8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

December 2, 2009

WATSON PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada
(State or Other Jurisdiction
of Incorporation) 001-03305
(Commission File Number) 95-3872914
(IRS Employer
Identification No.)

311 Bonnie Circle
Corona, California
(Address of Principal Executive Offices) 92880
(Zip Code)

Registrant’s telephone number, including area code: (951) 493-5300
(Former name or former address, if changed since last report): Not applicable.

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note.

     On December 2, 2009, Watson Pharmaceuticals, Inc., a Nevada corporation (“Watson”) completed its acquisition (the “Acquisition”) of all outstanding equity of Robin Hood Holdings Limited, a Malta private limited liability company (“Robin Hood”) and Cobalt Laboratories, Inc. (“Cobalt”), a Delaware corporation and wholly-owned subsidiary of Arrow Pharmaceutical Holdings Ltd. (“APH”) (together with Robin Hood, the “Arrow Group”) from certain selling shareholders (the “Sellers”) pursuant to the Share Purchase Agreement (as amended) by and among Watson, Watson Pharma S.à.r.l., a Luxembourg private limited liability company and wholly-owned subsidiary of Watson, Watson Cobalt Holdings, LLC, a Delaware limited liability company and wholly-owned subsidiary of Watson, Robin Hood, APH, a Malta private limited liability company and wholly-owned subsidiary of Robin Hood, Cobalt, Arrow International Ltd., a Malta private limited liability company and wholly-owned subsidiary of Robin Hood (“AIL”), Arrow Supplies Ltd., a Malta private limited liability company and wholly owned subsidiary of Robin Hood (“ASL”), the Sellers and Anthony Selwyn Tabatznik, solely in his capacity as the Shareholders’ Representative therein (the “Share Purchase Agreement”).

     On December 2, 2009, Watson filed a Current Report on Form 8-K (the “8-K Report”) to report completion of the Acquisition. This Amendment No. 1 to Current Report on Form 8-K/A (the “Amended Report”) is being filed to amend Item 9.01 of the 8-K Report in order to provide the financial information required by Item 9.01(a) and (b), which Watson indicated would be provided no later than 71 days from the date of the 8-K Report.

Item 9.01 Financial Statements and Exhibits.

     (a) Financial Statements of Businesses Required

     The audited financial statements of the Arrow Group for the fiscal years ended December 31, 2008 and 2007 is incorporated herein by reference to Exhibit 99.1.

     The unaudited condensed consolidated balance sheets as of June 30, 2009 and December 31, 2008 and related condensed consolidated statements of comprehensive income for the six months ended June 30, 2009 and 2008 of the Arrow Group is filed as Exhibit 99.2 to this Amended Report and is incorporated herein by reference.

     (b)Pro Forma Financial Information

     The unaudited pro forma condensed combined financial information reflecting the Acquisition is filed as Exhibit 99.3 to this Report and is incorporated herein by reference.

     (d)Exhibits

     The following exhibits are furnished as part of this Report:

Exhibit
Number	Description
99.1*	Audited financial statements of the Arrow Group for the fiscal years ended December 31, 2008 and 2007.
99.2	Unaudited interim financial statements of the Arrow Group for the six months ended June 30, 2009.
99.3	Unaudited pro forma condensed combined financial information, listed in item 9.01 (b) above.

* Previously filed as Exhibit 99.1 to the Form S-3 Report filed with the Securities and Exchange Commission on August 17, 2009.

2

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 16, 2010	WATSON PHARMACEUTICALS, INC.
	By:	/s/ R. Todd Joyce
		Name:	R. Todd Joyce
		Title:	Senior Vice President – Chief Financial Officer

3

EXHIBIT INDEX

Exhibit No.	Exhibit
99.1*	Audited financial statements of the Arrow Group for the fiscal years ended December 31, 2008 and 2007.
99.2	Unaudited interim financial statements of the Arrow Group for the six months ended June 30, 2009.
99.3	Unaudited pro forma condensed combined financial information reflecting the Acquisition.

* Previously filed as Exhibit 99.1 to the Form S-3 Report filed with the Securities and Exchange Commission on August 17, 2009.

EX-99.2

Exhibit 99.2

Robin Hood Holdings Limited

Condensed Consolidated Interim
Financial Statements

June 30, 2009 and 2008

Company Registration Number: C 31123

ROBIN HOOD HOLDINGS LIMITED
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2009 AND JUNE 30, 2008

Contents

	Page(s)
Condensed Consolidated Interim Financial Statements:
Balance Sheet		1
Statement of Comprehensive Income		2
Statement of Changes in Equity		3 — 4
Cash Flow Statement		5
Notes to the Condensed Consolidated Interim Financial Statements		6 — 10

ROBIN HOOD HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2009 AND DECEMBER 31, 2008

			2009		2008
	Note		USD ’000		USD ‘000
Assets
Goodwill and other intangible assets		4		155,178		154,379
Property, plant and equipment		5		72,631		67,396
Investments in associates				2,674		1,603
Other equity investments				6,069		6,069
Deferred tax assets				11,466		11,615
Total non-current assets				248,018		241,062
Inventories				170,146		145,200
Trade and other receivables				175,877		166,680
Marketable securities				16,099		7,064
Cash and cash equivalents				74,925		107,273
Total current assets				437,047		426,217
Total assets				685,065		667,279
Equity
Issued capital				32,685		32,685
Share premium				26,932		26,932
Shareholders’ loan notes				132,742		131,565
Other reserves				22,681		3,563
Retained earnings				294,079		291,498
Total equity attributable to equity holders of the Company				509,119		486,243
Non-controlling interest				4,191		1,933
Total equity				513,310		488,176
Liabilities
Bank borrowings				2,097		2,047
Other loans payable				1,733		1,718
Deferred tax liabilities				10,438		5,537
Other payables				406		300
Total non-current liabilities				14,674		9,602
Bank borrowings				887		873
Other loans payable				701		1,731
Trade and other payables				105,622		120,195
Current taxation				49,871		46,702
Total current liabilities				157,081		169,501
Total liabilities				171,755		179,103
Total equity and liabilities				685,065		667,279

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

1

ROBIN HOOD HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2009 AND JUNE 30, 2008

		2009			2008
	Note	USD ’000			USD ‘000
Continuing operations
Revenue	6		247,633			402,066
Cost of sales			(127,077	)		(136,099	)
Gross profit			120,556			265,967
Selling, general and administration costs			(65,324	)		(73,260	)
Development costs			(31,776	)		(38,792	)
Result from operations			23,456			153,915
Net financing income			3,087			2,846
Share of results of associates			1,037			(364	)
Impairment loss	7		(2,059	)		(1,562	)
Profit before tax			25,521			154,835
Income tax expense	8		(8,702	)		(15,754	)
Profit for the period from continuing operations			16,819			139,081
Discontinued operations
(Loss)/gain for the period from discontinued operations	9		(454	)		22,324
Profit for the period			16,365			161,405
Other comprehensive income
Foreign exchange translation differences			8,466			8,119
Total comprehensive income			24,831			169,524
Profit attributable to
Owners of the Company			13,497			160,756
Non-controlling interest			2,868			649
Profit for the period			16,365			161,405
Total Comprehensive Income attributable to
Owners of the Company			22,464			168,900
Non-controlling interest			2,367			624
			24,831			169,524

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2

ROBIN HOOD HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2009 AND JUNE 30, 2008

	Attributable to owners of the Company																Non-
	Share		Share		Shareholders’			Other			Retained						controlling			Total
	capital		premium		loan notes			reserves			earnings			Total			Interest			equity
Comparative period	USD’000		USD’000		USD’000			USD’000			USD’000			USD’000			USD’000			USD’000
Balance at January 1, 2008		32,685		26,932		261,531			26,059			142,618			489,825			3,262			493,087
Total comprehensive income for the period
Profit for the period		—		—								160,756			160,756			649			161,405
Other comprehensive income
Foreign exchange translation differences												8,144			8,144			(25	)		8,119
Total comprehensive income		—		—		—			8,144			160,756			168,900			624			169,524
Transaction with owners, recorded directly to equity
Own shares acquired									(8,477	)					(8,477	)					(8,477	)
Shareholders’ loan notes:
Interest, net of current taxation												(1,192	)		(1,192	)					(1,192	)
Accrued interest payable						1,192									1,192						1,192
Repayment of shareholders’ loan notes						(132,803	)								(132,803	)					(132,803	)
Net transfers to other reserves									(5,134	)		5,134			—						—
Total transaction with owners		—		—		(131,611	)		(13,611	)		3,942			(141,280	)		—			(141,280	)
Balance at June 30, 2008		32,685		26,932		129,920			20,592			307,316			517,445			3,886			521,331

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3

ROBIN HOOD HOLDINGS LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2009 AND JUNE 30, 2008

	Attributable to owners of the Company														Non-
	Share		Share		Shareholders’		Other		Retained						controlling			Total
	capital		premium		loan notes		reserves		earnings			Total			Interest			equity
Current period	USD’000		USD’000		USD’000		USD’000		USD’000			USD’000			USD’000			USD’000
Balance at January 1, 2009		32,685		26,932		131,565		3,563		291,498			486,243			1,933			488,176
Total comprehensive income for the period
Profit for the period		—		—		—		—		13,497			13,497			2,868			16,365
Other comprehensive income
Foreign exchange translation differences								8,967					8,967			(501	)		8,466
Total comprehensive income		—		—		—		8,967		13,497			22,464			2,367			24,831
Transaction with owners, recorded directly to equity
Shares acquired from minority																(2	)		(2	)
Shareholders’ loan notes:
Interest, net of current taxation										(765	)		(765	)					(765	)
Accrued interest payable						1,177							1,177						1,177
Net transfers to other reserves								10,151		(10,151	)		—						—
Dividend paid by subsidiaries to minority shareholders																(107	)		(107	)
Total transaction with owners		—		—		1,177		10,151		(10,916	)		412			(109	)		303
Balance at June 30, 2009		32,685		26,932		132,742		22,681		294,079			509,119			4,191			513,310

The accompanying notes are an integral part of these condensed consolidated interim financial statements

4

ROBIN HOOD HOLDINGS LIMITED

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2009 AND JUNE 30, 2008

	2009			2008
	USD ’000			USD ‘000
Cash flows used in operating activities
Profit for the period		16,365			161,405
Adjustments for:
Stock provisions and write-offs		282			4
Provision for doubtful debts		125			(717	)
Depreciation		3,832			4,613
Amortisation		2,206			2,415
Profit on disposal of property, plant and equipment		(11	)		(18	)
Gain on disposal of subsidiary		—			(25,924	)
Impairment loss		2,059			1,562
Interest receivable		(436	)		(1,588	)
Interest expense		123			326
Unrealised foreign exchange gains		(266	)		(451	)
Share of results of associate		(1,037	)		364
Income tax expense		8,730			15,754
		31,972			157,745
Working capital changes:
Inventories		(25,228	)		(19,122	)
Receivables		844			(51,018	)
Payables		(23,376	)		44,503
Cash absorbed by operations		(15,788	)		132,108
Taxation paid		(5,458	)		(15,753	)
Taxation refunded		503			—
Net cash used in operating activities		(20,743	)		116,355
Cash flows used in investing activities
Payments for marketable securities		(9,035	)		—
Proceeds from disposal of subsidiary		—			24,161
Acquisition of non-controlling interest		(877	)		(2,179	)
Repayment for acquisition of shares in minority		(2	)		—
Acquisition of other intangible assets		(2,427	)		(2,253	)
Acquisition of property, plant and equipment		(5,327	)		(5,398	)
Proceeds from sale of property, plant and equipment		34			49
Funds advanced to related parties		(3,096	)		(1,570	)
Repayment of funds advanced to related parties		9			852
Interest received		476			1,595
Net cash used in investing activities		(20,245	)		15,257
Cash flows used in financing activities
Payment for acquisition of own shares		—			(8,477	)
Repayment of shareholders’ loan notes		—			(132,803	)
Bank finance		63			109
Funds advanced by other related parties		1,076			92
Repayment of funds advanced by other related parties		(971	)		(8,810	)
Funds from other borrowings		—			1,111
Repayment of funds advanced from borrowings		(319	)		(75	)
Dividends paid by subsidiaries to minority shareholders		(107	)		—
Interest paid		(165	)		(355	)
Net cash used in financing activities		(423	)		(149,208	)
Net decrease in cash and cash equivalents before foreign exchange		(41,411	)		(17,596	)
Effect of exchange rate fluctuations on the translation of cash flows of foreign operations		9,063			13,124
Net decrease in cash and cash equivalents		(32,348	)		(4,472	)
Cash and cash equivalents (net of bank overdraft) at January 1		107,273			134,827
Cash and cash equivalents (net of bank overdraft) at June 30		74,925			130,355

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

5

ROBIN HOOD HOLDINGS LIMITED

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1	Reporting entity
	The condensed consolidated interim financial statements comprise those of Robin Hood Holdings Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates and joint ventures. The Company is, in turn, a subsidiary company of Quiver Inc. (referred to as the “Parent Company”). The registered office of the Company is at 57 St. Christopher Street, Valletta, Malta.
2	Basis of preparation
2.1	Statement of compliance
	The condensed consolidated interim financial statements for the six months ended June 30, 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the annual financial statements for the year ended December 31, 2008, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
	These condensed consolidated interim financial statements have been prepared in connection with Watson Pharmaceuticals Inc’s acquisition of the ordinary shares of Robin Hood Holdings Limited as described in Note 12.
	The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning January 1, 2009 and have not been early adopted:
	— IFRS 3 (revised), ‘Business combinations’ and consequential amendments to IAS27, ‘Consolidated and separate financial statements’, ISD28, ‘Investments in associates’ and ISD31, ‘Interests in joint ventures’, effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after July 1, 2009.
2.2	Functional and presentation summary
	These consolidated financial statements are presented in US Dollar (USD), which is the Company’s functional currency. All financial information presented in USD has been rounded to the nearest thousand.
3	Significant accounting policies
	Except for the changes described below, the accounting policies used in the preparation of the condensed consolidated interim financial statements are consistent with those used in the consolidated financial statements for the year ended December 31, 2008. Management is in the process of evaluating the new standards that have been released since the issue of the previous financial statements, however they do not anticipate that these new standards will have any impact on the Group’s current reporting.
3.1	Presentation of financial statements
	The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of January 1, 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed interim financial statements as of and for the six month periods ended on June 30, 2009 and June 30, 2008.

6

ROBIN HOOD HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

4 Intangible assets

						Intellectual						Computer
	Goodwill					Property						Software						Total
	2009		2008			2009			2008			2009			2008			2009			2008
	USD ‘000		USD ‘000			USD ‘000			USD ‘000			USD ‘000			USD ‘000			USD ‘000			USD ‘000
Opening net book amount at January 1		147,523		148,223			5,810			6,169			1,046			1,499			154,379			155,891
Effects of movements in foreign exchange rates		—		—			46			372			(8	)		117			38			489
Acquisition of non-controlling interest		877		2,179			—			—			—			—			877			2,179
Other additions		—		—			1,783			2,674			307			98			2,090			2,772
Disposals		—		(3,136	)		—			(604	)		—			—			—			(3,740	)
Amortisation		—		—			(1,802	)		(1,959	)		(404	)		(456	)		(2,206	)		(2,415	)
Closing net book amount at June 30		148,400		147,266			5,837			6,652			941			1,258			155,178			155,176

4.1 Goodwill

For the purpose of impairment testing of goodwill the Group is regarded as a single group of cash generating unit. The grouping is based on various factors including: (i) the level at which information about goodwill is available, (ii) the level at which management monitors goodwill, and (iii) the fact that the Group operates as a single segment under IAS 14 Segment Reporting. The cash generating unit’s recoverable amount is based on value in use using projections of the Group’s post tax cash flows plus a terminal value. The projections include key assumptions about internal future products, and expected prices. These calculations are based on actual operating results and four-year budgets/forecasts approved by the Board of Directors. Value in use is calculated using a discounted cash flow approach. A pre-tax risk-adjusted discount rate of 12.5% and an average growth rate of 1% has been applied to the projections for the years ended December 31, 2007 and 2008 respectively. The valuation indicates sufficient headroom such that changes to key assumptions discussed above are unlikely to result in any impairment of goodwill.

An impairment test of goodwill is performed at the end of the year. There have been no changes in the business since the tests carried out in December 2008 and December 2007 that would trigger an impairment of goodwill in the period to June 30, 2009 and June 30, 2008 respectively.

7

ROBIN HOOD HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

5 Property, plant and equipment

	2009			2008
	USD ’000			USD ‘000
Opening net book amount at January 1		67,396			76,626
Effects of movement in foreign exchange rates		3,810			2,808
Additions		5,280			5,066
Disposals		(23	)		(70	)
Depreciation		(3,832	)		(4,613	)
Closing net book amount at June 30		72,631			79,817

6 Revenue

6.1 Category of activity

	2009		2008
	USD ’000		USD ‘000
Sales		235,298		390,851
Licence fees and royalties		9,025		8,268
Other		3,310		2,947
		247,633		402,066

During 2009 there were no first-to-file products in the US market and this contributed to the declining revenue compared with 2008.

6.2 Geographical markets

	2009		2008
	USD ’000		USD ‘000
Europe		138,277		147,148
US		43,548		194,116
Canada		36,801		32,737
Australia and New Zealand		23,789		21,077
Brazil		2,682		3,183
South Africa		130		1,424
Rest of the world		2,406		2,381
		247,633		402,066

7 Impairment loss

The impairment loss relates to loans originated from financing transactions between the Group and an investee, which have been assessed as non-recoverable.

8

ROBIN HOOD HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

8 Income tax expense

	2009			2008
	USD ’000			USD ‘000
Income tax on taxable income for the period		(9,703	)		(15,786	)
Withholding taxes on interest		(11	)		(35	)
Tax refund		943			—
Tax effect of interest on loan notes charged to equity		(412	)		—
Tax over provided in prior years		481			67
Tax expense for the period		(8,702	)		(15,754	)

The effective tax rate as of June 30, 2008 (10.17%) was significantly lower than the effective rate for the six months ended June 30, 2009 (34.10%). This is primarily the result of change in the jurisdictions where the majority of the companies’ taxable profits are recognised.

9 Discontinued operations

During the first half of 2008 the Group sold one of its subsidiaries, Oryx Pharmaceuticals Inc and later in the year discontinued the distribution operation in Portugal.

10 Financial risk management

Risk mitigation is a key part of the management of the group and the Group has a well developed process to identify, manage and limit exposure to areas which may have a negative impact on the business.

There have been no major changes to the principal risks and uncertainties identified and disclosed in the notes to the financial statements for the year ended December 31, 2008. These are summarised as:

- Credit risk

- Market risk

- Interest rate risk

- Foreign Currency risk

- Price risk

- Liquidity risk

11 Related parties

11.1 Identity of related parties

The Group has a related party relationship with its Parent Company, other shareholders, associates, its directors and other related parties.

In addition to disclosures contained elsewhere in these financial statements, further related party disclosures are set out below.

9

ROBIN HOOD HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

11 Related parties (continued)

11.2	Transactions with related parties
	The following transactions were carried out with related parties:

	2009		2008
	USD ’000		USD ‘000
Sale of goods to Associate		53		—
Purchases of goods from related party		380		—
Services provided by related party		11		11
Interest receivable from related company		116		49
Interest on loan notes charged to equity:
Parent company		779		792
Other shareholders		398		400
		1,177		1,192

Goods are sold on the same terms and at the same selling price that are available to Group companies.

11.3	Transactions with key management personnel
	The Company’s directors are considered as the Group’s key management personnel. Total directors’ remuneration paid during the year and included within salaries cost was USD657 thousand (2008: USD2,488 thousand).

12 Events occurring after the Balance Sheet date

The following material events took place subsequent to the period end:

• On October 1, 2009, the Group exercised an option to receive upfront payments totalling USD 61.4million in consideration for the grant of certain rights and licenses under the terms of an agreement with a third party.

• On December 2, 2009, Watson Pharmaceuticals Inc acquired all of the ordinary shares of Robin Hood Holdings Limited for a total consideration of USD1.75 billion (the Watson transaction).

• In conjunction with the Watson transaction, on November 30, 2009, the outstanding balance on the convertible shareholders’ loan notes together with accrued interest to date, were fully repaid. The repayment was in part financed through a fresh bank loan amounting to USD90 million and the cash received from the early termination of a license agreement as discussed above.

• On January 28, 2010, the Group acquired the remaining outstanding shares of Eden BioPharma Inc. for USD15.0 million. Disclosures under IFRS 3 are not presented as the effect of the acquisition was not material to the Group.

10

EX-99.3

Exhibit 99.3

WATSON PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the Watson Pharmaceuticals, Inc. (“Watson”) acquisition (the “Acquisition”) of all outstanding equity of Robin Hood Holdings Limited, a Malta private limited liability company (“Robin Hood”) and Cobalt Laboratories, Inc., a Delaware corporation (“Cobalt”) (together with Robin Hood, the “Arrow Group”) (together with Watson the “Combined Entity”) on December 2, 2009 (the “Acquisition Date”) on our historical financial position and our results of operations. The following unaudited pro forma condensed combined balance sheet as of September 30, 2009 and unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2009 are based on the historical unaudited financial statements of Watson (which are available in Watson’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 that was previously filed with the SEC on November 6, 2009) and unaudited historical financial information of the Arrow Group which has been reconciled from International Financial Reporting Standards (“IFRS”) to U.S. generally accepted accounting principles (“U.S. GAAP”). The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2008 is based on the historical audited financial statements of Watson (which are available in Watson’s Annual Report on Form 10-K that was previously filed with the SEC on February 23, 2009) and the historical audited IFRS financial statements of Arrow Group for the year ended December 31, 2008 which have been reconciled to U.S. GAAP (refer to Exhibit 99.1 to the Registration Statement on Form S-3 that was previously filed with SEC on August 17, 2009 for the IFRS financial statements of Arrow Group for the years ended December 31, 2008 and 2007). The Acquisition has been accounted for as a business purchase combination using the purchase method of accounting under existing U.S. generally accepted accounting principles (“GAAP”).

     The pro forma adjustments are preliminary and are based upon available information and certain assumptions, described in the accompanying notes to unaudited pro forma condensed combined financial information that management believes are reasonable under the circumstances. All known revisions to the purchase price allocations will be included in our Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 10-K”). Allocations within our 2009 10-K will differ from the allocations within this Amendment No.1 to Current Report on Form 8-K/A (the “Amended Report”) as the pro forma adjustments in this Amended Report are based on the Arrow Group balance sheet as of September 30, 2009, whereas the 2009 10-K purchase accounting will be based on the Arrow Group balance sheet as of December 2, 2009. The establishment of the fair value of consideration for acquisitions requires the extensive use of accounting estimates and management judgment to establish the fair value of consideration, including contingent consideration. The allocation of the purchase price of tangible and identifiable intangible assets acquired and liabilities assumed also requires the extensive use of accounting estimates and management judgment to determine their respective fair values. The purchase price for the Arrow Group was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on a preliminary estimate of fair values as of December 2, 2009, with any excess being allocated to goodwill. Significant judgment is required in determining the fair values of in-process research and development (“IPR&D”), identifiable intangible assets, certain tangible assets and certain liabilities assumed. Such a valuation requires detailed estimates and

assumptions including, but not limited to, determining the timing and estimated costs to complete each IPR&D project, projecting the timing of regulatory approvals, and estimating future cash flows and direct costs in addition to developing the appropriate discount rates and market profit margins. Management believes the fair values assigned to the assets to be acquired and liabilities to be assumed are based on reasonable estimates and assumptions. Preliminary fair value estimates and resulting purchase price allocations may change if additional information becomes available.

     The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2008 and the nine months ended September 30, 2009 present combined results of operations assuming the Acquisition occurred on January 1, 2008. The unaudited pro forma condensed combined balance sheet as of September 30, 2009 assumes the Acquisition occurred on September 30, 2009. The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or results of operations that would have been realized had the Acquisition occurred as of the dates indicated, nor is it meant to be indicative of any anticipated condensed consolidated financial position or future results of operations that the Combined Entity will experience after the Acquisition Date. In addition, the accompanying unaudited pro forma condensed combined statements of operations do not include any expected synergies which may be achievable subsequent to the Acquisition Date or the impact of any one-time transaction related costs.

     In order to obtain regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), in connection with the Acquisition, Watson and the Arrow Group were required to divest certain assets. Subsequent to September 30, 2009, Watson sold its Abbreviated New Drug Application (“ANDA”) for Cabergoline, the generic equivalent to Dostinex, to Impax Laboratories, Inc. The Arrow Group sold its pending ANDA for Dronabinol, a generic equivalent to Marinol, to Impax Laboratories, Inc.

     Resolution Chemicals Ltd. (“Resolution”), the subsidiary of the Arrow Group that manufactures the Dronabinol active pharmaceutical ingredient, was divested in accordance with the terms of the consent order under the HSR Act immediately prior to the closing. An adjustment to the net assets represented in Arrow Group’s balance sheet as of September 30, 2009 and the unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2008 and nine months ended September 30, 2009 has been made to reflect the divestiture of Resolution.

     This unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes and assumptions as well as the historical consolidated financial statements and related notes of Watson contained in the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by Watson with the SEC and the historical consolidated financial statements and related notes of Arrow Group filed as an exhibit to the Registration Statement on Form S-3 referred to above.

Watson Pharmaceuticals, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2009
(In millions)

							Pro Forma						Pro Forma
	Watson			Arrow			Adjustments			Notes			Combined
ASSETS
Current assets:
Cash and cash equivalents	$	812.9		$	78.1			(1,050.0	)		(4a	)	$	91.0
								250.0			(4n	)
Restricted cash		—			3.8									3.8
Marketable securities		13.1			—									13.1
Accounts receivable, net		377.1			110.6			(1.4	)		(4l	)		483.0
								(3.3	)		(4d	)
Inventories		505.7			185.4			26.0			(4e	)		698.1
								(18.6	)		(4d	)
								(0.4	)		(4l	)
Prepaid expenses and other current assets		60.0			72.1			90.0			(4j	)		222.1
Deferred tax assets		116.5			0.7									117.2
Total current assets		1,885.3			450.7			(707.7	)					1,628.3
Property and equipment, net		625.1			78.0			(5.4	)		(4d	)		704.7
								7.0			(4f	)
Investments and other assets		96.2			12.7									108.9
Deferred tax assets		40.9			14.2									55.1
Product rights and other intangibles, net		510.2			5.9			1,232.1			(4g	)		1,748.2
Goodwill		868.1			25.8			726.3			(4k	)		1,620.2
Total assets	$	4,025.8		$	587.3		$	1,252.3					$	5,865.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	399.1		$	144.4		$	(1.4	)		(4l	)	$	537.0
								(5.1	)		(4d	)
Income taxes payable		—			52.6									52.6
Short-term debt and current portion of long-term debt		1.6			2.4			250.0			(4n	)		344.0
								90.0			(4m	)
Deferred revenue		21.1			1.5									22.6
Deferred tax liabilities		18.1			1.1			18.6			(4h	)		37.8
Total current liabilities		439.9			202.0			352.1						994.0
Long-term debt		997.4			—			150.0			(4a	)		1,147.4
Deferred revenue		34.0			—									34.0
Other long-term liabilities		5.3			137.5			110.0			(4a	)		119.5
								(133.3	)		(4c	)
Other taxes payable		63.1			—									63.1
Deferred tax liabilities		175.5			13.8			371.7			(4h	)		561.0
Total liabilities		1,715.2			353.3			850.5						2,919.0
Commitments and contingencies											(4j	)
Stockholders’ equity:
Preferred stock		—			—									—
Common stock		0.4			32.7			(32.7	)		(4b	)		0.5
								0.1			(4a	)
Additional paid-in capital		1,033.1			25.6			(25.6	)		(4b	)		1,669.2
								636.1			(4a	)
Retained earnings		1,583.2			156.5			(224.3	)		(4b	)		1,582.8
								(22.2	)		(4d	)
								90.0			(4j	)
								(0.4	)		(4l	)
Accumulated other comprehensive (loss) income		(0.2	)		25.2			(25.2	)		(4b	)		(0.2	)
Treasury stock, at cost		(305.9	)		(12.7	)		12.7			(4b	)		(305.9	)
Total stockholders’ equity		2,310.6			227.3			408.5						2,946.4
Noncontrolling interests		—			6.7			(6.7	)		(4b	)		—
Total equity		2,310.6			234.0			401.8						2,946.4
Total liabilities and stockholders’ equity	$	4,025.8		$	587.3		$	1,252.3					$	5,865.4

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information.

Watson Pharmaceuticals, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2008
(In millions, except per share amounts)

							Pro Forma			Pro Forma			Pro Forma
	Watson			Arrow			Adjustments			Notes			Combined
Net revenues	$	2,535.5		$	658.8		$	(16.6	)		(5a	)	$	3,170.6
								(7.1	)		(4d	)
Operating expenses:
Cost of sales (excludes amortization, presented below)		1,502.8			270.6			(11.8	)		(5a	)		1,750.9
								(11.7	)		(4d	)
								1.0			(5g	)
Research and development		170.1			69.4			(3.7	)		(4d	)		235.8
Selling, general and administrative		423.5			160.7			(2.2	)		(4d	)		582.0
Amortization		80.7			4.6			73.9			(5b	)		154.6
								(4.6	)		(5c	)
Loss (gain) on asset sales and impairments		0.3			—									0.3
Total operating expenses		2,177.4			505.3			40.9						2,723.6
Operating income		358.1			153.5			(64.6	)					447.0
Other income (expense):
Loss on early extinguishment of debt		(1.1	)		—									(1.1	)
Interest income		9.1			3.6			(12.7	)		(5d	)		—
Interest expense		(28.2	)		(3.3	)		(71.6	)		(5e	)		(101.0	)
								2.1			(4d	)
Other income		20.4			2.6									23.0
Total other income (expense), net		0.2			2.9			(82.2	)					(79.1	)
Income before income taxes		358.3			156.4			(146.8	)					367.9
Provision (benefit) for income taxes		119.9			20.2			(53.3	)		(5f	)		86.4
								(0.4	)		(4d	)
Net income from continuing operations	$	238.4		$	136.2		$	(93.1	)				$	281.5
Earnings per common share from continuing operations:
Basic	$	2.32											$	2.35
Diluted	$	2.09											$	2.34
Weighted average shares outstanding:
Basic		102.8						16.9			(6a	)		119.7
Diluted		117.7						2.5			(6b	)		120.3

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information.

Watson Pharmaceuticals, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Nine Months Ended September 30, 2009
(In millions, except per share amounts)

							Pro Forma			Pro Forma			Pro Forma
	Watson			Arrow			Adjustments			Notes			Combined
Net revenues	$	2,007.3		$	391.4		$	(5.5	)		(5a	)	$	2,385.1
								(8.1	)		(4d	)
Operating expenses:
Cost of sales (excludes amortization, presented below)		1,135.5			207.6			(3.4	)		(5a	)		1,337.4
								(3.1	)		(4d	)
								0.8			(5g	)
Research and development		136.8			54.4			(1.2	)		(4d	)		190.0
Selling, general and administrative		383.0			116.8			(14.3	)		(5h	)		483.3
								(2.2	)		(4d	)
Amortization		66.1			3.6			55.5			(5b	)		121.6
								(3.6	)		(5c	)
Loss on impairment		2.2			—									2.2
Total operating expenses		1,723.6			382.4			28.5						2,134.5
Operating income		283.7			9.0			(42.1	)					250.6
Other income (expense):
Loss on early extinguishment of debt		(2.0	)		—									(2.0	)
Interest income		4.3			0.5			(4.5	)		(5d	)		0.3
Interest expense		(18.3	)		(1.8	)		(51.0	)		(5e	)		(70.5	)
								0.6			(4d	)
Other income		5.2			0.9									6.1
Total other income (expense), net		(10.8	)		(0.4	)		(54.9	)					(66.1	)
Income before income taxes		272.9			8.6			(97.0	)					184.5
Provision (benefit) for income taxes		107.8			9.0			(36.5	)		(5f	)		80.3
Net income from continuing operations	$	165.1		$	(0.4	)	$	(60.5	)				$	104.2
Earnings per common share from continuing operations:
Basic	$	1.60											$	0.87
Diluted	$	1.45											$	0.86
Weighted average shares outstanding:
Basic		103.4						16.9			(6a	)		120.3
Diluted		118.1						3.3			(6c	)		121.4

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information.

Watson Pharmaceuticals, Inc.
Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Description of Transaction

 On December 2, 2009, pursuant to the Purchase Agreement, dated as of June 17, 2009 and amended November 26, 2009 (together the “Purchase Agreement”), by and among, Watson and the Arrow Group, Watson acquired the Arrow Group for consideration of approximately $1.9 billion which includes a combination of cash, stock and certain contingent consideration. Under the terms of the Agreement, Watson acquired all the outstanding shares of common stock of the Arrow Group for the following consideration:

• A cash payment of U.S. $1.05 billion paid at the Acquisition Date including assumption of certain liabilities of approximately $17.0 million;

• 16,943,409 validly issued fully paid and non-assessable shares of common stock of Watson issued at the Acquisition Date (the “Common Consideration”);

• $200.0 million face amount of Preferred Stock issued at the Acquisition Date (the “Preferred Consideration”); and

• Certain contingent payments due after the Acquisition Date based on the after-tax gross profits on sales of Atorvastatin in the United States as described in the Purchase Agreement.

In accordance with existing U.S. GAAP standards, the fair value of Watson’s common stock issued as part of the consideration transferred was measured on the closing date of the acquisition at the then-current market price of $37.55 per share for a total Common Consideration of approximately $636.2 million.

The Preferred Consideration was paid in the form of zero-coupon, non-convertible preferred stock which will be redeemable in the amount of $200.0 million three years after the Acquisition Date. The fair value of the Preferred Consideration is estimated to be $150.0 million for the purposes of the accompanying unaudited pro forma condensed combined financial statements and is presented within long-term debt.

Payment of contingent consideration will be based on post-tax gross profits, as defined in the Purchase Agreement, of sales within the United States (the “Territory”) from product launch date up to and including May 31, 2013 (the “Contingent Payment Period”) for the product Atorvastatin. The determination of contingent payment amounts is dependent upon the existence of generic competition within the Territory and post-tax gross profits earned, as defined in the Agreement. Should there be no competing generic product launched in the Territory during the Contingent Payment Period, payment of contingent consideration will be calculated as 50% of the post-tax gross profits, as defined in the Purchase Agreement. Should there be a competing product to Atorvastatin launched in the Territory during the Contingent Payment Period, payment of contingent consideration will be calculated as either 85% or 15% of the post-tax gross profits, as defined in the Purchase Agreement, with total contingent payments limited to $250.0 million during the Contingent Payment Period. In the preliminary purchase price allocation reflected in the accompanying unaudited pro forma condensed combined financial information, the fair value of the contingent consideration of $110.0 million was estimated based on the current information available.

2. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of Watson and the Arrow Group. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to

the Acquisition, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results.

The acquisition method of accounting under existing U.S. GAAP requires, among other things, that most assets acquired and liabilities assumed in a business purchase combination be recognized at their fair values as of the Acquisition Date and that the fair value of acquired IPR&D be recorded on the balance sheet regardless of the likelihood of success of the related product or technology as of the Acquisition Date. In addition, any common stock consideration transferred is measured at the Acquisition Date at the then current market price.

Fair value is defined under existing U.S. GAAP as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of an asset or liability. Market participants are assumed to be willing buyers or sellers in the most advantageous market for the asset or liability. Fair value measurement for an asset assumes the highest and best use by these market participants. As a result, Watson may be required to record assets which are not intended to be used or sold and/or to value assets at fair value measurements that do not reflect Watson’s intended use for those assets. Fair value measurements can be highly subjective and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates under the same facts and circumstances.

3. Reconciliation of IFRS to U.S. GAAP

The accompanying unaudited pro forma condensed combined financial information was prepared based on the following historical financial information of the Arrow Group:

• The accompanying unaudited pro forma condensed combined balance sheet as at September 30, 2009 includes the historical unaudited balance sheet information of the Arrow Group as at September 30, 2009, prepared using IFRS, which has been reconciled to U.S. GAAP.

• The accompanying unaudited pro forma condensed combined statement of operations for the year ended December 31, 2008 includes the historical audited financial statements of Arrow Group for the year ended December 31, 2008, prepared using IFRS, which has been reconciled to U.S. GAAP (refer to Exhibit 99.1 to the Registration Statement on Form S-3 filed with the SEC on August 17, 2009 for the IFRS financial statements of Arrow Group for the years ended December 31, 2008 and 2007). The IFRS reconciliation to U.S. GAAP is unaudited. and

• The accompanying unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2009 includes the historical unaudited financial information of Arrow Group for the nine months ended September 30, 2009, prepared using IFRS, which has been reconciled to U.S. GAAP.

Watson has not identified any differences in the reconciliations of Arrow Group’s IFRS based financial statements and financial information to U.S. GAAP that would have a material impact on the accompanying unaudited pro forma condensed combined financial information.

4. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

This footnote should be read in conjunction with “Note 1. Description of Transaction,” “Note 2. Basis of Presentation,” and “Note 3. Reconciliation of IFRS to U.S. GAAP.” Adjustments included in the column “Pro Forma Adjustments” to the accompanying unaudited pro forma condensed combined balance sheet as at September 30, 2009 reflect the following:

a. Under the acquisition method of accounting, the total consideration, as indicated in the following table, is allocated to Arrow Group’s identifiable tangible and intangible assets and liabilities based on their estimated fair values as of the Acquisition Date. The estimated consideration is allocated as follows (in millions):

	Note			Amount
Calculation of consideration:
Cash consideration		(4a	)	$	1,050.0
Fair value of Common Consideration		(4a	)		636.2
Fair value of Preferred Consideration		(4a	)		150.0
Preliminary fair value estimate of atorvastatin payment consideration		(4a	)		110.0
Total consideration		(4a	)		1,946.2
Preliminary allocation of consideration and adjustments:
Book value of Arrow’s net assets		(4b	)		(234.0	)
Settlement of shareholders loans		(4c	)		(133.3	)
Net adjustment for divestiture of Resolution Chemicals Ltd.		(4d	)		22.2
Loan assumed on acquisition		(4m	)		90.0
Adjustments to historical net book value:
Inventory		(4e	)		(26.0	)
Property, plant & equipment		(4f	)		(7.0	)
Intangible assets		(4g	)		(1,232.1	)
Adjustment to deferred tax liability		(4h	)		390.3
Adjustment for uncertain tax positions		(4i	)		—
Adjustment to fair value of contingencies		(4j	)		(90.0	)
Net change in goodwill		(4k	)	$	726.3

b.	Reflects the elimination of historical equity of Arrow Group.
c.	Reflects the settlement of shareholder loans at Acquisition Date.
d.	Reflects an adjustment to net assets acquired and an adjustment to the unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2008 and nine months ended September 30, 2009 to reflect the divestiture of Resolution. The divestiture of Resolution was required under the terms of the consent order under the HSR Act in connection with the Acquisition.
e.	Represents the estimated fair value adjustment to mark inventory to fair value. The Combined Entity will expense the increased valuation of Arrow Group’s inventory as the acquired inventory is sold, which for purposes of these unaudited pro forma condensed combined financial information is assumed

	to have occurred within the first year, post-acquisition. As there is no continuing impact of the inventory step-up on the Combined Entity results, the increased cost is not included in the unaudited pro forma condensed combined statement of operations.
f.	At Acquisition Date, property, plant and equipment are required to be measured at fair value. Fair value can be determined in a variety of ways depending on the nature of the asset and the quality of available information, but, generally, land is valued by referencing relevant sales transactions of comparable property and all other property, plant and equipment assets are measured by determining the cost to replace the asset with another asset of similar utility, with the income approach and/or market approach used where possible for validation. For purposes of these unaudited pro forma condensed combined financial information, a fair value adjustment to property, plant and equipment has been estimated utilizing the cost approach or, where secondary market information was readily available, the market approach.
g.	Of the total estimated consideration, approximately $514 million has been allocated to identified intangibles representing currently marketed products (“CMP”) and is estimated to be amortized over an average useful life of seven years. Approximately $724 million has been allocated to identified IPR&D intangible products. The IPR&D amounts will be capitalized and accounted for as indefinite-lived intangible assets and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project and launch of the product, Watson will make a separate determination of useful life of the IPR&D intangible and amortization will be recorded as an expense over the estimated useful life. As the IPR&D intangibles are not currently marketed, no amortization of these items is reflected in the unaudited pro forma combined condensed statements of operations for either the year ended December 31, 2008 or the nine months ended September 30, 2009.
	This fair value estimate for identifiable intangible assets is preliminary and is determined based on the assumptions that market participants would use in pricing an asset based on the most advantageous market for the asset (i.e. their highest and best use). This preliminary fair value estimate could include assets that are not intended to be used, may be sold or are intended to be used in a manner other than their best use. For purposes of the accompanying unaudited pro forma condensed combined financial information, it is assumed that all assets will be used and assets will be used in a manner that represents their highest and best use. The final fair value determination for identified intangibles, including the IPR&D intangibles, may differ from this preliminary determination.
	The fair value of identifiable intangible assets is determined primarily using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of the identifiable intangible assets valuations, from the perspective of a market participant, include the estimated net cash flows for each year for each project or product (including net revenues cost of sales, research and development costs, selling and marketing costs and working capital/asset contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream as well as other factors. The major risks and uncertainties associated with the timely and successful completion of the IPR&D projects include legal risk and regulatory risk. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change or the timely completion of each project to commercial success will occur. For these and other reasons, actual results may vary significantly from estimated results.
h.	Reflects a deferred income tax liability representing the estimated impact of purchase accounting adjustments for the inventory fair value step-up, property, plant and equipment fair value adjustment, contingencies adjustment and identifiable intangible assets fair value adjustment. This estimate of deferred tax liabilities was determined based on the excess book basis over the tax basis resulting from the above fair value adjustments using an estimated weighted average statutory tax rate of approximately 30%. This estimate is preliminary and is subject to change based upon management’s final determination of the fair values of tangible and identifiable intangible assets acquired and liabilities assumed by taxing jurisdiction.

i.	Watson records provisions for uncertain tax positions in accordance with the existing U.S. GAAP. Assessments of uncertain tax positions and the determination of corresponding tax provisions involve complex judgments about future events and rely on estimates and assumptions by management. Income taxes are exceptions to both the recognition and fair value measurement principles under the acquisition method of accounting. As such, the Combined Entity would account for Arrow Group’s uncertain tax positions under U.S. GAAP. The Arrow Group, as a private company based outside the United States, was not required to adopt U.S. GAAP to record provision for uncertain tax positions. Arrow Group’s pre-acquisition accounting approach for uncertain tax positions was based on Arrow Group’s management estimates and assumptions. As Watson’s management has not completed its assessment of Arrow Group’s uncertain tax positions and Watson’s management estimates and assumptions concerning Arrow Group’s accounting approach for uncertain tax positions could differ from Arrow Group’s management estimates and assumptions, final assessments of uncertain tax positions could differ materially from the amounts included in the accompanying unaudited pro forma condensed combined financial statements. Accordingly, Watson has not adjusted the Arrow Group’s historical book values for uncertain tax positions in the accompanying unaudited pro forma condensed combined financial information as full and complete relevant information concerning Arrow Group’s uncertain tax positions is not available.
j.	As of the acquisition date, except as specifically excluded, contingencies are required to be measured at fair value, if the acquisition-date fair value of the asset or liability arising from the contingency can be determined. If the acquisition-date fair value of the asset or liability cannot be determined, the asset or liability would be recognized at the acquisition date if both of the following criteria are met: (1) it is probable that an asset existed or that a liability had been incurred at the acquisition date, and (2) the amount of the asset or liability can be reasonably estimated. An adjustment has been made to prepaid assets and other current assets in the amount of $90.0 million to recognize the fair value of anticipated royalty and milestone net proceeds from Sepracor, Inc. due prior to December 31, 2010.
	Arrow Group is involved in various legal proceedings, including product liability, patent disputes, commercial, environmental and antitrust matters, which are considered normal business activities. Determining the fair value of liabilities, if any, associated with losses related to legal proceedings would require a detailed review and complete knowledge of complex legal matters and associated defense strategies for all outstanding Arrow Group legal proceedings. Watson has not completed the assessment whether the fair value of these potential contingent liabilities can be determined and, if determinable, to value these contingencies under a fair value standard. Accordingly, for the purpose of this unaudited pro forma condensed combined financial information, Watson has not adjusted the Arrow Group’s book values for legal contingencies. Final assessments of the liability positions for contingencies could differ materially from the amounts included in the accompanying unaudited pro forma condensed combined financial information.
k.	Goodwill is calculated as the difference between the fair value of the consideration expected to be transferred and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The acquired goodwill presented in the above table reflects the estimated goodwill from the preliminary purchase price allocation of $752.1 million and the elimination of historical goodwill in Arrow Group’s financial statements at September 30, 2009 of $25.8 million.
l.	Reflects the elimination of intercompany balances and an adjustment of certain balance sheet amounts for intercompany profit in inventory.
m.	Prior to closing, Arrow Group obtained a loan for $90.0 million through a subsidiary of Robin Hood (the “Note”). The Note will mature within one year of issuance. The Note is mandatorily repayable from anticipated royalty and milestone net proceeds from Sepracor, Inc. The Note is guaranteed by one or more of Arrow Group’s shareholders (the “Guarantor”). In the event Sepracor Inc. fails to make anticipated royalty/milestone payments to Watson for any reason, the Guarantor must repay the outstanding portion of the Note or reimburse Arrow Group for such defaulted amount.

n. Reflects new borrowings under Watson’s revolving credit facility.

5. Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments

This footnote should be read in conjunction with “Note 1. Description of Transaction,” “Note 2. Basis of Presentation,” “Note 3. Reconciliation of IFRS to U.S. GAAP,” and “Note 4. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments.” Adjustments included in the column “Pro Forma Adjustments” to the accompanying unaudited pro forma condensed combined statement of operations for the year ended December 31, 2008 and nine months ended September 30, 2009 reflect the following:

a.	Represents the elimination of net sales and cost of sales for product sales between Watson and Arrow Group for the respective periods.
b.	Represents increased amortization for fair value adjustments of identified intangible assets with definite lives. The increase in amortization expense for CMP intangibles is based on an average useful life of seven years as follows:

	Useful			Year Ended		Nine Months Ended
($ in millions)	Life	Fair Value		December 31, 2008		September 30, 2009
Intangible assets — CMP and other	varied	$	514.0	$	73.9	$	55.5
IPR&D	Unknown		724.0		—		—
		$	1,238.0	$	73.9	$	55.5

c.	To eliminate Arrow Group historical amortization expense as pro forma amortization expense is calculated above in Note 5b.
d.	Reflects lower interest income due to the use of Watson and Arrow Group available cash balances to finance a portion of the Acquisition. For the year ended December 31, 2008, all interest income was eliminated as the expected net use of cash to fund the Acquisition exceeded the average available cash balances for that year. Additional interest expense was calculated on the shortfall in cash for 2008 at the actual interest rate paid on the Senior Credit Facility for 2008 and is included below in the table in note 5e.
e.	Reflects higher interest expense and amortization of debt issue costs related to the issuance of $850 million senior notes in August 2009 to finance the Acquisition. Senior notes have a fixed coupon rate of 5.0% per annum on the 5 year tranche in the amount of $450.0 million and 6.125% per annum on the 10 year tranche in the amount of $400.0 million. This adjustment also reflects a net addition to the Senior Credit Facility at period average rates and the elimination of all interest charges related to Watson’s $575.0 million convertible contingent senior debentures (“CODES”) which were redeemed in September 2009. A summary of the pro forma interest adjustments in the accompanying pro forma condensed combined statement of operations is as follows:

	Year Ended			Nine Months Ended
	December 31, 2008			September 30, 2009
	(in millions)
Interest on senior notes offered	$	47.0		$	35.2
Senior credit agreement borrowings		9.5			1.6
Reversal of CODES interest		(12.6	)		(8.9	)
Elimination of interest on Robin Hood shareholder loans		(2.8	)		(1.8	)
Accretion of atorvastatin contingent payment consideration		12.0			9.9
Accretion of Preferred Stock		15.1			12.3
Interest on the Note		1.4			1.1
Amortization of debt issue costs and other		2.0			1.6
	$	71.6		$	51.0

     A ¹/₈% increase or decrease in the variable interest rate on borrowings under the senior credit agreement would increase or decrease the annual interest expense by approximately $0.5 million.

f.	Represents the income tax effect for unaudited pro forma condensed combined statement of operations adjustments using a statutory tax rate of approximately 38% for Watson’s future period pro forma adjustments and an estimated weighted average statutory tax rate of approximately 30% for Arrow Group’s future period pro forma adjustments.
g.	Reflects an estimate of the additional depreciation expense related to the preliminary estimated fair value adjustment to property, plant and equipment acquired.
h.	Reflects elimination of advisory, legal and regulatory costs incurred in the nine months ended September 30, 2009, which are directly attributable to the Acquisition but which are not expected to have a continuing impact on the Combined Entity results.

6. Adjustment to Weighted Average Shares Outstanding

a.	Represents the issuance of Common Consideration of approximately 16.9 million shares.
b.	Represents the issuance of Common Consideration of approximately 16.9 million shares and the elimination of approximately 14.4 million shares from the diluted share base as Watson’s CODES are assumed to have been redeemed at January 1, 2008.
c.	Represents the issuance of Common Consideration of approximately 16.9 million shares and the elimination of approximately 13.6 million shares from the diluted share base as Watson’s CODES are assumed to have been redeemed at January 1, 2008.