You should read the following discussion together with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 ("Annual Report"). This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under "Risk Factors" in our Annual Report and elsewhere in this Form 10-Q.

Summary

The following are certain significant events that occurred in the six months ended June 30, 2012:

• During the six months ended June 30, 2012, we made optional prepayments in an aggregate amount of $350 million of our term loan indebtedness under our New Senior Secured Credit Facilities (as defined below);

• In November 2011, we announced that our Board of Directors had authorized the redemption of up to an aggregate of $250 million of our ordinary shares (the "Redemption Program"). Pursuant to our Redemption Program, we redeemed 1.9 million ordinary shares in the six months ended June 30, 2012 at an aggregate cost of $32 million. Following the settlement of such redemptions, we cancelled all shares redeemed;

• In connection with the restructuring of our Western European operations announced in April 2011, we recorded pre-tax severance costs of $7 and $57 million in the quarter and six months ended June 30, 2012, respectively. In addition, we recognized pension-related curtailment gains of $7 and $8 million in the quarter and six months ended June 30, 2012, respectively. In the six months ended June 30, 2012, we incurred other restructuring costs of $1 million. Although we do not expect to record any material expenses relating to the Western European restructuring in future periods, as a result of the expected timing of the termination of employees, we anticipate recording approximately $4 million of additional pension-related curtailment gains during the second half of 2012;

• We recorded an impairment charge relating to our intangible assets of $106 million in the quarter ended June 30, 2012, $101 million of which was attributable to the impairment of our DORYX intangible asset following the April 30, 2012 decision of the United States District Court for the District of New Jersey holding that neither Mylan Pharmaceuticals Inc.'s ("Mylan") nor Impax Laboratories, Inc.'s ("Impax") proposed generic version of DORYX 150 infringed U.S. Patent No. 6,958,161 covering DORYX
150 (the "'161 Patent") and Mylan's subsequent introduction of a generic product in May 2012;

• We recorded a gain of $20 million in the quarter ended June 30, 2012, as a reduction of selling, general and administrative ("SG&A") expenses, based on the determination that it was no longer probable that the liability relating to the contingent milestone payments to Novartis Pharmaceuticals Corporation ("Novartis") in connection with our acquisition of the U.S. rights to ENABLEX in October 2010 (the " ENABLEX Acquisition") would be required to be paid;

• Our revenue for the quarter ended June 30, 2012 was $638 million and our net income was $53 million; and

• Our revenue for the six months ended June 30, 2012 was $1,323 million and our net income was $166 million.

2011 Strategic Transactions

During 2011, we announced the following strategic transactions that impacted our results of operations in the quarter and six months ended June 30, 2012 as compared to the prior year periods.

Refinancing of Senior Secured Indebtedness

On March 17, 2011, our subsidiaries, Warner Chilcott Holdings Company III, Limited ("Holdings III"), WC Luxco S.à r.l. (the "Luxco Borrower"), Warner Chilcott Corporation ("WCC" or the "US Borrower") and Warner Chilcott Company, LLC ("WCCL" or the "PR Borrower", and together with the Luxco Borrower and the US Borrower, the "Borrowers") entered into a new credit agreement (the "Credit Agreement") with a syndicate of lenders (the "Lenders") and Bank of America, N.A. as administrative agent, in order to refinance our Prior Senior Secured Credit Facilities (as defined below). Pursuant to the Credit Agreement, the Lenders provided senior secured credit facilities (the "New Senior Secured Credit Facilities") in an aggregate amount of $3,250 million comprised of $3,000 million in aggregate term loan facilities and a $250 million revolving credit facility available to all Borrowers. At the closing, we borrowed a total of $3,000 million under the term loan facilities and made no borrowings under the revolving credit facility. The proceeds of the term loans, together with approximately $279 million of cash on hand, were used to make an optional prepayment of $250 million in aggregate term loans under our Prior Senior Secured Credit Facilities, repay the remaining $2,969 million in aggregate term loans outstanding under our Prior Senior Secured Credit Facilities, terminate the Prior Senior Secured Credit Facilities and pay certain related fees, expenses and accrued interest.

Western European Restructuring

In April 2011, we announced a plan to restructure our operations in Belgium, the Netherlands, France, Germany, Italy, Spain, Switzerland and the United Kingdom. The restructuring did not impact our operations at our headquarters in Dublin, Ireland, our

facilities in Dundalk, Ireland, Larne, Northern Ireland or Weiterstadt, Germany or our commercial operations in the United Kingdom. We determined to proceed with the restructuring following the completion of a strategic review of our operations in our Western European markets where our product ACTONEL lost exclusivity in late 2010. ACTONEL accounted for approximately 70% of our Western European revenues in the year ended December 31, 2010. In connection with the restructuring, we moved to a wholesale distribution model in the affected jurisdictions to minimize operational costs going forward. The implementation of the restructuring plan impacted approximately 500 employees in total. For a further discussion of the Western European restructuring, including severance charges recorded as a component of restructuring costs in our condensed consolidated statement of operations, see "Note 3" to the notes to our condensed consolidated financial statements.

Manati Facility

In April 2011, we announced a plan to repurpose our Manati, Puerto Rico manufacturing facility. This facility now serves primarily as a warehouse and distribution center. As a result of the repurposing, we recorded charges of $23 million for the write-down of certain property, plant and equipment in the six months ended June 30, 2011, of which $2 million was recorded in the quarter ended June 30, 2011. Additionally, severance costs of $8 million were recorded in the six months ended June 30, 2011, of which $1 million was recorded in the quarter ended June 30, 2011. These severance costs relating to the Manati repurposing were settled in cash during the year ended December 31, 2011. The expenses relating to the Manati repurposing were recorded as a component of cost of sales in our condensed consolidated statement of operations.

Redemption Program

In November 2011, we announced that our Board of Directors authorized the Redemption Program. During the six months ended June 30, 2012, we recorded the redemption of 1.9 million ordinary shares at an aggregate cost of $32 million. In addition, we recorded the redemption of 3.7 million ordinary shares in the quarter ended December 31, 2011 at an aggregate cost of $56 million. Following the settlement of such redemptions, we cancelled all shares redeemed. We did not redeem any ordinary shares in the quarter ended June 30, 2012. The Redemption Program does not obligate us to redeem any number of our ordinary shares or an aggregate of shares equal to the full $250 million authorization. The Redemption Program will terminate on the earlier of December 31, 2012 or the redemption by us of an aggregate of $250 million of our ordinary shares.

Operating Results for the quarters and six months ended June 30, 2012 and 2011

Revenue

The following table sets forth our revenue for the quarters and six months ended June 30, 2012 and 2011, with the corresponding dollar and percentage changes:

                                              Quarter Ended                                         Six Months Ended
                                                 June 30,             Increase (decrease)               June 30,               Increase (decrease)
(dollars in millions)                        2012        2011      Dollars          Percent         2012         2011        Dollars         Percent
Women's Healthcare:
Osteoporosis
ACTONEL(1)                                  $   150      $ 193     $    (43 )           (22) %    $     296     $   425     $    (129 )          (30) %
ATELVIA                                          16          8            8              100 %           32           9            23             256 %

Total Osteoporosis                              166        201          (35 )           (17) %          328         434          (106 )          (24) %


Oral Contraceptives
LOESTRIN 24 FE                                   97        102           (5 )            (5) %          205         221           (16 )           (7) %
LO LOESTRIN FE                                   34         11           23              209 %           62          19            43             226 %
Other Oral Contraceptives                         4          2            2              100 %           10          12            (2 )          (17) %

Total Oral Contraceptives                       135        115           20               17 %          277         252            25              10 %


Hormone Therapy
ESTRACE Cream                                    46         38            8               21 %           98          73            25              34 %
Other Hormone Therapy                             7         11           (4 )           (36) %           21          25            (4 )          (16) %

Total Hormone Therapy                            53         49            4                8 %          119          98            21              21 %


Other Women's Healthcare Products                14         19           (5 )           (26) %           29          35            (6 )          (17) %

Total Women's Healthcare                        368        384          (16 )            (4) %          753         819           (66 )           (8) %


Gastroenterology:
ASACOL                                          187        188           (1 )            (1) %          398         375            23               6 %

Dermatology:
DORYX                                            23         32           (9 )           (28) %           53          98           (45 )          (46) %

Urology:
ENABLEX                                          41         40            1                3 %           85          85            -              -   %

Other:
Other products net sales                         12         16           (4 )           (25) %           23          33           (10 )          (30) %
Contract manufacturing product sales              4          7           (3 )           (43) %            6          10            (4 )          (40) %
Other revenue(2)                                  3          3           -               -   %            5           7            (2 )          (29) %

Total Revenue                               $   638      $ 670     $    (32 )            (5) %    $   1,323     $ 1,427     $    (104 )           (7) %

(1) Includes "other revenue" of $16 million and $19 million for the quarters ended June 30, 2012 and 2011, respectively, and $31 million and $41 million for the six months ended June 30, 2012 and 2011, respectively, as reported in our condensed consolidated statement of operations, resulting from the collaboration agreement with Sanofi-Aventis U.S. LLC.

(2) Excludes "other revenue" of $16 million and $19 million for the quarters ended June 30, 2012 and 2011, respectively, and $31 million and $41 million for the six months ended June 30, 2012 and 2011, respectively, reported in our condensed consolidated statement of operations and disclosed pursuant to footnote 1 above.

Total revenue in the quarter ended June 30, 2012 was $638 million, a decrease of $32 million, or 5%, compared to the same quarter in the prior year. Total revenue in the six months ended June 30, 2012 was $1,323 million, a decrease of $104 million, or 7%, compared to the same period in the prior year. For the quarter ended June 30, 2012, the decrease in revenues as compared to the prior year quarter was primarily driven by a decline in ACTONEL revenues of $43 million, due in large part to overall declines in the U.S. oral bisphosphonate market as well as the continued declines in ACTONEL rest of world ("ROW") net sales following the 2010 loss of exclusivity in Western Europe, offset, in part, by net sales growth in certain promoted products, primarily LO LOESTRIN FE, ESTRACE Cream and ATELVIA. For the six months ended June 30, 2012, the decrease was primarily attributable to a decline in ACTONEL revenues of $129 million and a decline in DORYX net sales of $45 million which was offset, in part, by net sales growth in certain promoted products, primarily LO LOESTRIN FE, ESTRACE Cream, ASACOL and ATELVIA, as compared to the prior year period.
Period-over-period changes in the net sales of our products are a function of a number of factors, including changes in: market demand, gross selling prices, sales-related deductions from gross sales to arrive at net sales and the levels of pipeline inventories of our products held by our direct and indirect customers. In addition, the launch of new products, the loss of exclusivity for our products and transactions such as product acquisitions and dispositions may also, from time to time, impact our period over period net sales. We use IMS Health, Inc. ("IMS") estimates of filled prescriptions for our products as a proxy for market demand in the U.S. Although these estimates provide a broad indication of market trends for our products in the U.S., the relationship between IMS estimates of filled prescriptions and actual unit sales can vary, and as a result, such estimates may not always be an accurate predictor of our unit sales.

Revenues of our osteoporosis products decreased $35 million, or 17%, in the quarter ended June 30, 2012, and $106 million, or 24%, in the six months ended June 30, 2012, compared with the prior year periods. Total revenues of ACTONEL were $150 million and $296 million, in the quarter and six months ended June 30, 2012, respectively, compared to $193 million and $425 million, respectively, in the prior year periods. Total ACTONEL revenues were comprised of the following components:

                                            Quarter Ended                                            Six Months Ended
                                               June 30,              Increase (decrease)                 June 30,                Increase (decrease)
(dollars in millions)                      2012        2011       Dollars           Percent          2012          2011       Dollars            Percent
United States                             $    90      $ 106     $     (16 )             (15 )%    $    166       $  250     $      (84 )             (34 )%
Non-U.S. North America                         12         16            (4 )             (25 )%          26           30             (4 )             (13 )%
ROW                                            32         52           (20 )             (38 )%          73          104            (31 )             (30 )%


Total net sales                               134        174           (40 )             (23 )%         265          384           (119 )             (31 )%

ROW, other revenue                             16         19            (3 )             (16 )%          31           41            (10 )             (24 )%


Total ACTONEL revenues                    $   150      $ 193     $     (43 )             (22 )%    $    296       $  425     $     (129 )             (30 )%

In the United States, ACTONEL net sales decreased $16 million, or 15%, in the quarter ended June 30, 2012, and $84 million, or 34%, in the six months ended June 30, 2012, compared with the prior year periods, primarily due to a decrease in filled prescriptions of 37% in the quarter and six months ended June 30, 2012. For the quarter ended June 30, 2012, the decrease in filled prescriptions was offset, in part, by a decrease in sales-related deductions and higher average selling prices as compared to the prior year quarter. For the six months ended June 30, 2012, the decrease in filled prescriptions, coupled with an increase in sales-related deductions, was offset, in part, by higher average selling prices as compared to the prior year period. In the U.S., ACTONEL filled prescriptions continue to decline due primarily to declines in prescriptions within the overall oral bisphosphonate market. ACTONEL ROW net sales were $32 million in the quarter ended June 30, 2012, down 38% from $52 million in the prior year quarter. In the six months ended June 30, 2012, ACTONEL ROW net sales were $73 million, down 30% from $104 million in the prior year period. The decline in ACTONEL ROW net sales in the quarter and six months ended June 30, 2012 was due to the continued declines in ROW net sales following the 2010 loss of exclusivity in Western Europe. While we expect to continue to experience significant declines in total ACTONEL revenues throughout the remainder of 2012 relative to 2011, we expect net sales from our new product ATELVIA will grow and partially offset some of those declines in the U.S. market. ATELVIA, which we began to promote in the U.S. in early 2011, generated net sales of $16 million and $8 million in the quarters ended June 30, 2012 and 2011, respectively, and $32 million and $9 million in the six months ended June 30, 2012 and 2011, respectively. The increase in ATELVIA net sales primarily relates to an increase in filled prescriptions of 120% and 197% in the quarter and six months ended June 30, 2012, respectively, as compared to the prior year periods.

Net sales of our oral contraceptive products increased $20 million, or 17%, in the quarter ended June 30, 2012, and $25 million, or 10%, in the six months ended June 30, 2012, compared with the prior year periods. LOESTRIN 24 FE generated net sales of $97 million in the quarter ended June 30, 2012, a decrease of 5%, compared with $102 million in the prior year quarter. During the six months ended June 30, 2012, LOESTRIN 24 FE generated net sales of $205 million, a decrease of 7%, compared with $221 million in the prior year period. The decrease in LOESTRIN 24 FE net sales in the quarter and six months ended June 30, 2012 as compared to the prior year periods was primarily due to a decrease in filled prescriptions of 14% and 17%, respectively, and an increase in sales-related deductions, offset, in part, by an expansion of pipeline inventories and higher average selling prices relative to the prior year periods. LO LOESTRIN FE, which we began to promote in the U.S. in early 2011 and is currently the primary promotional focus of our sales efforts, generated net sales of $34 million and $11 million, in the quarters ended June 30, 2012 and 2011, respectively, an increase of 209%. Additionally, LO LOESTRIN FE generated net sales of $62 million and $19 million in the six months ended June 30, 2012 and 2011, respectively, an increase of 226%. The increase in LO LOESTRIN FE net sales primarily relates to an increase in filled prescriptions of 277% and 477% in the quarter and six months ended June 30, 2012, respectively, as compared to the prior year periods.

Net sales of our hormone therapy products increased $4 million, or 8%, in the quarter ended June 30, 2012 and $21 million, or 21%, in the six months ended June 30, 2012, as compared with the prior year periods. Net sales of ESTRACE Cream increased $8 million, or 21%, and $25 million, or 34%, in the quarter and six months ended June 30, 2012, respectively, as compared to the prior year periods. The increase in ESTRACE Cream net sales in the quarter ended June 30, 2012 compared to the prior year quarter was primarily due to an increase in filled prescriptions of 15% and higher average selling prices, offset, in part, by a contraction of pipeline inventories relative to the prior year quarter. The increase in ESTRACE Cream net sales in the six months ended June 30, 2012 compared to the prior year period was due primarily to an increase in filled prescriptions of 15%, a decrease in sales-related deductions and higher average selling prices.

Net sales of ASACOL were $187 million in the quarter ended June 30, 2012, a decrease of $1 million, or 1%, compared to the prior year quarter. Net sales of ASACOL were $398 million in the six months ended June 30, 2012, an increase of $23 million, or 6%, compared with the prior year period. ASACOL net sales in North America in the quarters ended June 30, 2012 and 2011 totaled $175 million and $174 million, respectively, including net sales in the United States of $169 million and $168 million, respectively. The increase in ASACOL net sales in the United States of $1 million was due to higher average selling prices and a decrease in sales-related deductions, offset, in part, by a contraction of pipeline inventories and a decrease in filled prescriptions of 3% based on IMS estimates,

relative to the prior year quarter. ASACOL net sales in North America in the six months ended June 30, 2012 and 2011 totaled $374 million and $352 million, respectively, including net sales in the United States of $362 million and $341 million, respectively. The increase in ASACOL net sales in the United States relative to the prior year period was primarily due to higher average selling prices and an expansion of pipeline inventories, offset, in part, by a decrease in filled prescriptions of 3% based on IMS estimates. Our ASACOL 400 mg product accounted for approximately 72% of our total ASACOL net sales in the quarter and six months ended June 30, 2012. See "Note 14" to the notes to our condensed consolidated financial statements included elsewhere in this report for a description of legal proceedings related to ASACOL.

Net sales of DORYX decreased $9 million, or 28%, and $45 million, or 46% in the quarter and six months ended June 30, 2012, compared to the prior year periods. The decrease in DORYX net sales in the quarter ended June 30, 2012 relative to the prior year quarter was due primarily to the introduction of generic competition for DORYX 150 mg following the April 30, 2012 decision of the United States District Court for the District of New Jersey holding that neither Mylan's nor Impax's proposed generic version of DORYX 150 mg infringed the patent covering DORYX 150 mg, as well as an increase in sales-related deductions, offset, in part, by an expansion of pipeline inventories and higher average selling prices relative to the prior year quarter. The decrease in DORYX net sales in the six months ended June 30, 2012 relative to the prior year period was due primarily to an increase in sales-related deductions relating to changes made to the terms of our loyalty card program and other rebate programs and the introduction of generic competition for DORYX 150 mg, offset, in part, by higher average selling prices relative to the prior year period. We expect generic competition for DORYX 150 mg to result in significant declines in our future DORYX net sales. See "Note 14" to the notes to our condensed consolidated financial statements included elsewhere in this report.

Net sales of ENABLEX in the quarter ended June 30, 2012 were $41 million, an increase of 3%, compared to $40 million in the prior year quarter. Net sales of ENABLEX in the six months ended June 30, 2012 of $85 million were flat as compared with the prior year period. The increase in net sales for the quarter ended June 30, 2012 as compared to the prior year quarter was primarily due to higher average selling prices and a decrease in sales-related deductions, offset, in part, by a decrease in filled prescriptions of 17%. ENABLEX net sales in the six months ended June 30, 2012 were impacted by a decrease in filled prescriptions of 15% relative to the prior year period, offset by higher average selling prices and a decrease in sales-related deductions.

Cost of Sales (excluding amortization of intangible assets)

The table below shows the calculation of cost of sales and cost of sales
percentage for the quarters and six months ended June 30, 2012 and 2011:




                                                Quarter Ended            Quarter Ended            $         Percent
(dollars in millions)                           June 30, 2012            June 30, 2011         Change        Change
Product net sales                            $               619      $               648      $   (29 )          (4 )%

Cost of sales (excluding amortization)                        70                       76           (6 )          (8 )%

Cost of sales percentage                                      11 %                     12 %

                                              Six Months Ended        Six Months Ended          $         Percent
(dollars in millions)                          June 30, 2012           June 30, 2011         Change        Change
Product net sales                            $            1,288      $            1,379      $   (91 )          (7 )%

Cost of sales (excluding amortization)                      142                     199          (57 )         (29 )%

Cost of sales percentage                                     11 %                    14 %

Cost of sales (excluding amortization) decreased $6 million, or 8%, and $57 million, or 29%, in the quarter and six months ended June 30, 2012, respectively, compared with the prior year periods. The quarter and six months ended June 30, 2011 included $3 million and $31 million, respectively, in costs related to the repurposing of our Manati facility. Excluding the impact of the repurposing, our cost of sales as a percentage of product net sales was 11% in the quarters ended June 30, 2012 and 2011 and was 11% and 12% in the six months ended June 30, 2012 and 2011, respectively. The decrease in the six months ended June 30, 2012 relative to the prior year period was primarily due to the mix of products sold as well as operational savings as a result of the Manati repurposing.

Selling, General & Administrative Expenses

Our SG&A expenses were comprised of the following for the quarters and six
months ended June 30, 2012 and 2011:



                                                Quarter Ended           Quarter Ended           $           Percent
. . .