | **5.50** | **%**                                      |   | 5.75 | % |   | 6.00 | % |   | **5.50** | **%** |   | 5.75 | % |   | 6.00 | % |
| Expected                return on plan assets |   |                                 | **8.50** | **%**                                      |   | 8.75 | % |   | 9.00 | % |   | **7.50** | **%** |   | 7.75 | % |   | 8.00 | % |
| Rate                of compensation increase  |   |                                 | **-**    |                                       |   | - |   |   | 4.00 | % |   | **-** |   |   | - |   |   | - |   |
|                                          |   |                                 |     |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Non-U.S.                Plans****1**        |   |                                 |     |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount                rate                  |   |                                 | **4.00** | **%**                                      |   | 4.43 | % |   | 4.90 | % |   |   |   |   |   |   |   |   |   |
| Expected                return on plan assets |   |                                 | **5.93** | **%**                                      |   | 5.96 | % |   | 6.12 | % |   |   |   |   |   |   |   |   |   |
| Rate                of compensation increase  |   |                                 | **3.71** | **%**                                      |   | 3.76 | % |   | 3.09 | % |   |   |   |   |   |   |   |   |   |

----

*Balance      Sheets*

|                                            |   | Pension                Benefit Plans |      | Postretirement                Benefit Plan                3 |   |
|-------------------------------------------------|--------|--------------------------------------|-----------|-------------------------------------------------------------|--------|
|                                            |   | **2006**                             |      | 2005                                                        |   | **2006** |   | 2005 |   |
| **Change                in Benefit Obligation** |   |                                 |      |                                                        |   |   |   |   |   |
| Obligation                at beginning of year  |   | **$**                                | **413.9** |                                                        | $      | 387.8 |   | **$** | **97.3** |   | $ | 78.7 |   |
| Service                cost                     |   |                                 | **9.3**   |                                                        |   | 8.0 |   |   | **1.2** |   |   | 1.3 |   |
| Interest                cost                    |   |                                 | **20.4**  |                                                        |   | 19.9 |   |   | **5.7** |   |   | 5.4 |   |
| Participant                contributions        |   |                                 | **1.9**   |                                                        |   | 1.8 |   |   | **1.5** |   |   | 1.2 |   |
| Benefit                payments                 |   |                                 | **(24.4** | **)**                                                       |   | (19.4 | ) |   | **(7.9** | **)** |   | (9.1 | ) |
| Actuarial                (gain) loss            |   |                                 | **(13.3** | **)**                                                       |   | 38.2 |   |   | **6.2** |   |   | 19.8 |   |
| Plan                amendments                  |   |                                 | **1.5**   |                                                        |   | - |   |   | - |   |   | - |   |
| Currency                translation adjustments |   |                                 | **19.0**  |                                                        |   | (13.9 | ) |   | **-** |   |   | - |   |
| Special                termination benefits     |   |                                 | **0.8**   |                                                        |   | 0.2 |   |   | **-** |   |   | - |   |
| Curtailment                gain                 |   |                                 | **-**     |                                                        |   | (0.2 | ) |   | **-** |   |   | - |   |
| Settlement                gain                  |   |                                 | **-**     |                                                        |   | (8.5 | ) |   | **-** |   |   | - |   |
| Obligation                at end of year        |   | **$**                                | **429.1** |                                                        | $      | 413.9 |   | **$** | **104.0** |   | $ | 97.3 |   |

| **Change                in Plan Assets**                      |   |   |      |   |   |   |   |   |     |
|---------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|----------|
| Fair                value of plan assets at beginning of year |   | **$**  | **299.3** |   | $      | 281.7  |   | **$**  | **44.3** |   | $ | 43.6 |   |
| Actual                gain on plan assets                     |   |   | **35.0**  |   |   | 24.9   |   |   | **5.5**  |   |   | 1.2 |   |
| Employer                contributions                         |   |   | **10.6**  |   |   | 19.2   |   |   | **5.7**  |   |   | 7.4 |   |
| Participant                contributions                      |   |   | **1.9**   |   |   | 1.8    |   |   | **1.5**  |   |   | 1.2 |   |
| Benefit                payments                               |   |   | **(24.4** | **)**  |   | (19.4  | )      |   | **(7.9** | **)** |   | (9.1 | ) |
| Settlement                payments                            |   |   | **-**     |   |   | (0.5   | )      |   | **-**    |   |   | - |   |
| Currency                translation adjustments               |   |   | **10.8**  |   |   | (8.4   | )      |   | **-**    |   |   | - |   |
| Fair                value of plan assets at end of year       |   | **$**  | **333.2** |   | $      | 299.3  |   | **$**  | **49.1** |   | $ | 44.3 |   |

| **Funded                Status at end of year**          |   | **$**  | **(95.9** | **)**  | $      | (114.6 | )      | **$**  | **(54.9** | **)**  | $      | (53.0 | )      |
|----------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|-------|--------|
| Unrecognized                transition obligation        |   |   |      |   |   | 0.2    |   |   |      |   |   | -     |   |
| Unrecognized                prior-service cost (benefit) |   |   |      |   |   | -      |   |   |      |   |   | (1.2  | )      |
| Unrecognized                actuarial loss **1**         |   |   |      |   |   | 111.6  |   |   |      |   |   | 22.1  |   |
| Net                amount recognized at end of year      |   |   |      |   | $      | (2.8   | )      |   |      |   | $      | (32.1 | )      |

| **Amounts                recognized in the*****Balance                Sheets*****consist of:** |   |   |      |   |   |   |   |   |      |
|------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|
| Other                long-term assets                                                          |   | **$**  | **1.7**   |   | $      | 1.8    |   | **$**  | **-**     |   | $ | - |   |
| Accrued                compensation                                                            |   |   | **(2.7**  | **)**  |   | (4.4   | )      |   | **-**     |   |   | (7.0 | ) |
| Pension                and other benefit liabilities                                           |   |   | **(94.9** | **)**  |   | (86.7  | )      |   | **(54.9** | **)** |   | (25.1 | ) |
| Accumulated                other comprehensive loss**2**                                       |   |   | **-**     |   |   | 86.5   |   |   | **-**     |   |   | - |   |
| Net                amount recognized at end of year                                            |   | **$**  | **(95.9** | **)**  | $      | (2.8   | )      | **$**  | **(54.9** | **)** | $ | (32.1 | ) |

| **Amounts                  recognized in Accumulated Other Comprehensive Loss consist                  of:** |   |   |     |   |   |   |   |   |     |
|--------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|----------|
| Net                  actuarial loss 1                                                                        |   | **$**  | **81.9** |   |   |   |   | **$**  | **24.0** |   |   |   |   |
| Prior                  service cost (credit)                                                                 |   |   | **1.4**  |   |   | N/A    |   |   | **(1.0** | **)** |   | N/A |   |
| Net                  transition obligation                                                                   |   |   | **0.1**  |   |   |   |   |   | **-**    |   |   |   |   |
| Accumulated                  other comprehensive loss **2**                                                  |   | **$**  | **83.4** |   |   | N/A    |   | **$**  | **23.0** |   |   | N/A |   |

| 1 | The                decrease in net actuarial losses for the pension plans from $111.6                in 2005                to $81.9 in 2006 primarily relates to improved asset returns and                an                increase in the discount rate. The gains realized from improved asset                returns and the increase in the discount rate by the postretirement                benefit plan were more than offset by losses due to increase in medical                costs, resulting in an increase in net actuarial losses for the                postretirement benefit plan from $22.1 in 2005 to $24.0 in 2006.                Net                actuarial losses are deferred and amortized to expense over future                periods. Net gains and losses that exceed ten percent of the greater                of                the plans' projected benefit obligations or the market-related value                of                assets are amortized to earnings over the shorter of the estimated                future                service period of the plan participants or the period until any                anticipated final plan settlements. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | For                2006, the benefit payments and employer contributions for the                Postretirement Benefit Plan are net of Medicare subsidy receipts                of                $0.6. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Weighted      Average Assumptions Used to Determine Benefit Obligations**

|                                               |   | Pension                Benefit Plans |     | Postretirement                Benefit Plan |   |
|----------------------------------------------------|--------|--------------------------------------|----------|--------------------------------------------|--------|
|                                               |   | **2006**                             |     | 2005                                       |   | **2006** |   | 2005 |   |
| **U.S.                Plans**                      |   |                                 |     |                                       |   |   |   |   |   |
| Discount                rate                       |   |                                 | **5.75** | **%**                                      |   | 5.50 | % |   | **5.75** | **%** |   | 5.50 | % |
| Rate                of compensation increase  |   |                                 | **-**    |                                       |   | - |   |   | **-** |   |   | - |   |
|                                               |   |                                 |     |                                       |   |   |   |   |   |   |   |   |   |
| **Non-U.S.                Plans****1**             |   |                                 |     |                                       |   |   |   |   |   |   |   |   |   |
| Discount                rate                       |   |                                 | **4.45** | **%**                                      |   | 4.00 | % |   |   |   |   |   |   |
| Rate                of compensation increase       |   |                                 | **3.68** | **%**                                      |   | 3.71 | % |   |   |   |   |   |   |

**Plan      Assets **

|                                          |   | Pension                Benefit Plans |    | Postretirement                Benefit Plan 1 |   |
|-----------------------------------------------|--------|--------------------------------------|---------|----------------------------------------------|--------|
|                                          |   | **2006**                             |    | 2005                                         |   | **2006** |   | 2005 |   |
| **U.S.                Plans**                 |   |                                 |    |                                         |   |   |   |   |   |
| Equity                securities              |   |                                 | **73**  | **%**                                        |   | 72 | % |   | **72** | **%** |   | 97 | % |
| Fixed                income (debt) securities |   |                                 | **27**  | **%**                                        |   | 28 | % |   | **28** | **%** |   | 3 | % |
| Total                                         |   |                                 | **100** | **%**                                        |   | 100 | % |   | **100** | **%** |   | 100 | % |
|                                          |   |                                 |    |                                         |   |   |   |   |   |   |   |   |   |
| **Non-U.S.                Plans****2**        |   |                                 |    |                                         |   |   |   |   |   |   |   |   |   |
| Equity                securities              |   |                                 | **68**  | **%**                                        |   | 69 | % |   |   |   |   |   |   |
| Fixed                income (debt) securities |   |                                 | **11**  | **%**                                        |   | 20 | % |   |   |   |   |   |   |
| Other                                         |   |                                 | **21**  | **%**                                        |   | 11 | % |   |   |   |   |   |   |
| Total                                         |   |                                 | **100** | **%**                                        |   | 100 | % |   |   |   |   |   |   |

| 1 | The                weighted average asset allocation for the Postretirement Benefit                Plan was                changed in 2006 to reduce volatility in the investment portfolio                and to                align the investment mix with the Company's U.S. Pension                Plan. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Plan      Funded Status**

|                                          |   | Pension                Benefit Plans |      |
|-----------------------------------------------|--------|--------------------------------------|-----------|
|                                          |   |  **2006**                       |      |  2005 |   |
| Projected                benefit obligation   |   | **$**                                | **414.5** |   | $ | 400.8 |   |
| Accumulated                benefit obligation |   |                                 | **398.9** |   |   | 377.9 |   |
| Fair                value of plan assets      |   |                                 | **317.8** |   |   | 286.9 |   |

----

*New      Accounting Guidance *
*Note      1 —*
*Accounting      Policies *

|                                        |   | Pension                Benefit Plans |      |
|---------------------------------------------|--------|--------------------------------------|-----------|
|                                        |   |  **2006**                       |      |  2005 |   |
| Projected                benefit obligation |   | **$**                                | **417.9** |   | $ | 413.9 |   |
| Fair                value of plan assets    |   |                                 | **320.3** |   |   | 299.3 |   |

|                                       |   | Pension                Benefit Plans |   | Postretirement                Benefit Plan |   |
|--------------------------------------------|--------|--------------------------------------|--------|--------------------------------------------|--------|
| Net                actuarial loss          |   |                                 | 5.1    |                                       |   | 1.4 |   |
| Prior                service cost (credit) |   |                                 | 0.2    |                                       |   | (0.2 | ) |
| Transition                obligation       |   |                                 | 0.1    |                                       |   | - |   |

**Contributions**

**Estimated      Future Benefit Payments**

|                                    |   |                                 |   | Postretirement                Benefit Plan |   |
|-----------------------------------------|--------|--------------------------------------|--------|--------------------------------------------|--------|
|  Fiscal                Year Ending |   | Pension                Benefit Plans |   | Benefit                Payments            |   | Subsidy                Receipts |   |
| December                29, 2007        |   | $                                    | 22.6   |                                       | $      | 8.6 |   | $ | 0.8 |   |
| December                27, 2008        |   |                                 | 25.4   |                                       |   | 8.8 |   |   | 0.8 |   |
| December                26, 2009        |   |                                 | 25.5   |                                       |   | 9.0 |   |   | 0.8 |   |
| December                25, 2010        |   |                                 | 24.4   |                                       |   | 9.1 |   |   | 0.8 |   |
| December                31, 2011        |   |                                 | 23.3   |                                       |   | 9.2 |   |   | 0.8 |   |
| Fiscal                years 2012 - 2016 |   |                                 | 120.2  |                                       |   | 45.2 |   |   | 3.6 |   |

----

**Health      Care Cost Trend Rate**

|                                                                                                                                       |   | 1%                Increase |   | 1%                Decrease |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|----------------------------|--------|
| Effect                on total service and interest cost components of net periodic                postretirement health care benefit cost |   | $                          | 0.7    |                       | $      | (0.6 | ) |
|                                                                                                                                       |   |                       |   |                       |   |   |   |
| Effect                on the health care component of the accumulated postretirement benefit                obligation                     |   |                       | 10.2   |                       |   | (8.7 | ) |

**Defined      Contribution Plans **

**15.**
**Employee      Stock Plans**

*Accounting      for Stock Issued to Employees*
*Statements      of Income*

----

*Statements      of Income*
*Share-Based      Payment*

*Statement      of Cash Flows*

*Transition      Election Related to Accounting for Tax Effects of Share-Based Payment      Awards*
*Statements      of Cash Flows *

----

|  *Amounts                in millions, except per share data* |   | **December                30, 2006** |     |
|-------------------------------------------------------------------|--------|--------------------------------------|----------|
| Operating                income                                   |   | **$**                                | **8.1**  |   |
| Net                income                                         |   |                                 | **8.1**  |   |
| Earnings                per share: Basic                          |   |                                 | **0.15** |   |
| Earnings                per share: Diluted                        |   | **$**                                | **0.15** |   |

*Accounting      for Stock-Based Compensation-Transition and Disclosure*

|  *Amounts                in millions, except per share data*                                                                                                                       |   | **December                31, 2005** |      | December                25, 2004 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|----------------------------------|--------|
| Net                income, as reported                                                                                                                                                  |   | **$**                                | **19.2**  |                             | $      | 153.9 |   |
| Add:                Share-based compensation expense included in reported net income,                net of                tax 1                                                        |   |                                 | **3.3**   |                             |   | 6.2 |   |
| Deduct:                Total share-based compensation expense determined under the fair                value                based method for all awards, net of tax 1,                2 |   |                                 | **(16.6** | **)**                            |   | (18.0 | ) |
| Pro                forma net income                                                                                                                                                     |   | **$**                                | **5.9**   |                             | $      | 142.1 |   |
| Earnings                per share - Basic:                                                                                                                                              |   |                                 |      |                             |   |   |   |
| As                reported                                                                                                                                                              |   | **$**                                | **0.36**  |                             | $      | 2.94 |   |
| Pro                forma                                                                                                                                                                |   | **$**                                | **0.11**  |                             | $      | 2.71 |   |
| Earnings                per share - Diluted:                                                                                                                                            |   |                                 |      |                             |   |   |   |
| As                reported                                                                                                                                                              |   | **$**                                | **0.35**  |                             | $      | 2.83 |   |
| Pro                forma                                                                                                                                                                |   | **$**                                | **0.11**  |                             | $      | 2.61 |   |

| 1 | Amounts                reflect mark-to-market adjustments associated with the Company's                Restricted Stock Deferred Compensation                Plan. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Net                of tax amounts were calculated using the U.S. statutory rate (38.3                percent                in 2005 and 39.0 percent in 2004). |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2003      Long-Term Incentive Plan**

----

***Stock      Options***

|                                                    |   | Number                of Options (000s) |      | Weighted                Average Exercise Price |   | Weighted                Average Remaining Contractual Term in Years |   |   Aggregate                Intrinsic Value 1                ($000s) |    |
|---------------------------------------------------------|--------|-----------------------------------------|-----------|------------------------------------------------|--------|---------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|---------|
| Outstanding                as of December 31, 2005      |   |                                    | **5,824** |                                           | **$**  | **49.96**                                                           |   |                                                                          |    |   |   |   |   |
| Granted                                                 |   |                                    | **47**    |                                           |   | **52.46**                                                           |   |                                                                          |    |   |   |   |   |
| Exercised                                               |   |                                    | **(18**   | **)**                                          |   | **32.34**                                                           |   |                                                                          |    |   |   |   |   |
| Forfeited                and canceled                   |   |                                    | **(199**  | **)**                                          |   | **56.81**                                                           |   |                                                                          |    |   |   |   |   |
| Outstanding                at December 30, 2006         |   |                                    | **5,654** |                                           |   | **49.90**                                                           |   |                                                                          | **5.4** |   | **$** | **46.5** |   |
| Options                exercisable at December 30, 2006 |   |                                    | **4,715** |                                           | **$**  | **46.78**                                                           |   |                                                                          | **5.1** |   | **$** | **46.4** |   |

| 1 | Calculated                  using in-the-money stock options multiplied by the difference between                  the                  Company’s average of the high and low stock price on December 29, 2006                  and                  the option exercise price. The total number of in-the-money options                  exercisable on December 30, 2006 was approximately 3.0                  million. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                           |   | **December                30, 2006** |      | December                31, 2005 |   | December                25, 2004 |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|-----------|----------------------------------|--------|----------------------------------|--------|
| Weighted                average grant-date fair value of stock options granted |   | **$**                                | **16.48** |                             | $      | 24.47                            |   | $ | 19.19 |   |
| Total                fair value of options vested ($000s)                      |   | **$**                                | **19.0**  |                             | $      | 19.1                             |   | $ | 17.2 |   |
| Total                intrinsic value of options exercised ($000s)              |   | **$**                                | **0.3**   |                             | $      | 50.7                             |   | $ | 36.9 |   |

*Statement      of Cash Flows*

----

|                                   |   | **December                30, 2006** |      | December                31, 2005 |   | December                25, 2004 |   |
|----------------------------------------|--------|--------------------------------------|-----------|----------------------------------|--------|----------------------------------|--------|
| Expected                life           |   |                                 | **5**     |                             |   | 5                                |   |   | 6 |   |
| Expected                volatility     |   |                                 | **29.84** | **%**                            |   | 34.61                            | %      |   | 35.97 | % |
| Risk-free                interest rate |   |                                 | **4.66**  | **%**                            |   | 4.33                             | %      |   | 3.06 | % |
| Expected                dividend yield |   |                                 | **1.01**  | **%**                            |   | 1.13                             | %      |   | 1.18 | % |

|   Nonvested                Options          |   | Number                of Options (000s) |       | Weighted                Average Grant-Date Fair Value |   |
|-------------------------------------------------------|--------|-----------------------------------------|------------|-------------------------------------------------------|--------|
| Nonvested                options at December 31, 2005 |   |                                    | **2,024**  |                                                  | **$**  | **19.84** |   |
| Granted                                               |   |                                    | **47**     |                                                  |   | **16.48** |   |
| Vested                                                |   |                                    | **(1,090** | **)**                                                 |   | **17.47** |   |
| Forfeited                and canceled                 |   |                                    | **(55**    | **)**                                                 |   | **22.37** |   |
| Nonvested                options at December 30, 2006 |   |                                    | **926**    |                                                  | **$**  | **22.32** |   |

***Restricted      Stock***
** **

|   Nonvested                Restricted Shares          |   | Numbers                of Shares (000s) |    | Weighted                Average Grant-Date Fair Value |   |
|-----------------------------------------------------------------|--------|-----------------------------------------|---------|-------------------------------------------------------|--------|
| Nonvested                restricted shares at December 31, 2005 |   |                                    | **288** |                                                  | **$**  | **52.37** |   |
| Granted                                                         |   |                                    | **60**  |                                                  |   | **53.50** |   |
| Vested                                                          |   |                                    | **(96** | **)**                                                 |   | **38.60** |   |
| Forfeited                and canceled                           |   |                                    | **(3**  | **)**                                                 |   | **79.43** |   |
| Nonvested                restricted shares at December 30, 2006 |   |                                    | **249** |                                                  | **$**  | **57.65** |   |

|                                                                                                         |   | **December                30, 2006** |      | December                31, 2005 |   | December                25, 2004 |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|----------------------------------|--------|----------------------------------|--------|
| Weighted                average grant-date fair value of restricted stock awards                granted |   | **$**                                | **53.50** |                             | $      | 74.54                            |   | $ | 55.99 |   |
| Total                fair value of restricted stock awards vested ($000s)                                    |   | **$**                                | **4.8**   |                             | $      | 7.4                              |   | $ | 4.3 |   |

----

**Performance      Awards**

**Employee      Stock Purchase Plan**

**16.**
**Operating      Leases**

**17.**
**Commitments      and Contingencies**

**Subsidiary      Debt Guarantees **
*Note      11 - Debt*

**Letters      of Credit**

**Guarantees      **

**Tax      Indemnifications**

----

**Environmental      Indemnifications**

**Other      Commitments and Contingencies **
*Note      19 — Other Matters*

*Note      19 — Other Matters *

----

**Product      Warranties**

| Balance                at December 25, 2004                           |   | $      | 7.8  |   |
|-----------------------------------------------------------------------|--------|--------|------|--------|
| Accruals                for warranties issued                         |   |   | 6.9  |   |
| Changes                in accruals related to pre-existing warranties |   |   | (2.1 | )      |
| Settlements                made                                       |   |   | (6.7 | )      |
| Balance                at December 31, 2005 1                         |   | $      | 5.9  |   |
| Accruals                for warranties issued                         |   |   | 7.9  |   |
| Changes                in accruals related to pre-existing warranties |   |   | (0.5 | )      |
| Settlements                made                                       |   |   | (6.8 | )      |
| Balance                at December 30, 20061                          |   | $      | 6.5  |   |

| 1 | Warranty                reserve changes during 2005 and 2006, as well as the 2005 and 2006                year                end balances, do not include amounts in connection with the *MoistureLoc*                recall. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Deferred      Service Revenue**

| Balance                at December 25, 2004                                  |   | $      | 7.7   |   |
|------------------------------------------------------------------------------|--------|--------|-------|--------|
| Accruals                for service contracts                                |   |   | 11.8  |   |
| Revenue                recognized                                            |   |   | (12.6 | )      |
| Balance                at December 31, 2005                                  |   | $      | 6.9   |   |
| Accruals                for service contracts                                |   |   | 11.7  |   |
| Changes                in accruals related to pre-existing service contracts |   |   | (0.6  | )      |
| Revenue                recognized                                            |   |   | (12.4 | )      |
| Balance                at December 30, 2006                                  |   | $      | 5.6   |   |

----

**18.**
**Supplemental      Balance Sheet Information**

|                                                                           |   | **December                30, 2006** |     | December                31, 2005 |   | December                25, 2004 |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|----------|----------------------------------|--------|----------------------------------|--------|
| **Allowances                for Losses on Trade Receivables**                  |   |                                 |     |                             |   |                             |   |
| Balance                at beginning of year                                    |   | **$**                                | **16.2** |                             | $      | 22.1                             |   | $ | 20.6 |   |
| Change                in provision                                             |   |                                 | **4.2**  |                             |   | (0.6                             | )      |   | 4.2 |   |
| Gross                write-offs of trade receivables accounts                  |   |                                 | **(4.7** | **)**                            |   | (5.4                             | )      |   | (4.0 | ) |
| Recoveries                on trade receivables accounts previously written off |   |                                 | **0.4**  |                             |   | 1.2                              |   |   | 0.6 |   |
| Currency                effect                                                 |   |                                 | **0.9**  |                             |   | (1.1                             | )      |   | 0.7 |   |
| Balance                at end of year                                          |   | **$**                                | **17.0** |                             | $      | 16.2                             |   | $ | 22.1 |   |

|                                      |   | **December                30, 2006** |      | December                31, 2005 |   |
|-------------------------------------------|--------|--------------------------------------|-----------|----------------------------------|--------|
| **Inventories,                net**       |   |                                 |      |                             |   |
| Raw                materials and supplies |   | **$**                                | **54.3**  |                             | $      | 51.4 |   |
| Work                in process            |   |                                 | **18.8**  |                             |   | 19.5 |   |
| Finished                products          |   |                                 | **164.3** |                             |   | 148.9 |   |
|                                      |   | **$**                                | **237.4** |                             | $      | 219.8 |   |

|                                                  |   | **December                30, 2006** |        | December                31, 2005 |   |
|-------------------------------------------------------|--------|--------------------------------------|-------------|----------------------------------|--------|
| **Property,                Plant and Equipment, net** |   |                                 |        |                             |   |
| Land                                                  |   | **$**                                | **20.6**    |                             | $      | 20.0 |   |
| Buildings                                             |   |                                 | **374.1**   |                             |   | 344.8 |   |
| Machinery                and equipment                |   |                                 | **1,089.9** |                             |   | 998.2 |   |
| Leasehold                improvements                 |   |                                 | **26.6**    |                             |   | 25.5 |   |
| Equipment                on operating lease 1         |   |                                 | **18.1**    |                             |   | 14.4 |   |
|                                                  |   |                                 | **1,529.3** |                             |   | 1,402.9 |   |
| Less                accumulated depreciation          |   |                                 | **(896.1**  | **)**                            |   | (798.5 | ) |
|                                                  |   | **$**                                | **633.2**   |                             | $      | 604.4 |   |

| 1 | See                *Note                5 — Net Investment in Sales-Type and Operating Leases*                for additional information regarding equipment on operating                lease. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**19.**
**Other      Matters**

**Legal      Matters**
*MoistureLoc*
*Product      Liability Lawsuits*

----

***Shareholder      Securities Class Actions***
*In      re      Bausch & Lomb Incorporated Securities Litigation,*
*MoistureLoc*

***ERISA-Based      Class Actions***
*In      re      Bausch & Lomb Incorporated ERISA Litigation*
*MoistureLoc*

***Shareholder      Derivative Actions***
*MoistureLoc*

*In      re      Bausch & Lomb Incorporated Derivative Litigation*

----

*MoistureLoc*
*Little      v. Zarrella*
*Pinchuck      v. Zarrella*
*MoistureLoc*

*Pinchuck*
*Pinchuck*
*Little*

***Product      Liability Lawsuits***
*ReNu*
*ReNu*
*MoistureLoc*

----

***Material      Intellectual Property Litigation***
*Rembrandt      Vision Technology, L.P. v. Bausch & Lomb Incorporated and CIBA Vision      Corporation*
*PureVision*

***Material      Tax Litigation***
*Note      10 — Provision for Income Taxes*

**General      Litigation Statement **

----

*Item      3. Legal Proceedings*

**20.**
**Quarterly      Results, Stock Prices and Selected Financial Data      (Unaudited)**

**Quarterly      Results **
*Statements      of Income*

|                                              |   | First                Quarter |      | Second                Quarter |   | Third                Quarter |   | Fourth                Quarter |      |
|---------------------------------------------------|--------|------------------------------|-----------|-------------------------------|--------|------------------------------|--------|-------------------------------|-----------|
| **2006**                                          |   |                         |      |                          |   |                         |   |                          |      |
| Net                Sales                          |   | **$**                        | **546.0** |                          | **$**  | **571.5**                    |   | **$**                         | **577.3** |   | **$** | **597.6** |   |
| Gross                Profit                       |   |                         | **306.9** |                          |   | **322.0**                    |   |                          | **325.8** |   |   | **333.2** |   |
| Operating                Income                   |   |                         | **32.7**  |                          |   | **15.8**                     |   |                          | **30.1**  |   |   | **35.4** |   |
| Net                Income (Loss)                  |   |                         | **11.8**  |                          |   | **(15.1**                    | **)**  |                          | **2.8**   |   |   | **15.4** |   |
| Earnings                (Loss) Per Share, Basic   |   | **$**                        | **0.22**  |                          | **$**  | **(0.28**                    | **)**  | **$**                         | **0.05**  |   | **$** | **0.28** |   |
| Earnings                (Loss) Per Share, Diluted |   | **$**                        | **0.21**  |                          | **$**  | **(0.28**                    | **)**  | **$**                         | **0.05**  |   | **$** | **0.28** |   |

|                                              |   | First                Quarter |   | Second                Quarter |   | Third                Quarter |   | Fourth                Quarter |   |
|---------------------------------------------------|--------|------------------------------|--------|-------------------------------|--------|------------------------------|--------|-------------------------------|--------|
| 2005                                              |   |                         |   |                          |   |                         |   |                          |   |
| Net                Sales                          |   | $                            | 554.7  |                          | $      | 605.4                        |   | $                             | 567.3  |   | $ | 626.4 |   |
| Gross                Profit                       |   |                         | 321.9  |                          |   | 360.4                        |   |                          | 318.6  |   |   | 369.7 |   |
| Operating                Income                   |   |                         | 55.2   |                          |   | 75.7                         |   |                          | 56.4   |   |   | 96.1 |   |
| Net                Income (Loss)                  |   |                         | 33.3   |                          |   | 37.3                         |   |                          | (105.2 | ) |   | 53.8 |   |
| Earnings                (Loss) Per Share, Basic   |   | $                            | 0.63   |                          | $      | 0.70                         |   | $                             | (1.97  | ) | $ | 1.00 |   |
| Earnings                (Loss) Per Share, Diluted |   | $                            | 0.60   |                          | $      | 0.67                         |   | $                             | (1.97  | ) | $ | 0.96 |   |

----

**Quarterly      Stock Prices **

|   |   | **2006**                           |      | 2005                           |   |
|--------|--------|------------------------------------|-----------|--------------------------------|--------|
|   |   | **Price                Per Share** |      | Price                Per Share |   |
|   |   | **High**                           |      | **Low**                        |   | High |   | Low |   |
| First  |   | **$**                              | **73.24** |                           | **$**  | **63.68** |   | $ | 75.85 |   | $ | 61.82 |   |
| Second |   |                               | **63.96** |                           |   | **40.75** |   |   | 79.75 |   |   | 70.80 |   |
| Third  |   |                               | **52.80** |                           |   | **43.97** |   |   | 87.89 |   |   | 74.50 |   |
| Fourth |   |                               | **54.30** |                           |   | **47.36** |   |   | 84.30 |   |   | 66.17 |   |

**Selected      Financial Data**

|                                                   |   | **2006** |        | 2005   |   | 2004    |   | 2003   |    | 2002   |   |
|--------------------------------------------------------|--------|----------|-------------|--------|--------|---------|--------|--------|---------|--------|--------|
| **Results                for the Year**                |   |     |        |   |   |    |   |   |    |   |   |
| Net                Sales                               |   | **$**    | **2,292.4** |   | $      | 2,353.8 |   | $      | 2,233.5 |   | $      | 2,018.5 |   | $ | 1,810.5 |   |
| Net                Income                              |   |     | **14.9**    |   |   | 19.2    |   |   | 153.9   |   |   | 106.0 |   |   | 20.8 |   |
| Net                Income - Basic earnings per share   |   |     | **0.28**    |   |   | 0.36    |   |   | 2.94    |   |   | 2.02 |   |   | 0.39 |   |
| Net                Income - Diluted earnings per share |   |     | **0.27**    |   |   | 0.35    |   |   | 2.83    |   |   | 1.98 |   |   | 0.39 |   |
| Dividends                per share                     |   |     | **0.52**    |   |   | 0.52    |   |   | 0.52    |   |   | 0.52 |   |   | 0.65 |   |

| **Year-End                Position**             |   |   |        |   |   |    |   |   |    |   |   |
|--------------------------------------------------|--------|--------|-------------|--------|--------|---------|--------|--------|---------|--------|--------|
| Working                capital                   |   | **$**  | **530.3**   |   | $      | 617.7   |   | $      | 528.0   |   | $      | 528.9 |   | $ | 457.5 |   |
| Total                assets                      |   |   | **3,278.8** |   |   | 3,416.4 |   |   | 3,045.8 |   |   | 3,038.1 |   |   | 2,767.1 |   |
| Current                portion of long-term debt |   |   | **134.4**   |   |   | 161.2   |   |   | 100.8   |   |   | 195.0 |   |   | 186.4 |   |
| Long-term                debt                    |   |   | **698.3**   |   |   | 831.2   |   |   | 543.3   |   |   | 652.0 |   |   | 656.2 |   |
| Retained                earnings                 |   |   | **1,458.3** |   |   | 1,471.6 |   |   | 1,480.4 |   |   | 1,354.1 |   |   | 1,275.6 |   |
| Shareholders'                equity              |   |   | **1,394.8** |   |   | 1,283.9 |   |   | 1,362.8 |   |   | 1,160.8 |   |   | 1,005.3 |   |

| **Other                Ratios and Statistics**                                                             |   |   |      |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|
| Return                on average shareholders' equity                                                      |   |   | **1.1**   | **%**  |   | 1.4    | %      |   | 12.6   | %      |   | 10.5 | % |   | 2.1 | % |
| Return                on invested capital                                                                  |   |   | **1.3**   | **%**  |   | 1.2    | %      |   | 9.1    | %      |   | 7.5 | % |   | 2.1 | % |
| Effective                income tax rate for continuing operations before minority                interest |   |   | **79.7**  | **%**  |   | 89.9   | %      |   | 34.4   | %      |   | 37.3 | % |   | 69.8 | % |
| Current                ratio                                                                               |   |   | **1.6**   |   |   | 1.6    |   |   | 1.6    |   |   | 1.6 |   |   | 1.5 |   |
| Capital                expenditures                                                                        |   | **$**  | **107.7** |   | $      | 116.0  |   | $      | 118.9  |   | $      | 91.5 |   | $ | 91.9 |   |

**21.**
**Market      Withdrawal of **
***MoistureLoc***
**      Lens Care Solution**

*MoistureLoc*
** **
*MoistureLoc*

----

*MoistureLoc*

*      MoistureLoc *
*Note      19 *
*Other      Matters*

*MoistureLoc*
*Note      1 — Significant Accounting Policies*
*Note      2 — Acquisition*
*Note      1 — Significant Accounting Policies*

**Item      9.**
**Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure**

**Item      9A.**
**Controls      and Procedures**

**Evaluation      of Disclosure Controls and Procedures **

----

**Management’s      Report on Internal Control Over Financial Reporting **

*Internal      Control - Integrated Framework *

***Control      Environment***
*Item      2*

***Controls      Over Tax Accounting***
* *

*Internal      Control-Integrated Framework*

*Report      of Independent Registered Public Accounting Firm *

----

**Remediation      of Certain Material Weaknesses in Internal Control Over Financial      Reporting**

| ·   | Control                environment deficiencies related to (i) the failure to institute                all                elements of an effective program to help prevent and detect fraud                by                Company employees and (ii) the failure to establish and maintain                effective                corporate and regional management oversight and monitoring of operations                to detect subsidiaries’ override of established financial controls and                accounting policies, execution of improper transactions and accounting                entries to impact revenue and earnings, and reporting of these                transactions to the appropriate finance personnel or the Company’s                independent registered public accounting                firm. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Controls                over the financial reporting and close process to provide reasonable                assurance of the completeness and accuracy of certain financial statement                accounts in certain subsidiaries. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Controls                over revenue recognition and sales practices related to certain                subsidiaries’ relationships with their key distributors and the                installation of refractive laser surgery equipment in multiple locations                where the Company does business. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Controls                over the deferred compensation plan to ensure that the Plan document                was                amended to accurately reflect the Plan’s intended                design. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Control      Environment**

| ·   | Several                individuals in management positions at its Brazilian and Korean operations                have either left the Company or have been terminated. In addition,                the                Senior Vice President - Asia has been                replaced. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has strengthened its management and financial ranks including                the                appointment of a Vice President, Compliance reporting directly to                the                Chief Executive Officer and the Audit Committee of the Board; and                a Vice                President, Financial Compliance reporting to the Corporate                Controller. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company further enhanced its whistleblower program related to the                communication, investigation and resolution of whistleblower                activities. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company expanded executive management's ongoing communications regarding                the importance of adherence to internal controls and company                policies. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company realigned the global finance organization in its operating                segments to have a direct reporting relationship to the Corporate                Controller, rather than to management within the operating                segments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has reinforced the certification process to emphasize senior                managers' accountability for maintaining an ethical                environment. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company instituted a comprehensive fraud and compliance risk assessment                program and a risk analysis process to determine audits to be performed                by                the Internal Audit department and internal control testing to be                conducted                at non-significant locations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company formalized entity wide and corporate monitoring                controls. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | The                Company has augmented the quarterly financial reporting and close                process,                by implementing an expanded Quarterly Close Checklist which is completed                by each Operating Segment Controller and reviewed by the Corporate                Controller. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Financial      Reporting and Close Process**

| ·   | The                Company held a global controller’s conference in 2006 with topics covered                including financial reporting, internal controls, and global                processes. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company replaced several controllers, especially in the Asia                region. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has modified the performance management objectives and individual                bonus metrics for the global finance organization to be more heavily                weighted to internal controls and financial reporting and close                metrics. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The                Company reemphasized the requirements for reconciliation and support                of                all balance sheet accounts and journal                entries. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                number of entities at which substantive audits or internal control                testing                was performed by Internal Audit or the Sarbanes Oxley compliance                group was                expanded in 2006. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has augmented the quarterly financial reporting and close                process,                by implementing an expanded Quarterly Close Checklist which is completed                by each Operating Segment Controller and reviewed by the Corporate                Controller. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Revenue      Recognition**

| ·   | The                Company has enhanced key control activities related to revenue recognition                on laser installations and sales to distributor/wholesalers, documentation                and approval of terms of sales, including standard and extended credit                terms and analysis of sales returns and                exchanges. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has enhanced its quarterly financial reporting and close                process                by implementing a more extensive Quarterly Close Checklist and Quarterly                Close Call process which focuses on specific revenue recognition                related                issues. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has revised its Revenue Recognition policy to specifically                address                the issues identified in the material                weakness. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company currently accounts for revenue on a consignment basis in                the Korea                Vision Care and India Vision Care and Cataract distributor businesses                with                appropriate controls around the accounting process. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Deferred      Compensation Plan**

| ·   | The                Company will require formal review and approval of all new or amended                employee benefit plans by Corporate Technical                Accounting. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company amended its Deferred Compensation Plan early in 2006 to ensure                that the Plan complied with the intended                design. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Ongoing      Remediation of Material Weaknesses in Internal Control Over Financial Reporting      as of December 30, 2006 **
*Management's Report on Internal      Control Over Financial Reporting*

| ·   | The                Company has begun an initiative to provide additional training to                finance,                accounting and tax professionals regarding new and evolving areas                in U.S.                GAAP accounting. In addition, the Company is undertaking a review                to                ensure that the finance, accounting and tax functions are staffed                in                accordance with the required competencies, and has begun the process                of                making personnel changes where                necessary. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company is developing a formal training program for certain non-finance                employees on revenue recognition and integrity of financial reporting                and                controls. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company continues to provide training to its managers and sales                organizations on ethics and compliance with over 2,400 employees                trained                in 2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has initiated a project in 2007 to revise its Code of Conduct                and                other related Company policies. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company has further expanded and strengthened its internal audit                organization by hiring additional experienced audit                staff. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company, with the assistance of outside consultants other than its                independent registered public accountants, undertook a project to                perform                a comprehensive review of its accounting for income taxes including                deferred tax assets and liabilities, taxes payable and tax reserves.                Further, the Company will initiate processes to improve proper tracking                of                deferred tax assets and                liabilities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company implemented a process requiring all subsidiaries outside                of the                United States to use one global professional tax advisor to review                local                income tax returns prior to filing and to provide services relating                to tax                assessments and positions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company plans to add regional tax resources with indirect tax expertise                to                address VAT, customs and other indirect                taxes. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The                Company has strengthened its tax department by hiring additional                senior                tax staff with expertise in accounting for income                taxes. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company will undertake a project to redesign its controls around                income                taxes in the second quarter of                2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Changes      in Internal Control Over Financial Reporting **

**Item      9B.**
**Other      Information**

**Appointment      of New Chief Financial Officer**

**Entry      Into New Employment Agreement with Ronald L. Zarrella**

----

|   | A. | Termination                  without Cause by the Company; Good Reason by Mr. Zarrella                  -                  the Company will pay or provide: |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | within                30 days of termination, a lump sum payment equal to unpaid annual                base                salary to the date of termination; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                pro-rated bonus for the year in which the termination occurred, payable                when bonuses to other senior officers are paid for such                year; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                payment equal to two times annual base salary and target bonus, payable                over a two year period; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|
| ·   | continued                participation for Mr. Zarrella, his spouse and dependants in the                Company’s                health insurance plan for the remaining term of his employment period,                but                not in excess of 18 months; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | other                amounts or benefits Mr. Zarrella is eligible to receive prior to                the                termination date in accordance with Company’s plans, policies, programs or                agreements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B. | Termination                  Upon Death                  -                  the Company will pay or provide: |
|--------|----|--------------------------------------------------------------------------------------------------------------|

| ·   | within                30 days of termination, a lump sum payment equal to unpaid annual                base                salary to the date of termination; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                pro-rated bonus for the year in which the termination occurred, payable                when bonuses to other senior officers are paid for such                year; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | other                amounts or benefits Mr. Zarrella is eligible to receive prior to                the                termination date in accordance with Company’s plans, policies, programs or                agreements, including a death benefit. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | Termination                  Upon Disability                  -                  the Company will pay or provide: |
|--------|----|-------------------------------------------------------------------------------------------------------------------|

| ·   | within                30 days of termination, a lump sum payment equal to unpaid annual                base                salary to the date of termination; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                pro-rated bonus for the year in which the termination occurred, payable                when bonuses to other senior officers are paid for such                year; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | other                amounts or benefits Mr. Zarrella is eligible to receive prior to                the                termination date in accordance with Company’s plans, policies, programs or                agreements, including a disability                benefit. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | D. | Termination                  For Cause; Other than Good Reason                  -                  the Company will pay or provide unpaid annual base salary and other                  benefits through the termination                  date. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Part      III**

**Item      10.**
**Directors,      Executive Officers and Corporate Governance of Bausch & Lomb      Incorporated**

**Board      of Directors**

|  ALAN                M. BENNETT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  Director                since 2004Age:                55         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|  Mr.                Bennett served as senior vice president and chief financial officer                of                Aetna Inc., a leading provider of health, dental, group life, disability                and long-term care benefits from 2001 until his retirement in April                2007.                He joined Aetna in 1995 as chief financial officer for Aetna Business                Resources. He was named vice president and director of internal audit                of                Aetna Inc. in 1997 and in 1998 was named vice president and controller.                From 1981 to 1995, Mr. Bennett held several executive positions with                Pirelli Armstrong Tire Corporation. From 1972 to 1981, he was an                audit                manager at Ernst & Young. Mr. Bennett is a Director of Halliburton and                a member of the American Institute of Certified Public                Accountants. |
|  CATHERINE                M. BURZIK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |  Director                since January 2007Age:                56 |
|  Ms.                Burzik has served since November 2006 as president and chief executive                officer of Kinetic Concepts, Inc., a global medical technology company.                From 2004 until December 2006, she served as senior vice president                of                Applera Corporation and president of its Applied Biosystems Group,                a                developer and marketer of instrument-based systems. She joined Applera                in                2003 as a vice president. From 1997 to 2003, she held several executive                positions with Johnson & Johnson, including president of its                Ortho-Clinical Diagnostics, Inc. subsidiary. From 1974 to 1997, she                held                several executive positions in management with Eastman Kodak                Company.                                                                                                |
|  DOMENICO                DE SOLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  Director                since 1996Age:                63         |
|  Mr.                De Sole has served since April 2005 as chairman of Tom Ford International,                a luxury goods fashion company which produces fragrances, sunglasses                and a                signature ready-to-wear men's line. He served from 1995 to 2004 as                president and chief executive officer of Gucci Group N.V., a multibrand                luxury goods company. He joined that company in 1984 as president                and                chief executive officer of Gucci America, Inc. and in 1994 was named                chief                operating officer of Gucci Group N.V. Mr. De Sole is a director of                Delta                Airlines, Inc., GAP Inc. and Telecom Italia and Ermenegildo Zegna.                He is a                member of the Harvard Law School Advisory                Board.                                                                                      |

----

|  PAUL                A. FRIEDMAN, M.D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  Director                since 2004Age:                64 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
|  Dr.                Friedman has served since 2001 as president and chief executive officer                of                Incyte Corporation, a biotechnology company. From 1998 until 2001,                he                served as president of DuPont Pharmaceuticals Research Laboratories.                From                1994 until 1998, he served as president, Research and Development,                of                DuPont Merck Pharmaceutical Company. From 1991 to 1994, he was senior                vice                president of Research at Merck Sharp & Dohme Research Laboratories and                from 1985 to 1991 he held several executive positions there. From                1974 to                1985, Dr. Friedman was associate professor of Medicine and Pharmacology                at                Harvard Medical School. Dr. Friedman is a diplomat of the American                Board                of Internal Medicine and a member of the American Society of Clinical                Investigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|  JONATHAN                S. LINEN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |  Director                since 1996Age:                63 |
|  Mr.                Linen has served since January 2006 as advisor to the chairman of                American                Express Company, a diversified worldwide travel and financial services                company. From 1993 to 2006, he served as vice chairman. He joined                that                company in 1969 and held various executive positions before being                appointed president and chief executive officer of Shearson Lehman                Brothers in 1989. In 1992, he was named president and chief operating                officer of American Express Travel Related Services Company, Inc.                Mr.                Linen is chairman of the board of the International Golf Association,                a                trustee of the U.S. Council for International Business and a member                of The                Council on Foreign Relations. Mr. Linen presides on the policy committee                of The Travel Business Roundtable and is vice chairman of the executive                committee of the World Travel & Tourism Council. He serves as a member                of the boards of Yum! Brands, Inc., Intercontinental Hotels, World                Monuments Fund, the U.S. Travel & Tourism Promotion Advisory Board,                and is an executive committee member of NYC & Company. Mr. Linen is a                past chairman and now honorary member of the board of trustees of                the                National Urban League. |
|  RUTH                R. McMULLIN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  Director                since 1987Age:                65 |
|  Mrs.                McMullin is the chairperson of trustees of the Eagle-Picher Trust.                She was                a member of the faculty of the Yale School of Management as a Management                Fellow from 1994 to 1995. From 1992 to 1994, she was president and                chief                executive officer of the Harvard Business School Publishing Corporation.                From 1990 to 1992, Mrs. McMullin was a consultant to private industry                and                from 1991 to 1992, she was also acting chief executive officer of                UNR                Industries, Inc. and a member of that company's chairman's committee.                From                1989 to 1990, she was president and chief executive officer of John                Wiley                & Sons, Inc., a publishing company. Mrs. McMullin joined that company                as executive vice president and chief operating officer in 1987.                She is a                director of The Mighty Eighth Foundation, Inc., and The Mighty Eighth                Air                Force Heritage Center, Inc.                                                                                                                                                                                                                                                                                                                                                                                   |
|  LINDA                JOHNSON RICE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  Director                since 1990Age:                49 |
|  Mrs.                Rice has served since 2002 as president and chief executive officer                of                Johnson Publishing Company, Inc., a multi-media company. She joined                that                company in 1980, became vice president in 1985 and president and                chief                operating officer in 1987. In addition to management of the company,                she                oversees the editorial content of Ebony and Jet magazines. She is                also                president of Fashion Fair Cosmetics, a division of Johnson Publishing.                Mrs. Rice is a director of Kimberly-Clark Corporation, Omnicom Group,                Inc., and Money Gram International,                Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

|  WILLIAM                H. WALTRIP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |  Director                since 1985Age:                69 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
|  Mr.                Waltrip served from 1993 to 2003 as chairman of the board of Technology                Solutions Company, a systems integration company, and from 1993 until                1995                he was chief executive officer of that company. Mr. Waltrip has served                twice as Bausch & Lomb's interim chief executive officer, once in 1996                and once in 2001. He also served as the Company's chairman from 1996                to                1998 and again in 2001. From 1991 to 1993, he was chairman and chief                executive officer of Biggers Brothers, Inc., a food service distribution                company and was a consultant to private industry from 1988 to 1991.                From                1985 to 1988, he served as president and chief operating officer                of IU                International Corporation, a transportation, environmental and                distribution company. Earlier, he had been president, chief executive                officer and a director of Purolator Courier Corporation. He is a                director                of Theravance, Inc., Charles River Laboratories International, Inc.                and                Thomas & Betts Corporation. |
|  BARRY                W. WILSON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  Director                since 2003Age:                63 |
|  Mr.                Wilson joined Medtronic, Inc., a medical technology company, in 1995,                as                president, Europe, Middle East & Africa. Since 1997, he served as                senior vice president and a member of the Executive Committee. In                2001,                Mr. Wilson assumed responsibility for Medtronic International. He                is                currently senior vice president, International. From 1980 to 1993,                he held                various executive positions with Bristol-Myers Squibb, including                president                of Europe. Prior to that, he held executive positions with Pfizer,                Inc. in                nine different countries. Mr. Wilson was chairman of Eucomed, the                European                medical device industry association from 2000 to 2004 and now serves                as                its honorary chairman.                                                                                                                                                                                                                                                                                                                          |

|  KENNETH                L. WOLFE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  Director                since 1989Age:                68 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
|  Mr.                Wolfe served as chairman and chief executive officer of Hershey Foods                Corporation, a food products manufacturing firm, from 1994 until                his                retirement in 2001. He joined that firm in 1967 and held various                executive                positions before being appointed vice president and chief financial                officer in 1981. In 1984, Mr. Wolfe was named senior vice president.                From                1985 until 1993, he was president and chief operating officer. Mr.                Wolfe                is a director of Revlon, Inc. and is a trustee of Fidelity                Funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  RONALD                L. ZARRELLA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  Director                since 2001Age:                57 |
|  Mr.                Zarrella has served since 2001 as chairman and chief executive officer                of                Bausch & Lomb Incorporated. He was previously with General Motors                Corporation, where he was executive vice president and president                of                General Motors North America from 1998 to 2001. From 1994 to 1998,                Mr.                Zarrella was vice president and group executive in charge of General                Motors' North American Vehicle Sales, Service and Marketing Group.                From                1985 to 1994, Mr. Zarrella held several executive positions at Bausch                & Lomb, including serving as its president, chief operating officer                and a member of its Board. Mr. Zarrella is a director of Avaya, Inc.                He is                a trustee of Rochester Institute of Technology, the International                Agency                for the Prevention of Blindness, and the Committee for Economic                Development. Mr. Zarrella is a member of the board of the University                of                Rochester Medical Center, FIRST (For Inspiration and Recognition                of                Science and Technology), and the National Italian American                Foundation. |

----

**Executive      Officers of the Registrant**

| **Name                and Age**           | **Position**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Ronald                L. Zarrella (57)    | Chairman                and Chief Executive Officer since 2001; Executive Vice President                and                President, General Motors North America, General Motors Corporation                (1998-2001).                                                                                                                                                                                                                                                                                                                                                |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Gerhard                Bauer (51)         | Senior                Vice President, Global Operations and Engineering since May 2006;                Vice                President, Global Operations and Engineering for Europe (2001-May                2006).                                                                                                                                                                                                                                                                                                                                                        |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Alan                H. Farnsworth (54)    | Senior                Vice President and President, Europe, Middle East and Africa Region                since                2001; Corporate Vice President, Pharmaceuticals/Europe                (2000-2001).                                                                                                                                                                                                                                                                                                                                                          |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Dwain                L. Hahs (54)         | Senior                Vice President and President Asia Region since May 2006; Senior Vice                President, Global Operations and Engineering                (2000-2006).                                                                                                                                                                                                                                                                                                                                                                                        |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Stephen                C. McCluski (54) 1 | Senior                Vice President Corporate Strategy since March 2007; Senior Vice President                and Chief Financial Officer (1995-March 2007).                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| David                R. Nachbar (44)      | Senior                Vice President, Human Resources since 2002; Senior Vice President,                Human                Resources, The St. Paul Companies, Inc. (1998-2002).                                                                                                                                                                                                                                                                                                                                                                                         |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Efrain                Rivera (50)         | Senior                Vice President and Chief Financial Officer since March 2007; Corporate                Vice President and Treasurer (2004-March 2007); Corporate Vice President                and Assistant Treasurer (2003-2004); Leave of Absence (2003); Corporate                Vice President and President, Latin America and Canada (2002-2003);                President, Bausch & Lomb Latin America and General Manager, Bausch                & Lomb Mexico (2001-2002); Vice President and Controller, Vision Care                (1998-2001). |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Robert                B. Stiles (57)      | Senior                Vice President and General Counsel since 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Praveen                Tyle (47)          | Senior                Vice President, Research & Development and Chief Scientific Officer                since 2004; Group Vice President, Pharmaceutical Sciences and                Manufacturing, Biovail Corporation (2003-2004); Vice President, Global                Head, Global Pharmaceutical Sciences, Pharmacia Corporation (2001-2003);                Vice President, Pharmaceutical Sciences - U.S., Pharmacia Corporation                (1999-2001).                                                                                                 |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Evon                L. Jones (42)         | Corporate                Vice President and Chief Information Officer since January 2005;                Senior                Vice President and Chief Information Officer, The Dial Corporation                (2001-2004); Senior Vice President and Chief Information Officer,                America                West Holdings Corporation (1998-2001).                                                                                                                                                                                                           |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Barbara                M. Kelley (60)     | Corporate                Vice President, Communications and Investor Relations since                2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Jurij                Z. Kushner (56)      | Corporate                Vice President, Controller since                1995.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| Brian                Levy (55)           | Corporate                Vice President and Chief Medical Officer since 2004; Vice President,                Clinical & Medical Affairs (2000-2004). |
|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                     |
| Angela                J. Panzarella (49) | Corporate                Vice President, Global Vision Care since                2001.                                                                   |

----

| Gary                M. Phillips (41) | Corporate                Vice President and Vice President Commercial Operations, U.S. Surgical                and                Pharmaceuticals since January 2007; Corporate Vice President, Global                Pharmaceuticals (2002-2006); Executive Director, Strategic Planning,                Novartis Pharmaceuticals                (2000-2002). |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Henry                C. Tung (48) | Corporate                Vice President, Global Surgical since February 2005; Vice President,                New                Business Development, Boston Scientific Corporation (2000-February                2005). |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Section      16(a) Beneficial Ownership Reporting Compliance**
** **

**Corporate      Governance Principles and Board Matters**
** **

**Audit      Committee**

----

**Item      11.**
**Executive      Compensation**

**Compensation      Discussion and Analysis**

**Compensation      Philosophy, Objectives and Principles **

| ·   | Our                executive compensation programs are aligned with and support the                strategic                direction of our business; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                compensation programs are presented with transparency and encourage                behavior that is consistent with our values, our Cultural Drivers                and our                Commitment to an Ethical Culture. A description of these concepts                is                available on our web site at                http://www.bausch.com/en_US/corporate/corpcomm/general/ethical_culture.aspx; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our                “pay for performance” philosophy ties compensation awards to business and                individual achievement in a manner that recognizes target performance                with                at-market awards; above-target level performance is rewarded with                higher                awards, and below-target performance generates below-market awards,                if                any; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                proportion of compensation at risk increases as the employee’s level of                responsibility increases, and we believe in allocating variable                compensation to create a greater degree of “at risk” pay than our market                peers; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                encourage and support executive ownership in the Company through                the use                of stock ownership guidelines, which call for higher levels of ownership                as responsibility increases; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                portfolio of health, welfare, and savings benefit programs are designed                to                help in the attraction, productivity and retention of our employees;                and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                design and administration of our compensation programs strive to                be                financially efficient, affordable and                sustainable. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Compensation      Consultants **

----

**Role      of Executives in Establishing Compensation**

**Benchmarking      of Compensation**

**Elements      of Our Executive Compensation and Benefits Programs**

----

***Base      Salary***

***Annual      Incentive Compensation***

----

*ReNu*
*MoistureLoc*

***Long-Term      Incentive Program***

----

***Additional      Benefits***

----

*Summary      Compensation Table*

*Summary      Compensation Table*

***Stock      Ownership Guidelines***

***Deductibility      Cap on Executive Compensation***

**Retirement,      Separation, and Change of Control Arrangements**
*Potential      Payments on Retirement, Separation or Change of Control*

----

***Retirement***
* *
*Potential      Payments on Retirement, Separation or Change of Control*

***Separation***
*Potential      Payments on Retirement, Termination or Change of Control*

***Change      of Control***

**Chief      Executive Officer Compensation**
*Item      9B. Other Information*

*Item      9B. Other Information*

----

**Other      Named Executive Officer Compensation**

*ReNu*
*MoistureLoc*

**Compensation      Committee Report**

----

**Summary      Compensation Table & the Grants of Plan-Based Awards Table**
*Item      9B. Other Information*
*Item      9B. Other Information*

| ·   | Annual                salary of $1.1 million for the first two years of employment, with                annual                increases subject to review by our Board of Directors. Mr. Zarrella’s base                salary has not been increased since the inception of the employment                agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                target bonus of 100 percent of base salary with payouts ranging from                zero                percent to 150 percent of base salary based on the Company’s performance                against objectives set by the Compensation                Committee. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                restricted stock award granted in 2002 in the amount of 65,651 shares                that                fully vested in 2006, the fifth anniversary of Mr. Zarrella’s appointment.                The purpose of this award was to compensate him for benefits forfeited                at                his prior employer as a result of accepting his current position                with                Bausch & Lomb. The items forfeited included annual bonus compensation,                long-term incentive payments and stock option                value. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Participation                in employee welfare and benefits plans and other standard executive                perquisites including, but not limited to, financial planning benefits,                club membership and fees, vacation pay, and personal use of Company                aircraft. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Participation                in the Supplemental Executive Retirement Plan II (SERP II) which                is                described in more detail in the narrative to the *Pension                Benefits Table*                and the *Potential                Payments on Retirement, Termination or Change of Control*                section. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                post termination benefits including a change of control agreement                that are                described in detail in the *Potential                Payments on Retirement, Termination or Change of Control*                section. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Long-Term      Incentive Awards***
** **

***Annual      Incentive Compensation Awards***
** **
*Elements      of Our Executive Compensation and Benefits*

***All      Other Compensation***
** **
*All      Other Compensation *
*Summary      Compensation Table*

----

**Summary      Compensation Table**

|      Name                and Principal                Position           |   |       Year |   |       Salary |   |       Bonus |   |     Stock                Awards 1 |    |      Option                Awards                1 |   |     Non-Equity                Incentive                Plan Compensation |   | Change                in Pension                Value and                Nonqualified                Deferred                Compensation                Earnings |      |      All                Other Compensation2 |   |       Total |   |
|---------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------------------------|---------|-----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|----------------------------------------------------------------------|--------|-------------------------------------------|--------|
| R.L.                ZarrellaChairman                and C.E.O.                                    |   |                                     | 2006   |                                       | $      | 1,100,000                                 |   | $                                                          | -       |                                                                        | $      | 494,133                                                                                      |   | $                                                                                                                                                                 | 1,253,100 |                                                                 | $      | 545,600                                   |   | $ | 1,269,359 |   | $ | 257,874 |   | $ | 4,920,066 |   |
| S.C.                McCluski 3Sr.                V.P. and C.F.O.                                  |   |                                     | 2006   |                                       |   | 415,200                                   |   |                                                       | -       |                                                                        |   | -                                                                                            |   |                                                                                                                                                              | 323,703   |                                                                 |   | 154,454                                   |   |   | 35,071 |   |   | 170,850 |   |   | 1,099,278 |   |
| P.                TyleSr.                V.P. R&D, Chief                Scientific Officer    |   |                                     | 2006   |                                       |   | 410,001                                   |   |                                                       | 105,000 |                                                                        |   | 356,870                                                                                      |   |                                                                                                                                                              | 334,075   |                                                                 |   | 207,102                                   |   |   | 1,927 |   |   | 176,640 |   |   | 1,591,615 |   |
| D.                L. HahsSr.                V.P. & President,                Asia Region      |   |                                     | 2006   |                                       |   | 405,600                                   |   |                                                       | -       |                                                                        |   | 167,100                                                                                      |   |                                                                                                                                                              | 215,424   |                                                                 |   | 164,116                                   |   |   | 37,029 |   |   | 351,787 |   |   | 1,341,056 |   |
| J.M.                Loughlin 4Sr.                V.P. & President,                Asia Region |   |                                     | 2006   |                                       |   | 335,000                                   |   |                                                       | -       |                                                                        |   | -                                                                                            |   |                                                                                                                                                              | 206,734   |                                                                 |   | 135,549                                   |   |   | 21,001 |   |   | 508,125 |   |   | 1,206,409 |   |

**Summary      Compensation Table Footnotes**

| 1 | SFAS                  No. 123(R) assumptions used to determine the value of equity awards                  disclosed in the "Stock Awards" and "Option Awards"                  columns: |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Fair                Value Assumptions:                  |   | 2/25/2003Grant                Date |      | 7/1/2003Grant                Date |   | 2/2/2004Grant                Date |   | 7/19/2004Grant                Date |      | 1/31/2005Grant                Date |   |
|---------------------------------------------------------------|--------|------------------------------------|-----------|-----------------------------------|--------|-----------------------------------|--------|------------------------------------|-----------|------------------------------------|--------|
|    Exercise                price of option     |   | $                                  | 29.85     |                              | $      | 37.18                             |   | $                                  | 54.26     |                               | $      | 61.31 |   | $ | 71.85 |   |
|    Grant                date share price       |   |                               | 29.85     |                              |   | 37.18                             |   |                               | 54.26     |                               |   | 61.31 |   |   | 71.85 |   |
|    Expected                term of the option  |   |                               | 6         |                              |   | 6                                 |   |                               | 6         |                               |   | 5 |   |   | 5 |   |
|    Expected                volatility          |   |                               | 36.01     | %                                 |   | 36.12                             | %      |                               | 35.91     | %                                  |   | 36.93 | % |   | 35.15 | % |
|    Expected                dividends           |   |                               | 1.18      | %                                 |   | 1.21                              | %      |                               | 1.18      | %                                  |   | 1.20 | % |   | 1.14 | % |
|    Risk                free interest rate      |   |                               | 3.30      | %                                 |   | 3.69                              | %      |                               | 3.30      | %                                  |   | 3.54 | % |   | 4.34 | % |
| **   Black                Scholes Fair Value** |   | **$**                              | **10.67** |                              | **$**  | **13.52**                         |   | **$**                              | **19.03** |                               | **$**  | **20.79** |   | **$** | **24.55** |   |

|   | a. | The                Company’s matching and base Company contributions into the 401(k) Account                Plan and the 401(k) Excess Account. See the *Retirement*                section of the *Potential                Payments on Retirement, Termination or Change of Control*                section and the narrative discussion on *Non-Qualified                Deferred Compensation*                for more details. Amounts by named executive officer are as                follows: |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   Named                Executive Officer |   | Total                Company Contributions to 401(k) Account Plan and Non-Qualified Deferred                Compensation 401(k) Excess Account |    |
|----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| R.L.                Zarrella                       |   | $                                                                                                                                              | 110,000 |   |
| S.C.                McCluski                       |   |                                                                                                                                           | 58,128  |   |
| P.                Tyle                             |   |                                                                                                                                           | 39,817  |   |
| D.L.                Hahs                           |   |                                                                                                                                           | 68,952  |   |
| J.M.                Loughlin                       |   |                                                                                                                                           | 46,900  |   |

----

|   | b. | Our                  2006 awards under LEAP as described further in the *Additional                  Benefits*                  section of the Compensation Discussion and Analysis. Each of the                  named                  executive officers elected to receive equity equivalents rather                  than cash                  and as a result, amounts are 15 percent of the executive’s eligible                  wages: |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Named                    Executive Officer |   | 2006                    LEAP Value 1 |   |
|--------------------------------------------|--------|--------------------------------------|--------|
| R.L.                    Zarrella 2         |   | $                                    | 0      |   |
| S.C.                    McCluski           |   |                                 | 65,657 |   |
| P.                    Tyle                 |   |                                 | 64,835 |   |
| D.L.                    Hahs               |   |                                 | 64,139 |   |
| J.M.                    Loughlin           |   |                                 | 52,975 |   |

|   | 1 | LEAP                  balances at year-end consist of Company stock units that fully                  vest five                  years from the beginning of the Plan year. Upon his retirement,                  Mr.                  Loughlin vested in 20 percent of the 2006 LEAP value for a vested                  benefit                  of $10,595. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | Mr.                  Zarrella is not eligible to participate in                  LEAP. |
|--------|---|----------------------------------------------------------------------------------------|

|   | c. | The                amounts set forth in the “All Other Compensation” column include the value                of perquisites, as set forth in the chart                below: |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  NamedExecutiveOfficer  |   | PersonalUse                ofCompanyPlane |   |   FinancialPlanning |   |  PersonalUse                of Club |   |   ExecutiveAuto |   |  MatchingCharitableContributions |   |   RelocationAllowances |   |   ExecutivePhysicals |   |   HomeSecurity |   |   ExpatriateAllowances  1 |   |   Total                ValuePerquisites |   |
|------------------------------|--------|-------------------------------------------|--------|-------------------------------|--------|------------------------------------------|--------|---------------------------|--------|---------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|--------------------------|--------|-----------------------------------------------|--------|---------------------------------------------------|--------|
| R.L.                Zarrella |   | $                                         | 81,452 |                          | $      | 21,837                                   |   | $                         | 140    |                                  | $      | 31,379                           |   | $                              | 10,000 |                     | $      | -                                             |   | $                                                 | -      |   | $ | 714 |   | $ | - |   | $ | 145,522 |   |
| S.C.                McCluski |   |                                      | -      |                          |   | 1,500                                    |   |                      | 6,749  |                                  |   | 25,623                           |   |                           | 10,000 |                     |   | -                                             |   |                                              | -      |   |   | 905 |   |   | - |   |   | 44,777 |   |
| P.                Tyle       |   |                                      | 8,286  |                          |   | 10,000                                   |   |                      | 2,312  |                                  |   | 25,236                           |   |                           | 5,000  |                     |   | 14,662                                        |   |                                              | 4,245  |   |   | - |   |   | - |   |   | 69,741 |   |
| D.L.                Hahs     |   |                                      | -      |                          |   | 10,600                                   |   |                      | 12,878 |                                  |   | 35,663                           |   |                           | 6,000  |                     |   | 26,006                                        |   |                                              | -      |   |   | 460 |   |   | 124,805 |   |   | 216,412 |   |
| J.M.                Loughlin |   |                                      | -      |                          |   | 10,000                                   |   |                      | 3,254  |                                  |   | 25,429                           |   |                           | -      |                     |   | 84,275                                        |   |                                              | -      |   |   | - |   |   | 283,573 |   |   | 406,531 |   |

Perquisite      value calculation methodology:      The      values shown for perquisites are the actual incremental cost to the Company      related to the benefit. The value of personal use of the Company plane is based      on incremental direct operating costs. A weighted average per mile cost of      fuel,      maintenance, landing fees, crew travel-related expenses, and other miscellaneous      variable costs have been included. Since the corporation's aircraft are used      mainly for business travel, fixed costs such as pilots’ and other employees’salaries and aircraft lease costs are not included.

|   | 1 | Mr.                Loughlin’s Other Annual Compensation includes expatriate allowances of                $283,573 for 2006. Mr. Loughlin was on expatriate assignment in Hong                Kong                during a portion of 2006, and received the following allowances in                accordance with the Company’s Global Service Policy: goods and services                differential, Hong Kong housing/utilities (less employee contribution),                annual home leave, storage, and tax differential. The tax differential                portion of the allowances in the amount of $133,680 represents actual                income tax and gross-up payments made by the Company on behalf of                Mr.                Loughlin, less amounts withheld from Mr. Loughlin’s salary for the year                2006. The tax differential includes Hong Kong tax in the amount of                $128,091 which was paid in local currency on Mr. Loughlin’s behalf in June                2006, and converted to US dollars using the Company’s published foreign                exchange rate for June. These amounts adjust Mr. Loughlin’s taxes to                levels he would have paid in the U.S. under the Company’s Tax Equalization                Program. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | Life                insurance premiums and other nominal                amounts. |
|--------|----|----------------------------------------------------------------------------------|

----

**2006      Grants of Plan-Based Awards **
**1**

|                          |   | Estimated                Future Payouts Under Non-Equity Incentive Plan Awards |   |
|-------------------------------|--------|--------------------------------------------------------------------------------|--------|
|  Name                    |   | Threshold                ($)                                                   |   | Target                2 ($) |   | Maximum                ($) |   |
|                          |   |                                                                           | 0      | % |   | 67 | % |   | 134 | % |
| R.L.                Zarrella  |   | $                                                                              | 0      |   | $ | 737,000 |   | $ | 1,474,000 |   |
| S.C.                McCluski  |   |                                                                           | 0      |   |   | 208,638 |   |   | 417,276 |   |
| P.                Tyle        |   |                                                                           | 0      |   |   | 206,026 |   |   | 412,051 |   |
| D.L.                Hahs      |   |                                                                           | 0      |   |   | 203,814 |   |   | 407,628 |   |
| J.                M. Loughlin |   |                                                                           | 0      |   |   | 168,338 |   |   | 336,675 |   |

|   | 1 | We                made no equity-based awards to named executive officers in 2006 due                to the                withdrawal of reliance on previously-filed financial statements,                and the                delay in filing our 2005 financial statements, which restricted us                from                issuing equity-based compensation, except for transactions which                could be                exempted under Federal Securities                law. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2 | The                Annual Incentive Compensation Plan target payouts for 2006 were adjusted                to 67 percent as described in detail under the heading *Elements                of Our Executive Compensation and Benefits*in* *the                Compensation Discussion and                Analysis. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |     The                AICP caps the payout of the pool at 200 percent of target which,                after the                adjustment to 67 percent by the Compensation Committee, is 134 percent                of                target. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |     The                overall pool cannot be exceeded, however, individual awards can be                adjusted upward or downward depending on performance and other factors                as                determined by the Compensation                Committee. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |     Actual                payouts were lower than the 67 percent target, with the exception                of Dr.                Tyle, as reflected in the *Summary                Compensation Table*. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**2006        Outstanding Equity Awards at Fiscal Year-End**

|                                                                                        | Option                  Awards                                                                        | Stock                  Awards                                                                                   |
|---------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|
|      Name                                                          | Number                  of Securities Underlying Unexercised Options (#)                  Exercisable |  Number                  of Securities Underlying Unexercised Options (#) Unexercisable                  1 |    Option                  Exercise Price ($) |    Option                  Expiration Date |  Number                  of Shares or Units of Stock that Have Not Vested (#) 2 |  Market                  Value of Shares or Units of Stock that Have Not Vested                  ($) |
| R.                  L. Zarrella                                              | 41,66778,43370,000500,000370,000                                                                      | 83,33339,217                                                                                          | $71.845054.260029.845037.685031.9100 | 1/31/20152/2/20142/25/20131/2/201211/9/2011 |   |   |
| S.                  C. McCluski           | 10,33423,33340,00035,00050,00030,00028,6301,37029,0371,96321,4652,355                                 | 20,66611,667                                                       | 71.845054.260029.845038.345044.825061.968872.968872.968850.937550.937542.375042.3750 | 1/31/20152/2/20142/25/20131/28/20121/29/20117/24/20107/27/20097/27/20097/27/20087/27/20087/21/20077/21/2007 |   |   |
| P.                  Tyle                                                                    | 8,33423,333                                                                                           | 16,66611,667                                                                                                    | 71.845061.3050 | 1/31/20157/19/2014 | 20,0008,000 | 1,041,200416,480 |
| D.                  L. Hahs                                             | 6,66716,66730,00025,00030,00024,000                                                                   | 13,3338,333                                                                                      | 71.845054.260029.845038.345044.825061.9688 | 1/31/20152/2/20142/25/20131/28/20121/29/20117/24/2010 | 10,000     | 520,600     |
| J.                  M. Loughlin                                    | 6,33416,33330,00015,0001,37010,6301,963                                                               | 12,6668,167                                                                                 | 71.845054.260029.845061.968872.968872.968850.9375 | 1/31/20152/2/20142/25/20137/24/20107/27/20097/27/20097/27/2008 |   |   |

| 1 | Vesting                dates for the unvested portion of the option awards are outlined                below: |
|---|---------------------------------------------------------------------------------------------------------------|

|   |     For                the                1/31/2015 option expiration date: 41,666 vest on 1/31/2007 and 41,667                vest                on 1/31/2008 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                2/2/2014 option expiration date: 39,217 vest on                2/2/2007 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                1/31/2015 option expiration date: 10,333 vest on 1/31/2007 and 10,333                vest                on 1/31/2008 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                2/2/2014 option expiration date: 11,667 vest on                2/2/2007 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                1/31/2015 option expiration date: 8,333 vest on 1/31/2007 and 8,333                vest                on 1/31/2008 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                7/19/2014 option expiration date: 11,667 vest on                7/19/2007 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                1/31/2015 option expiration date: 6,666 vest on 1/31/2007 and 6,667                vest                on 1/31/2008 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                2/2/2014 option expiration date: 8,333 vest on                2/2/2007 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

----

|   |     For                the                1/31/2015 option expiration date: 6,333 vest on 1/31/2007 and 6,333                vest                on 2/28/2007, per his separation                agreement |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |     For                the                2/2/2014 option expiration date: 8,167 vest on                2/2/2007 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Vesting                dates for Stock Awards are listed                below: |
|---|--------------------------------------------------------------------------------|

|   |     10,000                vest on 1/31/2010 and 10,000 vest on                1/31/2012 |
|--------|-------------------------------------------------------------------------------------------------------------|

|   |     2,666                vest on 7/19/2007, 2,667 vest on 7/19/2009 and 2,667 vest on                7/19/2011 |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   |     Dr.                Tyle earned dividend equivalents of                $14,560 |
|--------|-------------------------------------------------------------------------------------------------------|

|   |     10,000                vest on 7/26/2010 |
|--------|-----------------------------------------------------------------|

|   |     Mr.                Hahs earned dividend equivalents of                $5,200 |
|--------|------------------------------------------------------------------------------------------------------|

**2006      Option Exercises and Stock Vested **
**1**

|                            |   | Stock                Awards                             |   |
|---------------------------------|--------|---------------------------------------------------------|--------|
|   Name                |   | Number                of Shares Acquired on Vesting (#) |   |  Value                Realized on Vesting ($) |   |
| R.                L. Zarrella 2 |   |                                                    | 65,561 |   | $ | 3,378,686 |   |
| S.                C. McCluski   |   |                                                    |   |   |   |   |   |
| P.                Tyle          |   |                                                    |   |   |   |   |   |
| D.                L. Hahs       |   |                                                    |   |   |   |   |   |
| J.                M. Loughlin   |   |                                                    |   |   |   |   |   |

| 1 | No                named executive officers exercised their stock options in 2006 due                to the                withdrawal of reliance on previously-filed financial statements,                and the                delay in filing our 2005 financial statements, which restricted us                from                issuing equity-based compensation, except for transactions which                could be                exempted under Federal Securities                law. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | At                the time he was employed as Chief Executive Officer, Mr. Zarrella                elected                to defer this award upon vesting. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Pension      Benefits**

***Retirement      Benefits Plan***

----

***Retirement      Benefit Restoration Plan***

***Supplemental      Executive Retirement Plans (SERPs)***

***SERP      II***

*Item      9B. Other Information*

***SERP      III***

----

***General      Information***
** **
*Item      8. Financial Statements and Supplementary Data*
*Note      14 — Employee Benefits*

**2006      Pension Benefits**

|  Name                         |  Plan                Name                                                                                                                                                                                              | Number                of Years Credited Service (#) | Present                Value of Accumulated Benefit ($) | Benefits                Payable at Normal Retirement Age 2                ($) |  Payments                During Last Fiscal Year ($) |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|---------------------------------------------------------|-------------------------------------------------------------------------------|-----------------------------------------------------------|
| R.L.                Zarrella  | Retirement                Benefits PlanSupplemental                Executive    Retirement                Plan II                                                                                            | 15                115                1              | $124,08317,033,899                                      | $141,60022,359,403                                                            | $00                                                       |
| S.C.                McCluski       | Retirement                Benefits PlanRetirement                Benefit    Restoration                Plan Supplemental                Executive    Retirement                Plan III       | 18  18   18      | 189,672325,435 299,314                             | 281,870483,627 444,809                                                   | 00 0                                                 |
| P.                Tyle             | Supplemental                Executive   Retirement                Plan III                                                                                                                                   | 2                                         | 44,758                                                  | 94,591                                                                        | 0                                                         |
| D.L.                Hahs           | Retirement                Benefits PlanRetirement                Benefit    Restoration                Plan Supplemental                 Executive    Retirement                Plan III | 29  29   29      | 377,898227,930 254,059                             | 704,336698,639 377,557                                                   | 00 0                                                 |
| J.M.                Loughlin       | Retirement                Benefits PlanRetirement                Benefit    Restoration                PlanSupplemental                Executive    Retirement                Plan III        | 25  25   25      | 237,850108,462 141,367                             | 404,020296,463 192,381                                                   | 00 0                                                 |

| 1 | Includes                five years of current service plus ten years of prior                service. |
|---|-------------------------------------------------------------------------------------------------------|

| 2 | Lump                sum value at normal retirement age of 63, except for Mr. Zarrella.Mr.                Zarrella’s benefit value is calculated using a retirement age of 60 as set                forth in his employment agreement dated November 9, 2001. Mr. Zarrella’s                employment agreement effective January 1, 2007 allows for higher                benefit                levels should the contract enter into renewal periods. Material terms                of                Mr. Zarrella’s employment agreement are set forth in *Item                9B. Other Information*. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                March 2007, Mr. McCluski announced his intention to retire effective                June                30, 2007. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | In                April 2006, Mr. Loughlin announced his intention to retire which                was                effective February 28, 2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

**Non-Qualified      Deferred Compensation**

----

***Executive      Deferred Compensation Plan***

***The      Restricted Stock Deferred Compensation Plan***
** **

***Distribution      Terms***

----

**2006      Non-Qualified Deferred Compensation**

|     Name |   |  Executive                Contributions in Last Fiscal Year ($) |       |  Registrant                Contributions in Last Fiscal Year ($)                2 |   |   Aggregate                Earnings in Last Fiscal Year ($)3 |   |   Aggregate                Withdrawals/ Distributions ($) |    |  Aggregate                Balance at Last Fiscal Year End ($)4 |   |
|------------------------------|--------|----------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|---------------------------------------------------------------------|--------|
| R.L.                Zarrella |   | $                                                                    | 3,431,5371 |                                                                                   | $      | 88,000                                                                 |   | $                                                                   | 0       |                                                                | $      | 0 |   | $ | 11,046,067 |   |
| S.C.                McCluski |   |                                                                 | 9,760      |                                                                                   |   | 27,328                                                                 |   |                                                                | 0       |                                                                |   | 426,108 |   |   | 1,133,069 |   |
| P.                Tyle       |   |                                                                 | 190,001    |                                                                                   |   | 33,250                                                                 |   |                                                                | 71,799  |                                                                |   | 0 |   |   | 785,777 |   |
| D.L.                Hahs     |   |                                                                 | 33,672     |                                                                                   |   | 38,677                                                                 |   |                                                                | 299,156 |                                                                |   | 94,529 |   |   | 4,044,088 |   |
| J.M.                Loughlin |   |                                                                 | 5,750      |                                                                                   |   | 16,100                                                                 |   |                                                                | 0       |                                                                |   | 75,659 |   |   | 2,102,060 |   |

| 1 | Includes                the value of 65,561 shares of Common stock and associated dividend                equivalents based on the closing stock price of our Common stock                on                December 31, 2006. This award vested on November 9, 2006 and was                granted                to Mr. Zarrella in connection with his hiring as our Chairman and                Chief                Executive Officer. Mr. Zarrella deferred the award until one month                after                retirement. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*All      Other Compensation*
*Summary      Compensation Table*

| 3 | Losses                for Mr. Zarrella totaled $1,610,119Losses                for Mr. McCluski totaled                $185,970Losses                for Mr. Loughlin totaled                $99,385Aggregate                Earnings were not included in the *Summary                Compensation Table*because                the Company does not provide above market                earnings. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | The                chart below lists the amounts reported as compensation in previous                years’                Summary Compensation tables. It is comprised of 401(k) Excess company                matching and base company contributions and deferred Long Term Incentive                awards. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                               |   | 2000   |    | 2001   |   | 2002   |   | 2003   |      | 2004   |   | 2005    |   | Total  |    |
|------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|
| R.L.                Zarrella  |   | $      | 0       |   | $      | 2,538  |   | $      | 6,433,246 |   | $      | 40,500  |   | $      | 115,439 |   | $ | 254,000 |   | $ | 6,845,723 |   |
| S.C.                McCluski       |   |   | 131,343 |   |   | 13,803 |   |   | 69,854    |   |   | 281,294 |   |   | 25,478  |   |   | 0 |   |   | 521,773 |   |
| P.                Tyle             |   |   | 0       |   |   | 0      |   |   | 0         |   |   | 0       |   |   | 0       |   |   | 722,044 |   |   | 722,044 |   |
| D.L.                Hahs           |   |   | 0       |   |   | 0      |   |   | 43,083    |   |   | 143,976 |   |   | 281,843 |   |   | 458,954 |   |   | 927,855 |   |
| J.M.                Loughlin       |   |   | 72,641  |   |   | 2,962  |   |   | 91,348    |   |   | 160,322 |   |   | 0       |   |   | 0 |   |   | 327,273 |   |

**Potential      Payments on Retirement, Termination or Change of Control**

***Retirement***

----

*Pension      Benefits *

| ·   | Long-Term                Incentive Awards: Vested stock options granted under the 2003 Long-Term                Incentive Plan expire three years from the last day of active employment                or the remaining term of the options, whichever is less, if applicable.                Vested options at retirement granted under the 1990 or 2001 Stock                Incentive Plans expire five years (for non-qualified stock options)                or                three months (for incentive stock options) from the last date of                active                employment or the remaining term of the option, whichever is shorter.                Unvested stock options and restricted stock grants cancel on the                last day                of active employment under all three plans, unless otherwise determined                by                the Compensation Committee. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Long-Term                Equity Equivalent Accumulation Plan (LEAP): Equity equivalent units                vest                partially in 20 percent increments depending on the number of years                completed during the five-year vesting period. LEAP is further described                in the Compensation Discussion and Analysis, *Additional                Benefits*                section. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Retirement      **
**1**

|                                        |   | R.L.                Zarrella |   | S.C.                McCluski |   | P.                Tyle |   | D.L.                Hahs |   | J.M.                Loughlin |   |
|---------------------------------------------|--------|------------------------------|--------|------------------------------|--------|------------------------|--------|--------------------------|--------|------------------------------|--------|
| Perquisites                & Benefits 2 |   | $                            | 0      |                         | $      | 0                      |   | $                        | 0      |                         | $      | 12,828 |   | $ | 10,595 |   |
| **Total**                                   |   | **$**                        | **0**  |                         | **$**  | **0**                  |   | **$**                    | **0**  |                         | **$**  | **12,828** |   | **$** | **10,595** |   |

| 1 | See                the *Pension                Benefits*                and *Non-Qualified                Deferred Compensation*tables                for balances available to each named executive                officer. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Lump                sum value of the vested portion of LEAP. Mr. Zarrella is not a participant                in LEAP. Mr. McCluski and Dr. Tyle were not retirement eligible as                of                December 31, 2006. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Change      of Control***

----

| ·   | ***Equity                Compensation***                Under our long-term incentive plans, awards such as outstanding stock                options, stock appreciation rights (SARs) and restricted stock/unit                awards                fully vest upon a change of control. Accelerated vesting of equity                awards                is consistent with the alignment of the named executive officers’                interests with the shareholders’ interests. Performance shares vest at                target levels specified in the award agreement. Options granted under                the                1990 and 2001 stock incentive plans and the 2003 Long-Term Incentive                Plan                (at the discretion of the Compensation Committee) may be surrendered                for                cash payment during the 60 days after a change of control. If                the named executive officer elects to surrender options, he/she is                entitled to receive in cash, an amount equal to the highest price                per                share paid in the change of control transaction minus the exercise                price                of the option multiplied by the number of                options. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***SERP***                Vested and unvested SERP benefits are due and payable to the executive                within 15 days of a change of                control. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***The                Retirement Benefit Restoration Plan and Deferred Compensation                Account***                Vested benefits are due and payable within 15 days of a change of                control. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***LEAP***                All amounts earned under the plan, both vested and unvested, are                due and                payable to the executive within 15 days of a change of                control. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lump                sum payments within 30 days of the termination date                including: |
|--------------------|---------------------------------------------------------------------------------------------------|

| o   | Accrued                obligations defined as (i) unpaid base salary through the termination                date, (ii) a pro-rated bonus payment based on the greater of the                prior                year’s bonus or the average bonus paid over the last three years, (iii)                unused vacation pay, and (iv) unpaid, vested deferred compensation                account                balances. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | A                severance amount equal to three times base salary and three times                the                greater of the prior year’s bonus or the highest bonus paid over the last                three years. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | A                supplemental retirement amount equal to an additional three-year                accrual                in each retirement plan. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | A                payout of any unpaid SERP benefits. |
|---------------|------------------------------------------------------|

| o   | A                cash award, for each unpaid long-term performance cycle ending during                the                three-year period covered by the change of control agreement. Currently,                there are no outstanding long-term performance awards with a cycle                ending                during the three-year period covered by the change of control                agreement. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Welfare                and other benefits including perquisites (described in more detail                in the                *Additional                Benefits*                section of the Compensation Discussion and Analysis), for three                years. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exercise                options granted under the 2003 Long-Term Incentive Plan for up to                two                years after the termination. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A                lump sum payment within 30 days of the termination date                including: |
|--------------------|----------------------------------------------------------------------------------------------------|

| o   | Any                unpaid base salary through the termination date,                and |
|---------------|----------------------------------------------------------------------------------------|

| o   | any                unpaid, vested deferred compensation account                balances. |
|---------------|------------------------------------------------------------------------------------------|

| ·   | A                lump sum payment within 30 days of the termination date                including: |
|--------------------|----------------------------------------------------------------------------------------------------|

| o   | Any                unpaid base salary through the termination                date, |
|---------------|------------------------------------------------------------------------------------|

| o   | a                pro-rated bonus payment based on the greater of the prior year’s bonus or                the average bonus paid over the last three                years, |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | any                unused vacation pay, and |
|---------------|---------------------------------------------|

| o   | any                unpaid, vested deferred compensation account                balances. |
|---------------|------------------------------------------------------------------------------------------|

| ·   | A                payout of any unpaid SERP benefits. |
|--------------------|------------------------------------------------------|

| ·   | A                payout of other applicable                benefits. |
|--------------------|----------------------------------------------------------------------|

**Change      of Control**

|                                                                |   | R.L.                Zarrella |           | S.C.                McCluski |   | P.                Tyle |   | D.L.                Hahs |          | J.M.                Loughlin |   |
|---------------------------------------------------------------------|--------|------------------------------|----------------|------------------------------|--------|------------------------|--------|--------------------------|---------------|------------------------------|--------|
| Severance                1                                          |   | $                            | 8,250,000      |                         | $      | 2,885,121              |   | $                        | 2,772,807     |                         | $      | 2,912,235 |   | $ | 2,192,418 |   |
| Bonus                2                                              |   |                         | 1,092,667      |                         |   | 295,502                |   |                     | 404,634       |                         |   | 386,715 |   |   | 212,269 |   |
| Stock                Options 3                                      |   |                         | 0              |                         |   | 0                      |   |                     | 0             |                         |   | 0 |   |   | 0 |   |
| Restricted                Stock 4                                   |   |                         | NA             |                         |   | NA                     |   |                     | 1,457,680     |                         |   | 520,600 |   |   | NA |   |
| Supplemental                Retirement Amount                5 |   |                         | 647,725        |                         |   | 114,968                |   |                     | 6,319         |                         |   | 121,386 |   |   | 68,844 |   |
| Perquisites                & Benefits 6                         |   |                         | 492,777        |                         |   | 430,489                |   |                     | 457,046       |                         |   | 488,040 |   |   | 368,029 |   |
| Excise                Tax Gross-Up 7                                |   |                         | 0              |                         |   | 1,303,445              |   |                     | 2,123,002     |                         |   | 1,886,976 |   |   | 949,065 |   |
| **Total**                                                           |   | **$**                        | **10,483,168** |                         | **$**  | **5,029,526**          |   | **$**                    | **7,221,487** |                         | **$**  | **6,315,952** |   | **$** | **3,790,625** |   |

| 1 | Three                times base salary and the greater of the prior year’s bonus or the highest                bonus paid in the last three years prior to the change of                control. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Assumes                a change of control date of December 31, 2006. This value represents                the                higher of average bonus over the last three years or the bonus earned                in                2005. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Intrinsic                value of unvested options at a stock price of $52.06 on December                29,                2006. |
|---|-----------------------------------------------------------------------------------------------------------------------------------|

| 4 | Messrs.                Zarrella, McCluski, and Loughlin do not have any unvested restricted                stock. |
|---|-------------------------------------------------------------------------------------------------------------------|

| 5 | This                includes the Supplemental Retirement Amount (the accrual of all retirement                plans which the executive would have received if the employment                continued for three years). See the *Pension                Benefits*                and *Non-Qualified                Deferred Compensation*tables                for balances available to each named executive                officer. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | The                cost of providing welfare benefits and perquisites, based on current                costs                for three years and the payout of LEAP benefits. Perquisites are                described                in more detail in the *Additional                Benefits*                section of the Compensation Discussion and Analysis. Mr. Zarrella                is not                eligible for LEAP. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Payment                of excise tax gross-up if the tax is required under Section 4999                of the                Internal Revenue Code. Assumes a 40 percent individual income tax                rate. As                of December 31, 2006, Mr. Zarrella was not expected to exceed the                limits                under Section 280G, therefore no excise tax gross-up is required.                If he                did exceed the limits we would provide the excise tax                gross-up. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Involuntary        Termination for Cause***
** **

| ·   | ***Long-Term                Incentive Plan***** **For                any awards under the 2003 Long-Term Incentive Plan, all vested and                unvested stock options and unvested restricted stock grants are                immediately forfeited. For stock options granted under the 1990 Stock                Incentive Plan, executives have three months from the last day of                active                employment to exercise options. There are no unvested restricted                stock                awards under the 1990 Stock Incentive                Plan. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | ***LEAP***                All unvested benefits are immediately                forfeited. |
|--------------------|-------------------------------------------------------------------------------------------|
| ·   | ***Retirement                and Deferred Compensation***** **All                unvested benefits are immediately                forfeited. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

*Pension      Benefits*
*Non-Qualified      Deferred Compensation *

***Involuntary      Termination without Cause***

| ·   | ***Separation                Pay (Base and Bonus)***                One year’s base pay, plus a prorated bonus for the time worked, provided                at least six months of service were                completed. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Long-Term                Incentive Program***                Unvested stock options and restricted stock grants cancel on the                last day                of active employment, unless otherwise determined by the Compensation                Committee. To the extent they are vested at termination, stock options                granted under the 2003 Long-Term Incentive Plan expire 90 days from                the                last day of active employment or the remaining term of the options,                whichever is less. Vested non-qualified stock options and incentive                stock                options granted under the 1990 Stock Incentive Plan or non-qualified                stock                options granted under the 2001 Stock Incentive Plan expire three                months                from the date of termination or the remaining term of the option,                whichever is less. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Outplacement                Services***                The Company covers the fees and costs of outplacement services for                one                year up to a maximum of 15 percent of the preceding year’s base pay and                bonus. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***LEAP***                Only vested benefits under the plan are                paid. |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | ***Perquisites***                Perquisites continue through the period in which the executive receives                severance pay including use of the Company car, club membership dues                and                financial counseling. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Item      9B. Other Information*

| ·   | ***Separation                Pay (Base and Bonus)***                Base salary paid, in a lump sum, through the end of the current term                of                his employment agreement. A bonus payout equal to a prorated portion                of                the highest bonus paid during the employment                period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Long-Term                Incentive Program***                Benefits match those outlined above for other named executive                officers. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***SERP                II***                Mr. Zarrella will vest in the SERP II benefit level attained at the                end of                the employment period. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Health                Benefits, Life Insurance and Perquisites***                Continue through the end of the employment                period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Retirement and Deferred                Compensation***** **Provide                vested benefits under the plans. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

----

**Involuntary      Termination without Cause or For Good Reason**

|                                            |   | R.L.                Zarrella |      | S.C.                McCluski |   | P.                Tyle |   | D.L.                Hahs |      | J.M.                Loughlin |   |
|-------------------------------------------------|--------|------------------------------|-----------|------------------------------|--------|------------------------|--------|--------------------------|-----------|------------------------------|--------|
| Severance                1                      |   | $                            | 1,100,000 |                         | $      | 415,200                |   | $                        | 410,001   |                         | $      | 405,600 |   | $ | 335,000 |   |
| Bonus                2                          |   |                         | 3,300,000 |                         |   | 311,400                |   |                     | 307,501   |                         |   | 304,200 |   |   | 251,250 |   |
| Stock                Options 3                  |   |                         | N/A       |                         |   | N/A                    |   |                     | -         |                         |   | N/A |   |   | N/A |   |
| Restricted                Stock 4               |   |                         | N/A       |                         |   | N/A                    |   |                     | 416,480   |                         |   | N/A |   |   | N/A |   |
| Supplemental                Retirement Amount 5 |   |                         | 551,900   |                         |   | N/A                    |   |                     | N/A       |                         |   | N/A |   |   | N/A |   |
| Perquisites                & Benefits 6     |   |                         | 174,259   |                         |   | 65,953                 |   |                     | 75,902    |                         |   | 87,161 |   |   | 62,043 |   |
| Total                                           |   | $                            | 5,126,159 |                         | $      | 792,553                |   | $                        | 1,209,884 |                         | $      | 796,961 |   | $ | 648,293 |   |

| 1 | One                year’s base salary for all named executive                officers. |
|---|----------------------------------------------------------------------------------------------|

| 2 | Assumes                involuntary termination occurred on December 31, 2006. Assumes Mr.                Zarrella’s employment period ends on December 29, 2007 as provided under                the renewal of his 2001 employment                agreement. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Dr.                Tyle’s employment arrangement provides for the full vesting of the options                granted upon his hire on July 19, 2004 if he is involuntarily terminated                prior to July 19, 2007. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Dr.                Tyle’s employment arrangement provides for the full vesting of his                restricted stock award if he is involuntarily terminated prior to                July 19,                2007. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Mr.                Zarrella is eligible to receive his SERP II accrual through the end                of the                employment period (i.e. December 29, 2007), in accordance with his                2001                employment agreement. See the *Pension                Benefits*                and *Non-Qualified                Deferred Compensation*                tables for balances available to each named executive                officer. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | The                value of welfare benefits and perquisites continuation for the remaining                contract term, assuming December 29, 2007, for Mr. Zarrella. Similarly,                for the other named executive officers, the value represents perquisites                and welfare benefits continuation for one                year. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Voluntary      Termination***

*Involuntary      Termination Without Cause*

----

***Death      & Disability***
** **

| ·   | ***Long-Term                Incentive Program***                Unvested stock options under the 1990 and 2001 stock incentive plans                and                the 2003 Long-Term Incentive Plan fully vest effective on the date                of                death or disability. Unvested restricted stock grants under the 2003                Long-Term Incentive Plan fully vest upon death or disability. Incentive                stock options granted under the 1990 stock incentive plan and                non-qualified options granted under the 2003 Long-Term Incentive                Plan                expire one year from the date of death or disability or, for the                1990                plan, the remaining term of the options, whichever is less. Non-qualified                stock options granted under the 1990 and 2001 stock incentive plans                expire                five years from the date of death or disability or the remaining                option                term, whichever is less. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Long-Term                Equity Equivalent Accumulation Plan (LEAP)***                All amounts earned under the Plan, both vested and unvested, are                due and                payable to the executive or the executive’s designated                beneficiary. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Separation                Pay (Base and Bonus)***                Base salary paid through the date of death or disability, as well                as a                pro-rated bonus payout equal to the highest bonus paid during the                employment period, paid through the date of death or                disability. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ***Benefits and                Perquisites***                Payment for the value of benefits and perquisites through the end                of the                employment period. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Death      & Disability**
**      1**

|                                        |   | R.L.                Zarrella |        | S.C.                McCluski |   | P.                Tyle |   | D.L.                Hahs |          | J.M.                Loughlin |   |
|---------------------------------------------|--------|------------------------------|-------------|------------------------------|--------|------------------------|--------|--------------------------|---------------|------------------------------|--------|
| Perquisites                & Benefits 2 |   | $                            | 164,259     |                         | $      | 65,657                 |   | $                        | 64,835        |                         | $      | 64,139 |   | $ | 52,975 |   |
| Stock                Options 3              |   |                         | 0           |                         |   | 0                      |   |                     | 0             |                         |   | 0 |   |   | 0 |   |
| Restricted                Stock 4           |   |                         | 0           |                         |   | 0                      |   |                     | 1,457,680     |                         |   | 520,600 |   |   | 0 |   |
| **Total**                                   |   | **$**                        | **164,259** |                         | **$**  | **65,657**             |   | **$**                    | **1,522,515** |                         | **$**  | **584,739** |   | **$** | **52,975** |   |

| 1 | Assumes                death or disability occurs on December 31,                2006. |
|---|----------------------------------------------------------------------------------------|

| 2 | Mr.                Zarrella’s amount is the cost of his benefits and perquisites for the                remainder of his employment period. For other named executive officers,                the amount reflects the value of their LEAP                balance. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Intrinsic                value of unvested options at a stock price of $52.06 on December                29,                2006. |
|---|-----------------------------------------------------------------------------------------------------------------------------------|

**Directors’      Compensation Summary**

**Annual      Retainer and Fees **

| Position                                                        |   | Fee                Paid |   |
|-----------------------------------------------------------------|--------|-------------------------|--------|
| Chair                of the Audit Committee                     |   | $                       | 10,000 |   |
| Member                of the Audit Committee                    |   |                    | 5,000  |   |
| Chair                of the Compensation Committee              |   |                    | 7,500  |   |
| Chair                of the Nominating and Governance Committee |   |                    | 7,500  |   |
| Lead                Director                                    |   |                    | 25,000 |   |

----

**Stock      Ownership Guidelines **

**Director      Deferred Compensation Plan **

**Director      Stock Options **

**Deferred      Stock Equivalent Program **

**Other      Benefits **

----

**Board      of Directors’ Compensation**

**2006      Board of Director's Compensation**

|       Name        |   | Fees                Earned or Paid in Cash ($) |   |   Stock                Awards ($) |   |     Option                Awards ($) 10 |   |    Non-Equity                Incentive Plan Compensation ($) |   | Change                in Pension Value and Non-qualified Deferred Compensation Earnings                ($) |   |     All                Other Compensation ($) |   |       Total                ($) |   |
|-------------------------------------------------|--------|------------------------------------------------|--------|---------------------------------------------|--------|-------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
| A.                M. Bennett                1   |   | $                                              | 6,500  |                                        |   |                                                             |   | $                                                                           | 24,390 |                                                                                                       |   |                                                                   |   | $                                                            | 0      |   |   |  |   | $ | 30,890 |   |
| D.                De Sole                2      |   |                                           | 5,000  |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 29,390 |   |
| P.                A. Friedman                3  |   |                                           | 26,000 |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 50,390 |   |
| J.                S. Linen                4     |   |                                           | 7,500  |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 3,688  |   |   |  |   |   | 35,578 |   |
| R.                R. McMullin                5  |   |                                           | 52,000 |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 91,543 |   |   |  |   |   | 167,933 |   |
| L.                Johnson Rice                6 |   |                                           | 39,000 |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 63,390 |   |
| W.                H. Waltrip                7   |   |                                           | 84,500 |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 108,890 |   |
| B.                W. Wilson                8    |   |                                           | 0      |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 24,390 |   |
| K.                L. Wolfe                9     |   |                                           | 62,000 |                                        |   |                                                             |   |                                                                        | 24,390 |                                                                                                       |   |                                                                   |   |                                                         | 0      |   |   |  |   |   | 86,390 |   |

**Note:**

| 1 | Mr.                Bennett has not met director stock ownership guidelines and, therefore,                receives his annual retainer 50 percent in cash and 50 percent in                stock.                He elected to defer his cash compensation. Due to the restriction                on                awarding Company stock, Mr. Bennett received no compensation in 2006.                A                non-qualified deferred compensation loss of $40,956 was                incurred. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Mr.                De Sole has met director stock ownership guidelines and elected to                receive                his annual retainer in stock. Due to the restriction on awarding                Company                stock, Mr. De Sole received no annual retainer compensation in 2006.                The                cash amount of $5,000 reflects his fee as a member of the Audit Committee.                A non-qualified deferred compensation loss of $107,109 was                incurred. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Dr.                Friedman has not met director stock ownership guidelines and, therefore,                receives his annual retainer 50 percent in cash and 50 percent in                stock.                He received $26,000 cash compensation in 2006. Due to the restriction                on                awarding Company stock, Dr. Friedman did not receive the remaining                $26,000                of his annual retainer. A non-qualified deferred compensation loss                of                $24,708 was incurred. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Mr.                Linen has met director stock ownership guidelines and elected to                receive                his annual retainer in stock. Due to the restriction on awarding                Company                stock, Mr. Linen received no annual retainer compensation in 2006.                The                cash amount of $7,500 reflects his fee as Chair of the Compensation                Committee. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Mrs.                McMullin has met director stock ownership guidelines and elected                to                receive her annual retainer in cash in the amount of                $52,000. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 6 | Mrs.                Rice has met director stock ownership guidelines and elected to receive                her annual retainer 75 percent in cash and 25 percent in stock. She                received $39,000 in cash compensation. Due to the restriction on                awarding                Company stock, Mrs. Rice did not receive the remaining $13,000 of                her                annual retainer. A non-qualified deferred compensation loss of $75,897                was                incurred. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Mr.                Waltrip has met director stock ownership guidelines and elected to                receive                his annual retainer in cash. He also received his annual retainer                as Lead                Director in the amount of $25,000 and annual fee as Chair of the                Nominating and Governance Committee in the amount of $7,500 in cash.                A                non-qualified deferred compensation loss of $23,310 was                incurred. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | Mr.                Wilson has met director stock ownership guidelines and elected to                receive                his annual retainer in stock. Due to the restriction on awarding                Company                stock, Mr. Wilson received no compensation in 2006. A non-qualified                deferred compensation loss of $62,800 was                incurred. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | Mr.                Wolfe has met director stock ownership guidelines and elected to                receive                his annual retainer in cash in the amount of $52,000. He also received                his                annual fee as Chair of the Audit Committee in cash in the amount                of                $10,000. A non-qualified deferred compensation loss of $23,310 was                incurred. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 | This                column represents the dollar amount recognized for financial statement                reporting purposes with respect to the 2006 fiscal year for the fair                value                of stock options previously granted to directors. The fair value                was                estimated using the Black-Scholes option-pricing model in accordance                with                SFAS No. 123(R). The Black-Scholes fair value per option was $23.02,                based                on the following assumptions: exercise price and grant date market                price                of $83.55; 5.0 years expected life, expected volatility of 26.032                percent,                expected dividend yield of 1.054 percent, and a risk free rate of                4.140                percent. The following directors have outstanding option awards at                2006                fiscal year end: Mr. Bennett (4,882), Mr. De Sole (22,917), Dr. Friedman                (1,956), Mr. Linen (22,917), Mrs. McMullin (22,917), Mrs. Rice (19,151),                Mr. Waltrip (40,890), Mr. Wilson (8,970), and Mr. Wolfe                (20,750). |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Compensation      Committee Interlocks and Insider Participation **

**Item      12.**
**Security      Ownership of Certain Beneficial Owners and Management and Related Stockholder      Matters**

**Equity      Compensation Plan Information**

*Equity Compensation Plan Information*
*Item      5. Market for Bausch & Lomb Incorporated’s Common Stock, Related Shareholder      Matters and Issuer Purchases of Equity Securities.*

**Beneficial      Owners of More than 5% of the Company's Common Stock**

|    Name                and Address of Beneficial Owners                                                             |   |  Number                of Shares and Nature of Beneficial Ownership |                       | Percent                of Outstanding Common Stock |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|----------------------------|----------------------------------------------------|--------|
| **Franklin                Mutual Advisers, LLC**101                John F. Kennedy ParkwayShort                Hills, NJ 07078     |   |                                                                     | 4,372,960                1 |                                               |   | 8.2 | % |
| **Lord,                Abbett & Co., LLC**90                Hudson StreetJersey                City, NJ 07302                  |   |                                                                     | 3,141,779                2 |                                               |   | 5.8 | % |
| **Capital                Research and Management Company**333                South Hope StreetLos                Angeles, CA 90071 |   |                                                                     | 3,133,900                3 |                                               |   | 5.8 | % |

| 1 | Shares                are as of December 29, 2006 and include 4,372,960 shares with respect                to                which there is sole power to vote and 4,372,960 with respect to which                there is sole power of disposition. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Shares                are as of December 29, 2006 and include 3,037,779 shares with respect                to                which there is sole power to vote and 3,141,779 shares with respect                to                which there is sole power of                disposition. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Shares                are as of December 29, 2006 and include 3,133,900 shares with respect                to                which there is sole power to vote and 3,133,900 shares with respect                to                which there is sole power of                disposition. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Security      Ownership of Directors and Named Executive Officers **

|      Name                of Beneficial Owner                         |   |     Shares                Owned |                    | Right                to Acquire Beneficial Ownership Under Options Exercisable Within                60                Days |   |     %                of Class                1 |   |    Deferred                Shares/ Units 2 |   |
|-----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------------------|-----------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
| Alan                M. Bennett                                                                |   |                                                | 500                     |                                                                                                                        |   | 4,882                                                              |   |                                                      | 0%*    |   |   | 2,673 |   |
| Domenico                De Sole                                                               |   |                                                | 0                       |                                                                                                                        |   | 22,917                                                             |   |                                                      | 0%*    |   |   | 7,059 |   |
| Paul                A. Friedman                                                               |   |                                                | 1,510                   |                                                                                                                        |   | 1,956                                                              |   |                                                      | 0%*    |   |   | 1,629 |   |
| Dwain                L. Hahs                                                                  |   |                                                | 47,157                3 |                                                                                                                        |   | 147,333                                                            |   |                                                      | 0%*    |   |   | 14,450                8 |   |
| Jonathan                S. Linen                                                              |   |                                                | 17,530                  |                                                                                                                        |   | 22,917                                                             |   |                                                      | 0%*    |   |   | 1,536 |   |
| John                Loughlin                                                                  |   |                                                | 15,051                4 |                                                                                                                        |   | 102,463                                                            |   |                                                      | 0%*    |   |   | 16,419                9 |   |
| Stephen                C. McCluski                                                            |   |                                                | 25,542                5 |                                                                                                                        |   | 295,487                                                            |   |                                                      | 0%*    |   |   | 15,242                10 |   |
| Ruth                R. McMullin                                                               |   |                                                | 11,009                  |                                                                                                                        |   | 22,917                                                             |   |                                                      | 0%*    |   |   | 1,536 |   |
| Linda                Johnson Rice                                                             |   |                                                | 6,713                   |                                                                                                                        |   | 19,151                                                             |   |                                                      | 0%*    |   |   | 5,002 |   |
| Praveen                Tyle                                                                   |   |                                                | 28,787                6 |                                                                                                                        |   | 40,000                                                             |   |                                                      | 0%*    |   |   | 15,163                11 |   |
| William                H. Waltrip                                                             |   |                                                | 5,367                   |                                                                                                                        |   | 40,890                                                             |   |                                                      | 0%*    |   |   | 1,536 |   |
| Barry                W. Wilson                                                                |   |                                                | 5,771                   |                                                                                                                        |   | 8,970                                                              |   |                                                      | 0%*    |   |   | 4,161 |   |
| Kenneth                L. Wolfe                                                               |   |                                                | 7,117                   |                                                                                                                        |   | 20,750                                                             |   |                                                      | 0%*    |   |   | 1,536 |   |
| Ronald                L. Zarrella                                                             |   |                                                | 28,179                7 |                                                                                                                        |   | 1,140,983                                                          |   |                                                      | 0%*    |   |   | 190,794 |   |
| All                directors and executive officers as a group (27    persons) |   |                                                | 453,201                 |                                                                                                                        |   | 2,780,514                                                          |   |                                                      | 1      | % |   | 377,522 |   |

| 1 | Except                for Class B stock, which is transferable only in accordance with                the terms                of the Company's stock incentive plan under which it was acquired,                and                except as otherwise indicated, sole voting and investment power exists                with respect to all shares listed as beneficially owned. No individual                named above beneficially owns more than one percent of the                Company's outstanding voting stock and the shares beneficially owned                by                all directors and executive officers as a group constitute one percent                of                the Company's outstanding voting                stock. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Includes                common stock equivalent units held under deferred compensation plans                and                the Long-Term Equity Equivalent Accumulation                Plan. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Includes                1,770 shares, which may be acquired under the 401(k) plan and 10,000                shares of restricted stock subject to satisfaction of certain vesting                conditions. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Includes                4,676 shares which may be acquired under the 401(k)                plan. |
|---|--------------------------------------------------------------------------------------------------|

| 5 | Includes                3,352 shares which may be acquired under the 401(k)                plan. |
|---|--------------------------------------------------------------------------------------------------|

| 6 | Includes                450 shares which may be acquired under the 401(k) plan and 28,000                shares                of restricted stock subject to satisfaction of certain vesting                conditions. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Includes                1,650 shares which may be acquired under the 401(k)                plan. |
|---|--------------------------------------------------------------------------------------------------|

| 8 | Includes                1,226 units under the Long-Term Equity Equivalent Accumulation Plan                subject to satisfaction of certain vesting                conditions. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | Includes                203 units under the Long-Term Equity Equivalent Accumulation Plan                which                are fully vested. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

| 10 | Includes                1,387 units under the Long-Term Equity Equivalent Accumulation Plan                subject to satisfaction of certain vesting                conditions. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11 | Includes                1,370 units under the Long-Term Equity Equivalent Accumulation Plan                subject to satisfaction of certain vesting                conditions. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      13.**
**Certain      Relationships and Related Transactions**

**Related      Transactions **

*Item      9B. Other Information*

| ·   | Financial                counseling; |
|--------------------|--------------------------------------|

| ·   | outplacement                services; |
|--------------------|---------------------------------------|

| ·   | club                membership; and |
|--------------------|-------------------------------------|

| ·   | automobile                lease. |
|--------------------|----------------------------------|

**Board      Independence**
** **

**Item      14.**
**Principal      Accounting Fees and Services**

**Audit      Committee Policy on Pre-Approval of Services of Independent      Accountants**
** **
provided      for up to one year and any pre-approval is detailed as to the particular service      or category of services and is generally subject to a specific budget. The      independent accountants and management are required to periodically report      to      the Audit Committee regarding the extent of services provided by the independent      accountants in accordance with this pre-approval and the fees for the services      performed to date. The Audit Committee may also pre-approve particular services      on a case-by-case basis.

**Audit      Fees **

**Audit-Related      Fees **

**Tax      Fees **

**All      Other Fees **

----

**Part      IV**

**Item      15.**
**Exhibits,      Financial Statement Schedules**

| **(a)**                                                                                                                                                                                                                                                                                                                                                       | **Index                to Financial Statements and Financial Statement Schedules Covered                by                Reports of Independent Auditors.** | **Page**                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                          | **1.**                                                                                                                                                       | **Financial                statements filed herewith:**                                                                            |   |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |  Report                of Independent Registered Public Accounting Firm                                                       |  150 |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |  Balance                Sheets at December 30, 2006 and December 31, 2005                                                     |  61 |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |  For                the years ended December 30, 2006, December 31, 2005 and December                25,                2004: |   |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |       Statements                of Income                                                            |  60 |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |       Statements                of Cash Flows                                                        |  62 |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |       Statements                of Changes in Shareholders' Equity                                   |  63 |
|                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                         |       Notes                to Financial Statements                                                   |  65 |
|  All                schedules have been omitted because the required information is not                present or not present in amounts sufficient to require submission                of the                schedule, or because the information required is included in the                financial                statements or the notes thereto. |

| **(b)** |  **Item                601 Exhibits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |  Those                exhibits required to be filed by Item 601 of Regulation S-K are listed                in                the Exhibit Index immediately preceding the exhibits filed herewith                and                such listing is incorporated herein by reference. Each of Exhibits                (10)-a                through (10)-w, (10)-hh through (10)-kk, (10)-oo, (10)-rr, (10)-ss,                (10)-vv and (10)-ww is a management contract or compensatory plan                or                arrangement required to be filed as an exhibit to this Form pursuant to                Item 15(c) of this Annual Report on Form 10-K. |   |

----

**Signatures**

**Principal      Executive Officer**

**Principal      Financial Officer**

**Controller**

**Directors**

----

**Report        of Independent Registered Public Accounting Firm**

** **

**Consolidated        Financial Statements**

*Note        1 — Significant Accounting Policies *
*Note        15 — Employee Stock Plans*

*Note        1 -— Significant Accounting Policies *
*Note        14 -— Employee Benefits *

*Note        14 -— Employee Benefits*
*Accounting        and Disclosure Requirements Related to the Medicare Prescription Drug,        Improvement and Modernization Act of 2003*

**Internal        Control Over Financial Reporting**
*Controls        and Procedures*
*Internal        Control - Integrated Framework*

----

----

*Internal        Control - Integrated Framework*
*Internal        Control - Integrated Framework*
*.*

----

**Exhibit      Index**

| **S-K                Item****601                No.** | **Document**                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (3)-a                                                 | Restated                Certificate of Incorporation of Bausch & Lomb Incorporated (filed as                Exhibit (3)-a to the Company's Form 10-K for the fiscal year ended                December 31, 2005, File No. 1-4105, and incorporated herein by                reference).                                                                                                          |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (3)-b                                                 | Amended                and Restated By-Laws of Bausch & Lomb Incorporated, effective April                26, 2005 (filed as Exhibit (3)-e to the Company's Form 10-Q for the                quarter ended June 25, 2005, File No. 1-4105, and incorporated herein                by                reference).                                                                                  |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-a                                                 | See                Exhibit (3)-a.                                                                                                                                                                                                                                                                                                                                                                    |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-b                                                 | Form                of Indenture, dated as of September 1, 1991, between the Company                and                Citibank, N.A., as Trustee, with respect to the Company's Medium-Term                Notes (filed as Exhibit (4)-a to the Company's Registration Statement                on                Form S-3, File No. 33-42858 and incorporated herein by                reference). |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-c                                                 | Supplemental                Indenture No. 1, dated May 13, 1998, between the Company and Citibank,                N.A. (filed as Exhibit 3.1 to the Company's Current Report on Form                8-K,                dated July 24, 1998, File No. 1-4105 and incorporated herein by                reference).                                                                                   |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-d                                                 | Supplemental                Indenture No. 2, dated as of July 29, 1998, between the Company and                Citibank, N.A. (filed as Exhibit 3.2 to the Company's Current Report                on                Form 8-K, dated July 24, 1998, File No. 1-4105 and incorporated herein                by                reference).                                                             |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-e                                                 | Supplemental                Indenture No. 3, dated November 21, 2002, between the Company and                Citibank, N.A. (filed as Exhibit 4.8 to the Company's Current Report                on                Form 8-K, dated November 18, 2002, File No. 1-4105 and incorporated                herein                by reference).                                                           |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-f                                                 | Supplemental                Indenture No. 4, dated August 1, 2003, between the Company and Citibank,                N.A. (filed as Exhibit 4.1 to the Company's Current Report on Form                8-K,                dated August 6, 2003, File No. 1-4105 and incorporated herein by                reference).                                                                                |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-g                                                 | Fifth                Supplemental Indenture, dated August 4, 2003, between the Company                and                Citibank, N.A. (filed as Exhibit 4.2 to the Company's Current Report                on                Form 8-K, filed August 6, 2003, File No. 1-4105, and incorporated                herein                by reference).                                                 |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-h                                                 | Sixth                Supplemental Indenture, dated December 20, 2004, between the Company                and                Citibank, N.A. (filed as Exhibit (4)-j to the Company's Annual Report                on                Form 10-K for the fiscal year ended December 25, 2004, File No. 1-4105                and                incorporated herein by reference).                       |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-i                                                 | Supplemental                Indenture No. 7, dated as of June 6, 2006 (filed as Exhibit (4) to                the                Company's Current Report on Form 8-K, filed June 12, 2006 and incorporated                herein by reference).                                                                                                                                                     |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-j                                                 | Supplemental                Indenture No. 8, dated as of November 8, 2006 (filed as Exhibit (4)-j                to                the Company's Annual Report on Form 10-K for the fiscal year ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                        |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-k                                                 | Amended                and Restated Supplemental Indenture No. 8, effective as of November                8,                2006 (filed as Exhibit (4)-k to the Company's Annual Report on Form                10-K                for the fiscal year ended December 31, 2005, File No. 1-4105 and                incorporated herein by reference).                                                |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |
| (4)-l                                                 | Supplemental                Indenture No. 9, effective as of January 31, 2007 (filed                herewith).                                                                                                                                                                                                                                                                                       |
|                                                  |                                                                                                                                                                                                                                                                                                                                                                                                 |

----

| (10)-a | Change                of Control Employment Agreement with certain executive officers of                the                Company (filed as Exhibit (10)-a to the Company's Annual Report on                Form                10-K for the fiscal year ended December 29, 1990, File No. 1-4105                and                incorporated herein by reference).                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-b | Change                of Control Employment Agreement with certain executive officers of                the                Company (filed as Exhibit (10)-b to the Company's Annual Report on                Form                10-K for the fiscal year ended December 28, 1996, File No. 1-4105                and                incorporated herein by reference).                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-c | Amended                and Restated Supplemental Retirement Income Plan II (filed as Exhibit                (10)-f to the Company's Annual Report on Form 10-K for the fiscal                year                ended December 29, 1990, File No. 1-4105 and incorporated herein                by                reference).                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-d | Amended                and Restated Supplemental Retirement Income Plan III, dated December                31,                2000 filed as Exhibit (10)-d to the Company's Annual Report on Form                10-K                for the fiscal year ended December 30, 2000, File No. 1-4105 and                incorporated herein by reference).                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-e | Annual                Retainer Stock Plan for Non-Employee Directors (filed as Exhibit                (10)-dd                to the Company's Annual Report on Form 10-K for the fiscal year ended                December 28, 1996, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-f | Management                Incentive Compensation Plan (filed as Exhibit (10)-b to the Company's                Form                10-Q for the quarter ended June 27, 1998, File No. 1-4105 and incorporated                herein by reference).                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-g | Employment                Agreement dated November 9, 2001 between Bausch & Lomb Incorporated                and Ronald L. Zarrella, Chairman and Chief Executive Officer (filed                as                Exhibit (10)-z to the Company's Annual Report on Form 10-K for the                fiscal                year ended December 29, 2001, File No. 1-4105 and incorporated herein                by                reference).       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-h | Amended                and Restated 1990 Stock Incentive Plan (filed as Exhibit (10)-s to                the                Company's Annual Report on Form 10-K for the year ended December                28, 2002,                File No. 1-4105 and incorporated herein by reference).                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-i | Amendment                No. 6 to the Bausch & Lomb Incorporated 1990 Stock Incentive Plan                (filed as Exhibit (10)-t to the Company's Annual Report on Form 10-K                for                the year ended December 28, 2002, File No. 1-4105 and incorporated                herein                by reference).                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-j | Corporate                Officer Separation Plan (filed as Exhibit (10)-v to the Company's                Annual                Report on Form 10-K for the year ended December 28, 2002, File No.                1-4105                and incorporated herein by reference).                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-k | Amended                and Restated 2001 Stock Incentive Plan for Non-Officers, as approved                by                the Committee on Management on January 22, 2001 and amended on July                23,                2001 (filed as Exhibit (10)-w to the Company's Annual Report on Form                10-K                for the year ended December 28, 2002, File No. 1-4105 and incorporated                herein by reference). |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-l | Amendment                No. 2 to the Bausch & Lomb Incorporated 2001 Stock Incentive Plan for                Non-Officers, effective January 1, 2003 (filed as Exhibit (10)-x                to the                Company's Annual Report on Form 10-K for the year ended December                28, 2002,                File No. 1-4105 and incorporated herein by reference).                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-m | 2003                Long-Term Incentive Plan as amended and restated on July 15, 2003                (filed                as Exhibit (10)-b to the Company's Form 10-Q for the quarter ended                June                28, 2003, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (10)-n | Amendment                No. 1 to the Amended and Restated Supplemental Retirement Income                Plan III                (filed as Exhibit (10)-b to the Company's Form 10-Q for the quarter                ended                September 27, 2003, File No. 1-4105 and incorporated herein by                reference).                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

| (10)-o | Stock                Unit Award Agreement pursuant to the 2003 Long-Term Incentive Plan                (filed                as Exhibit (10)-c to the Company's Form 10-Q for the quarter ended                September 27, 2003, File No. 1-4105 and incorporated herein by                reference).       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                           |
| (10)-p | Restricted                Stock Award Agreement pursuant to the 2003 Long-Term Incentive Plan                (filed                as Exhibit (10)-d to the Company's Form 10-Q for the quarter ended                September 27, 2003, File No. 1-4105 and incorporated herein by                reference). |

| (10)-q  | Bausch                & Lomb Incorporated Annual Incentive Compensation Plan, as amended                and                restated on July 25, 2006 (filed as Exhibit (10)-q to the Company's                Annual                Report on Form 10-K for the year ended December 31, 2005, File No.                1-4105                and incorporated herein by reference).                                                                                                                                                           |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-r  | Director                Deferred Compensation Plan as amended and restated on December 1,                2003                (filed as Exhibit (10)-w to the Company's Annual Report on Form 10-K                for                the year ended December 27, 2003, File No. 1-4105 and incorporated                herein                by reference).                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-s  | Restricted                Stock Deferred Compensation Plan, as amended and restated on December                1,                2003 (filed as Exhibit (10)-x to the Company's Annual Report on Form                10-K                for the year ended December 27, 2003, File No. 1-4105 and incorporated                herein by reference).                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-t  | Executive                Deferred Compensation Plan, as amended and restated on December 1,                2003                (filed as Exhibit (10)-y to the Company's Annual Report on Form 10-K                for                the year ended December 27, 2003, File No. 1-4105 and incorporated                herein                by reference).                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-u  | Stock                Option Agreement Pursuant to the 2003 Long-Term Incentive Plan (filed                as                Exhibit (10)-z to the Company's Annual Report on Form 10-K for the                year                ended December 27, 2003, File No. 1-4105 and incorporated herein                by                reference).                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-v  | Long-Term                Equity Equivalent Accumulation Plan (filed as Exhibit (10)-v to the                Company's Annual Report on Form 10-K for the year ended December                31, 2005,                File No. 1-4105 and incorporated herein by reference).                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-w  | Amendment                No. 2 to the Amended and Restated Supplemental Retirement Income                Plan III                (filed as Exhibit (10)-w to the Company's Annual Report on Form 10-K                for                the year ended December 31, 2005, File No. 1-4105 and incorporated                herein                by reference).                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-x  | Credit                Agreement by and among Bausch & Lomb Incorporated, certain banks,                financial institutions and other institutional lenders and issuers                of                letter of credit, Citigroup Global Markets Inc., Keybank National                Association and Citibank, N.A., dated July 26, 2005 (filed as Exhibit                (10)-b to the Company's Form 10-Q for the quarter ended June 25,                2005,                File No. 1-4105 and incorporated herein by reference). |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-y  | Credit                Agreement between, among others, Citibank International PLC, as facility                agent, Bausch & Lomb B.V. and Bausch & Lomb Incorporated, dated                November 29, 2005 (filed as Exhibit (10)-y to the Company's Annual                Report                on Form 10-K for the year ended December 31, 2005, File No. 1-4105                and                incorporated herein by reference).                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-z  | Letter                Waiver (U.S. Credit Agreement), dated November 23, 2005 (filed as                Exhibit                (10)-z to the Company's Annual Report on Form 10-K for the year ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-aa | Letter                Waiver (U.S. Credit Agreement), dated February 24, 2006 (filed as                Exhibit                (10)-aa to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)-bb | Letter                Waiver (B.V. Term Loan), dated February 24, 2006 (filed as Exhibit                (10)-bb                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                            |

----

| (10)-cc | Letter                Waiver (U.S. Credit Agreement), dated May 17, 2006 (filed as Exhibit                (10)-cc to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                    |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-dd | Letter                Waiver (B.V. Term Loan), dated May 17, 2006 (filed as Exhibit (10)-dd                to                the Company's Annual Report on Form 10-K for the year ended December                31,                2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-ee | Letter                Waiver (U.S. Credit Agreement), dated August 28, 2006 (filed as Exhibit                (10)-ee to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-ff | Letter                Waiver (B.V. Term Loan), dated August 30, 2006 (filed as Exhibit                (10)-ff                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-gg | Agreement                for the Sale and Purchase of the Entire Issued Capital of Sino Concept                Technology Limited, by and between Sino Biopharmaceutical Limited                and                Bausch & Lomb Incorporated, dated July 2, 2005 (filed as Exhibit                (10)-gg to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-hh | Summary                of employment arrangement for Praveen Tyle, Senior Vice President                and                Chief Scientific Officer (filed as Exhibit (10)-hh to the Company's                Annual                Report on Form 10-K for the year ended December 31, 2005, File No.                1-4105                and incorporated herein by reference).                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-ii | Summary                of terms for agreement to authorize Company contribution for certain                participants in the 401(k) Excess Program under the non-qualified                Executive Deferred Compensation Plan (filed herewith).                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-jj | Executive                Deferred Compensation Plan for Post-2004 Deferrals, dated November                7, 2006                (filed as Exhibit (10)-jj to the Company's Annual Report on Form                10-K for                the year ended December 31, 2005, File No. 1-4105 and incorporated                herein                by reference).                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-kk | Amendment                to Executive Deferred Compensation Plan, dated November 7, 2006 (filed                as                Exhibit (10)-kk to the Company's Annual Report on Form 10-K for the                year                ended December 31, 2005, File No. 1-4105 and incorporated herein                by                reference).                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-ll | Letter                Waiver (U.S. Credit Agreement), dated December 13, 2006 (filed as                Exhibit                (10)-ll to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-mm | Letter                Waiver (B.V. Term Loan), dated December 13, 2006 (filed as Exhibit                (10)-mm                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-nn | License                Agreement between and among CIBA Vision AG and Bausch & Lomb                Incorporated, dated July 1, 2004 (filed as Exhibit (10)-oo to the                Company's Annual Report on Form 10-K for the year ended December                31, 2005,                File No. 1-4105 and incorporated herein by reference). (Portions                of this                exhibit are omitted pursuant to a confidential treatment request                and filed                separately with the SEC.) |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-oo | Long                Term Performance Unit Agreement Pursuant to the 2003 Long-Term Incentive                Plan (filed as Exhibit (10)-pp to the Company's Annual Report on                Form 10-K                for the year ended December 31, 2005, File No. 1-4105 and incorporated                herein by reference).                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (10)-pp | Letter                Waiver (U.S. Credit Agreement), dated January 26, 2007 (filed as                Exhibit                (10)-qq to the Company's Annual Report on Form 10-K for the year                ended                December 31, 2005, File No. 1-4105 and incorporated herein by                reference).                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| (10)-qq | Letter                Waiver (B.V. Term Loan), dated January 29, 2007 (filed as Exhibit                (10)-rr                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005, File No. 1-4105 and incorporated herein by                reference). |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-rr | Paul                G. Howes Separation Letter, effective April 9, 2007 (filed                herewith).                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-ss | John                M. Loughlin Separation Letter, dated February 14, 2007 (filed                herewith).                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-tt | Amendment                No. 1 to Credit Agreement, effective April 11, 2007 (filed as Exhibit                99.1                to the Company's Current Report on Form 8-K, filed April 13, 2007,                File                No. 1-4105 and incorporated herein by reference).            |
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-uu | Amendment                to B.V. Term Loan Agreement, effective April 12, 2007 (filed as Exhibit                99.2 to the Company's Current Report on Form 8-K, filed April 13,                2007,                File No. 1-4105 and incorporated herein by reference).                         |
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-vv | Form                of Restricted Stock Award Agreement Pursuant to the 2003 Long-Term                Incentive Plan (with additional change of control provisions) (filed                herewith).                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                 |
| (10)-ww | Employment                Agreement dated April xx, 2007 between Bausch & Lomb Incorporated and                Ronald L. Zarrella, Chairman and Chief Executive Officer (filed                herewith).                                                                                         |
|    |                                                                                                                                                                                                                                                                                                 |
| (12)    | Statement                Regarding Computation of Ratio of Earnings to Fixed Charges (filed                herewith).                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                 |
| (21)    | Subsidiaries                (filed herewith).                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                 |
| (24)    | Power                of Attorney with respect to the signatures of directors in this Annual                Report on Form 10-K (filed herewith).                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                 |
| (31)-a  | Certification                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith).                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                 |
| (31)-b  | Certification                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                herewith).                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                 |
| (32)-a  | Certification                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                Section 1350 (furnished herewith).                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                 |
| (32)-b  | Certification                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                Section 1350 (furnished herewith).                                                                                                                                                  |