2002
NOTICE OF
ANNUAL MEETING
AND PROXY
STATEMENT

[BAUSCH & LOMB LOGO]

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Corporate Offices One Bausch & Lomb Place
Rochester NY 14604-2701

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[BAUSCH & LOMB LOGO]

March 22, 2002

Dear Bausch & Lomb Shareholder:

We invite you to attend our annual meeting of shareholders on Tuesday, April 30, 2002, at 10:30 a.m., to be held at The Center for Biomedical Learning Conference Center at the Strong Memorial Medical Center Complex, School of Medicine and Dentistry, 601 Elmwood Avenue in Rochester, New York.

This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement tells you about the agenda and the procedures for the meeting. It also describes how the company's Board of Directors operates and gives certain information about the company. In addition, you will note that for your convenience we have included the company's financial statements for 2001 as Exhibit A to the proxy statement.

We hope you will be able to attend the annual meeting. If you need special assistance at the meeting, please contact the Secretary of the company at the address above.

Sincerely,

/s/ Ronald L. Zarrella

Ronald L. Zarrella
Chairman and Chief Executive Officer

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Date: April 30, 2002

Time: 10:30 a.m.

Place: The Center for Biomedical Learning Conference Center

Strong Memorial Medical Center Complex
School of Medicine and Dentistry
601 Elmwood Avenue
Rochester, New York 14642-0001

YOUR VOTE IS IMPORTANT. YOU MAY EITHER CALL THE TOLL-FREE NUMBER SET FORTH ON YOUR PROXY CARD OR SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY TO ENSURE ITS ARRIVAL IN TIME FOR THE MEETING.

/s/ Jean F. Geisel

Jean F. Geisel
Secretary
March 22, 2002

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GENERAL INFORMATION
The approximate date on which the enclosed form of proxy and this proxy statement are first being sent to shareholders is March 22, 2002.

Outstanding Shares
On February 1, 2002, 53,253,369 shares of common stock and 524,938 shares of class B stock were outstanding. Each common share and class B share has one vote.

Who May Vote
Shareholders of Bausch & Lomb Incorporated as of the company's record date, March 8, 2002, may vote. A list of shareholders entitled to vote will be available at the request of any shareholder at the annual meeting.

How To Vote
You may vote by proxy or in person at the meeting. To vote by proxy, you may either call the toll-free number set forth on the proxy card, or mail your signed proxy card to our tabulator in the envelope provided. Even if you plan to attend the meeting, we recommend that you vote prior to the meeting. You can always change your vote as described below.

How Proxies Work
Bausch & Lomb's Board of Directors is asking for your proxy. By giving us your proxy, you authorize the proxyholders (members of Bausch & Lomb management) to vote your shares at the meeting in the manner you direct. If you do not specify how you wish us to vote your shares, your shares will be voted "for" all director candidates, "for" the ratification of the appointment of PricewaterhouseCoopers LLP as independent accountants for the company for 2002, and "against" the shareholder proposal described on pages 20 and 21. Proxyholders will also vote shares according to their discretion on any other matter properly brought before the meeting.

You may receive more than one proxy card depending on how you hold your shares. Generally, you need to either call the toll-free number or sign and return all of your proxy cards to vote all of your shares. For example, if you hold shares through someone else, such as a stockbroker, you may get proxy material from them. Shares registered in your name and shares held in the Bausch & Lomb 401(k) Plan are covered by a separate proxy card. If a proxy card representing shares in the Bausch & Lomb 401(k) Plan is not voted, those shares will be voted by the trustee of the Plan in accordance with the direction of the majority of shares voted by other participants in the Plan.

If for any reason any of the nominees for election as directors becomes unavailable for election, discretionary authority may be exercised by the proxyholders to vote for substitutes proposed by the Board of Directors.

Quorum
In order to carry out the business of the meeting, we must have a quorum. This means that at least a majority of the outstanding shares eligible to vote must be represented at the meeting, either by proxy or in person. Shares owned by Bausch & Lomb are not voted and do not count for this purpose.

Changing Your Vote
You may revoke your proxy before it is voted by submitting a new proxy with a later date, by voting in person at the meeting or by notifying Bausch & Lomb's Secretary in writing at the address under "Questions?" on page 22.

Bausch & Lomb   1   2002 Proxy Statement

Votes Needed
Director nominees receiving the largest number of votes cast are elected, up to the maximum number of directors fixed by the Board to be elected at the meeting. As a result, any shares not voted (whether by abstention, broker non-vote or otherwise) have no impact on the election of directors, except to the extent that the failure to vote for a particular nominee may result in another nominee receiving a larger number of votes. Ratifying the appointment of PricewaterhouseCoopers LLP as independent accountants for 2002, and any other matter properly brought before the meeting, requires the favorable vote of a majority of the votes cast.

Attending In Person
Only shareholders, their designated proxies and Bausch & Lomb's guests may attend the meeting.

BOARD OF DIRECTORS
The Board of Directors of the company met ten times in 2001. Each of the directors attended 75% or more of the aggregate number of regularly scheduled and special Board and committee meetings held during the year.

Directors who were not employees of the company received an annual retainer of $52,000. In addition, directors who chaired committees and were not employees of the company received a $5,200 annual retainer. No additional fees are paid for attendance at meetings. The company does not pay an annual retainer or fees to directors who are employees of the company.

The company's Annual Retainer Stock Plan for Non-Employee Directors was approved by the shareholders on May 10, 1996 and amended on January 25, 2000 to include director stock ownership guidelines. The guidelines provide that directors who own company shares with an aggregate market value of $260,000 or more have the option to receive their annual retainer in company stock or cash or a combination of both. Directors who have not met the guidelines receive at least one-half of the annual retainer in company stock.

Under the 1990 Stock Incentive Plan, non-employee directors annually receive non-qualified, fully-vested options to purchase shares of class B stock of the company. The number of options is determined by a fixed formula set forth in the Plan, and the exercise price of all such options is determined by the fair market value of the company's common stock on the date of grant. For fiscal year 2001, each non-employee director was granted 3,084 options to purchase class B shares at a price of $34.85 per share.

Effective November 9, 2001, the Board of Directors appointed William H. Waltrip as lead director to assist the Board with the transition of Ronald L. Zarrella as chairman and chief executive officer of the company. The appointment commenced on January 1, 2002 and will end with the annual meeting of shareholders on April 30, 2002.

Committees Of The Board
The Board of Directors has established four standing committees to assist it in carrying out its responsibilities: the Executive Committee, the Audit Committee, the Committee on Management and the Committee on Directors.

Bausch & Lomb   2   2002 Proxy Statement

The Committee on Directors will consider director candidates proposed by shareholders. The company's by-laws provide that such shareholder submissions must include certain biographical information concerning the recommended individual, including age, address, employment history and board memberships, if any, and the candidate's written consent to the nomination and to serve if elected. To be considered for nomination at the 2003 annual meeting, shareholder submissions for nomination must be received at the offices of the company to the attention of the Secretary at One Bausch & Lomb Place, Rochester, New York 14604-2701 between December 31, 2002 and January 30, 2003.

Bausch & Lomb   3   2002 Proxy Statement

General
The Board of Directors currently has nine members and, pursuant to the company's by-laws, is divided into three classes. One class is elected each year to serve for three years. The term of office of each class will expire, respectively, on the dates of the annual meetings of shareholders in 2002, 2003 and 2004. The directors whose terms expire at the 2002 annual meeting of shareholders are Jonathan S. Linen, John R. Purcell and William H. Waltrip.

John R. Purcell has been a director of the company since 1976 and reached retirement age in 2001. The company's Corporate Governance Guidelines state that when a director reaches age 70 during his or her term of office, he or she shall retire as a director effective on the date of the next annual meeting of shareholders. In order to maintain continuity of the Board of Directors during the transition of Ronald L. Zarrella, who was named chairman and chief executive officer of the company on November 9, 2001, the Board of Directors has approved an exception to the Corporate Governance Guidelines to allow Mr. Purcell to stand for re-election as a director.

The Board of Directors has fixed the number of directors to be elected at the 2002 annual meeting of shareholders at four. In accordance with the by-laws which require that the three classes of directors be as equal in number as possible, Mr. Zarrella is nominated to stand for election to serve until the 2004 annual meeting and Messrs. Linen, Purcell and Waltrip are nominated to stand for re-election to serve until the 2005 annual meeting.

Information about the nominees for election as directors, as well as those directors continuing in office, is presented below.

Bausch & Lomb   4   2002 Proxy Statement

Bausch & Lomb   5   2002 Proxy Statement

Bausch & Lomb   6   2002 Proxy Statement

Item No. 2
Ratification of the Appointment of Independent Accountants
The Board of Directors has unanimously approved and voted to recommend that shareholders ratify the appointment of PricewaterhouseCoopers LLP as independent accountants of the company for 2002. They have been independent accountants of the company since 1927. A representative of PricewaterhouseCoopers LLP plans to be present at the meeting, will have the opportunity to make a statement, and is expected to be available to respond to questions.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND DIRECTORS AND EXECUTIVE OFFICERS
Beneficial Owners of More than 5% of the Company's Common Stock

Bausch & Lomb   7   2002 Proxy Statement

Security Ownership Of Directors and Executive Officers
Presented below is information concerning the amount of company stock beneficially owned by each director and director nominee, each non-director officer named in the Summary Compensation Table appearing on page 13, and all directors and executive officers of the company as a group. All numbers stated are as of February 1, 2002, and include beneficial ownership of shares of common and class B stock, which are identical with respect to dividend and liquidation rights and vote together as a single class for all purposes.

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 below beneficially owns more than 1% of the company's outstanding voting stock, other than Messrs. Zarrella and Carpenter, and the shares beneficially owned by all directors and executive officers as a group constitute 4.5% of the company's outstanding voting stock.

In addition to shares beneficially owned by directors and executive officers of the company, as indicated above, such persons may also own common stock equivalents under deferred compensation plans of the company, reflecting further their economic stake in the value of the company's common stock. As of February 1, 2002, the following common stock equivalents were owned by (i) the company's executive officers: Mr. Zarrella, 2,239; Mr. Carpenter, 54,976; Mr. Hahs, 7,356; Mr. McCluski, 13,801; Mr. Sieczkarek, 544; Mr. Aron, 548; (ii) the company's directors: Mr. Purcell, 8,111; and (iii) all executive officers and directors of the company as a group, 106,848.

Bausch & Lomb   8   2002 Proxy Statement

Bausch & Lomb   9   2002 Proxy Statement

Base Pay
Base pay levels and increases for each officer take into consideration the individual's current performance, experience, the scope and complexity of his or her position within the company and the external competitive marketplace for comparable positions at peer companies. Base pay for officers is reviewed each year, and generally adjusted annually. In 2001, base pay for officers was not increased from 2000 levels, except where, during the year, an officer's responsibilities changed.

In determining Mr. Carpenter's base salary, the committee considered the comparator companies' actual and forecasted chief executive officer compensation (on a size-adjusted basis), targeting the lower end of the third quartile of the peer group chief executive officer base pay. The committee also considered financial and strategic performance of the company in the preceding year (2000) under Mr. Carpenter's direction. No weighting was assigned to the foregoing factors. Mr. Carpenter did not receive a salary increase in 2001. Upon Mr. Carpenter's resignation, Mr. Waltrip's compensation was set at $400,000 per year. The pay was set after consideration of competitive pay for interim CEOs and a review of responsibilities to be performed. Mr. Zarrella's annualized base pay was established after consideration of competitive pay in the external market, including Mr. Zarrella's base pay with his then-employer.

Annual Incentive Awards
In 2001, under the company's Economic Value Added, or EVA(R) ¹, incentive compensation program, corporate officers, including those identified in the Summary Compensation Table on page 13, except for Messrs. Zarrella and Waltrip, were eligible for annual incentive awards. These awards were based upon actual EVA performance of the company, plus, for operating units, the actual performance in achieving objectives established at the beginning of the year which drive EVA performance against targets established by the committee at the beginning of the year. Those operating unit objectives included, for example, sales and earnings growth, cost improvement and cash flow goals. EVA improvement occurs when the ratio of: (i) net operating profit after tax to (ii) capital employed in the business increases over time, thus linking incentive compensation and return on capital. The bonus target for each officer is expressed as a percentage of base pay, falling within a range of 37-90%, depending upon the position. Incentive targets for the executive officers on average were at the lower end of the third quartile of the comparator group of companies.

The committee defined performance intervals to establish measurement standards for determining the range of payouts as a percentage of the target payment. The performance intervals establish the criteria for a payout from zero to 200% of the target payment, but there is no cap and no floor in the incentive calculation.

The EVA program provides the incentive of a significant bonus opportunity, but also uses a "cumulative bonus bank" feature to ensure that extraordinary EVA improvements are sustained before extraordinary awards are paid out. If EVA performance exceeds the EVA goal, the target bonus plus one-half of the incentive calculation in excess of the target amount is paid currently, and the other half of the additional incentive is carried forward, in the bank, to the next year, payment of which is subject to future results. Similarly, a decline in EVA performance creates a negative bonus bank impact which is carried into future years and may reduce future awards. This bonus bank creates short- and long-term incentive features, rewarding sustained performance and continued employment.

For executive officers without individual operating unit responsibility, including the CEO, the 2001 annual incentive was based entirely on overall corporate EVA performance. In 2001, Bausch & Lomb's corporate EVA performance was negative, resulting in no bonus payout on overall corporate performance. Executive officers identified in the Summary Compensation Table on page 13 who managed business units had up to 50% of their annual incentive based on performance against EVA drivers of the business unit they managed. Negative overall company performance resulted in no cash bonus being paid to executive officers for 2001 under the EVA Incentive Compensation Program. The committee also decided that in order to incent future operating unit performance, it was in the company's best interests that no negative impact from overall company performance be applied to reduce bonus banks below zero.

Neither Mr. Zarrella nor Mr. Waltrip participated in the annual incentive program. Mr. Carpenter participated in this program, but received no bonus for 2001.

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Bausch & Lomb   10   2002 Proxy Statement

Long-Term Incentive Awards
The package of long-term incentives offered to officers in 2001 included stock options and stock grants. The package of long-term incentives was targeted at the upper end of the third quartile of peer company long-term incentive awards.

Under the Bausch & Lomb 1990 Stock Incentive Plan, which was approved by the shareholders, officers of the company are eligible to receive awards of stock options and stock grants, as approved by the committee. Guidelines for stock options and stock grants are based on a review of comparator company data in combination with an internal assessment of the scope and complexity of the executive's position. For each officer position, a target stock award is defined based on market data. The committee reviews the competitiveness of the target awards annually.

In January 2001, the committee awarded options within this framework including to Mr. Carpenter and to other officers identified on the Summary Compensation table on page 13.

As part of his hiring package, which is described on page 18, the company agreed to grant Mr. Zarrella 500,000 stock options in 2001. Mr. Waltrip received a one-time grant of 50,000 stock options in September 2001 as part of his agreement to serve as interim chief executive officer following Mr. Carpenter's departure. The 2001 options received by Messrs. Waltrip and Zarrella vested immediately. All stock options were priced at the fair market value of the underlying stock as of the date of the grant.

In 2001, Mr. Carpenter received options to purchase 200,000 shares of class B stock with an exercise price of $44.825 per share. This award was below the target level for an annual award.

Under the Cumulative EVA Program, corporate officers, including some of those identified in the Summary Compensation Table on page 13, received restricted stock grants made pursuant to the company's 1990 Stock Incentive Plan. Each restricted stock grant under the Cumulative EVA Program vests based on achievement by the company of three-year corporate EVA goals approved by the committee at the time of grant. These awards are targeted at 25% of participants' aggregate long-term incentive compensation, with the chief executive officer's award under the Cumulative EVA Program targeted at 25% of such long-term incentive compensation. Actual awards under the Cumulative EVA Program, upon vesting, can range from 0-200% of the target number of shares awarded, depending upon company performance against pre-approved multi-year goals. In addition, since awards are expressed in shares of company stock, the actual value of awards upon vesting will vary based upon upward and downward changes in the market value of Bausch & Lomb common stock from the date of grant to the vesting date. The Cumulative EVA Program was designed to provide executives with incentives for long-term EVA improvements while also increasing stock ownership to further align executives' interests with those of shareholders.

Under the Cumulative EVA Program for the three-year award cycle beginning in 2001, executive officers, including some of those identified in the Summary Compensation Table on page 13, were awarded the shares of class B restricted stock described in the table on page 15 entitled "Long Term Incentive Plan - Awards in Last Fiscal Year". Neither Mr. Zarrella nor Mr. Waltrip received awards under the Cumulative EVA Program. Based upon the company's poor performance against pre-established multi-year EVA improvement goals for the years 1999-2001, Cumulative EVA Program awards granted to company executive officers in 1999 did not vest. Therefore, the value of these awards was zero. Mr. Carpenter's award under the Cumulative EVA Program, which is described on the table on page 15 entitled "Long Term Incentive Plan" was forfeited, together with all prior unvested awards under that program, upon his resignation in September 2001.

In addition to the Cumulative EVA Program, restricted stock grants may be awarded periodically to officers of the company. In 2001, restricted stock grants were awarded to officers other than the chief executive officer, including three of the people identified in the Summary Compensation Table on page 13, to reflect promotions and the company's desire to retain key executive talent.

Bausch & Lomb   11   2002 Proxy Statement

Supplemental Executive Retirement Plan
An additional key element of total compensation for the chief executive officer is the Supplemental Executive Retirement Plan ("SERP") II, under which Mr. Zarrella was vested immediately as part of his hiring package, in view of his prior service with the company, and in view of similar benefits with his former employer which were forfeited. This benefit is described further on page 17. Mr. Carpenter was vested in this Plan before his resignation. This Plan, funded by life insurance to minimize the cost to the company, is designed to provide a competitive retirement benefit (up to a 60% replacement ratio). All other executive officers participate in SERP III, described on page 17. Contributions made under SERP II and SERP III Plans do not result in taxable income to the participants.

Response to Internal Revenue Code Limits on Deductibility of Certain Compensation
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits to $1,000,000 per person the company's tax deduction of certain non-performance-based compensation paid in a given year to its most highly compensated officers. The levels of non-performance-based salary, bonus and other compensation paid by the company do not typically exceed this level. In order to minimize the potential for lost tax deductibility, the committee recommended, and shareholders approved in 1998, amendments to certain company plans which were designed to assure that performance-based compensation plans currently in place achieve compliance with the requirements of Section 162(m) of the Code. The committee's present intention is to use the requirements of Section 162(m) as a guide in its compensation-related decisions, except where the best interests of the company and its shareholders dictate otherwise.

Conclusion
Each element of the officer compensation package is reviewed by the Committee on Management to ensure that base pay and incentive opportunities are at competitive levels and to provide incentive systems reflecting financial performance and an alignment with shareholder interests. In summary, we believe the total compensation philosophy and compensation program serve the best interests of the shareholders.

Bausch & Lomb   12   2002 Proxy Statement

The individuals named in the following tables include all individuals serving as the company's chief executive officer during the fiscal year ended December 29, 2001, and the four other most highly compensated executive officers of the company for the fiscal year ended December 29, 2001.

Bausch & Lomb   13   2002 Proxy Statement

Bausch & Lomb   14   2002 Proxy Statement

Long-Term Incentive Compensation
As described in more detail in the Report of the Committee on Management on page 9, the EVA Plan requires that 50% of accrued bonuses payable in excess of 100% of target bonus be banked. The amount in the bonus bank is at risk in the sense that in any year the accrued bonus is negative, the negative bonus amount is subtracted from the outstanding bonus bank balance. For fiscal 2001, there were no amounts in the bonus bank as they were paid out in full in 2000.

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[PERFORMANCE GRAPH]

Assumes $100 invested on last day of December 1996. Dividends are reinvested quarterly.

Bausch & Lomb   16   2002 Proxy Statement

Under the company's Retirement Benefits Plan, all employees of the company and certain subsidiaries who have reached age 21 and have at least one year of service are participants. The Plan is a cash balance retirement plan which accrues benefits in a hypothetical account which can be paid either as a single lump sum or converted to a lifetime monthly annuity at time of retirement or separation from the company. Account values increase annually based on earnings, as defined in the Plan, as well as other factors such as age, service and interest credited on account balances. Benefits vest after five years of service as defined in the Plan. Each of Messrs. Zarrella, Waltrip, Carpenter, Hahs, McCluski, Sieczkarek and Aron is a vested participant under this Plan. Assuming continued employment to normal retirement age, the estimated annual benefits payable to Messrs. Zarrella, Hahs, McCluski, Sieczkarek and Aron are $31,776, $93,302, $61,174, $47,187, and $20,823, respectively. Assuming the payment of accrued benefits is deferred until normal retirement age, the estimated annual benefit payable to Mr. Carpenter is $15,310. Assuming the payment of accrued benefits is paid immediately, the estimated annual benefit payable to Mr. Waltrip is $1,676.

In addition, the company maintains a separate Retirement Benefit Restoration Plan, which provides eligible employees additional retirement benefits, which would otherwise be provided under the Retirement Benefits Plan but are excluded from that Plan by specific federal regulatory limitations. Benefits vest after five years of service as defined in the Plan. Messrs. Hahs, McCluski, Sieczkarek and Aron are vested participants under this Plan. Assuming continued employment to normal retirement age, the estimated annual benefit payable to Messrs. Hahs, McCluski, Sieczkarek and Aron is $130,064, $120,960, $66,199 and $12,210, respectively.

The company maintains two Supplemental Executive Retirement Plans ("SERP"), under which officers may become eligible for retirement benefits in addition to those provided under the company's Retirement Benefits Plan. No officer is eligible to participate in more than one company SERP, and the officers named in the Summary Compensation Table on page 13, except for Mr. Waltrip, are participants in one of the SERPs described below. Participants who vest under SERP II will receive annual benefits, payable monthly, in an amount equal to a percentage of their final average salary and bonus compensation. Final Average Compensation is the highest average of a participant's compensation for any three full calendar years during the participant's last ten full calendar years of employment with the company. The percentage used is a function of age at retirement: 32% at age 55, and up to 60% at age 62. SERP III is a cash balance retirement plan which accrues benefits for eligible officers in a hypothetical account, at an annual rate of 5% of covered earnings, as defined in the Plan. Benefits are paid either as a single lump sum or converted to a lifetime monthly annuity at time of retirement or separation from the company. Benefits vest upon the completion of five years of service. The plans also provide for the payout of the net present value of all benefits in the event of a change in control of the company.

Messrs. Carpenter and Zarrella have vested benefits under SERP II. Messrs. Hahs, McCluski, Sieczkarek and Aron have vested benefits under SERP III. Assuming continued employment to age 60, the estimated annual benefit payable for Mr. Zarrella under SERP II is $1,738,554. Assuming the payment of accrued benefits is deferred until normal retirement age, the estimated annual benefit payable to Mr. Carpenter is $244,222. Assuming continued employment to normal retirement age, the estimated annual benefit payable to Messrs. Hahs, McCluski, Sieczkarek and Aron under SERP III is $77,825, $83,277, $72,127, and $11,215, respectively. Under SERP III, the benefit payable is stated as a cash balance. However, for purposes hereof, the annual payments stated above are calculated by applying an actuarial-based conversion factor against the projected value of the individual's cash balance account at normal retirement age.

In connection with class B shares purchased under the company's stock incentive plans, the company may loan the participant an amount equal to the full amount of the purchase price of those shares, in which case the shares serve as collateral for the loan. The rate of interest on loans to participants is the lesser of the applicable federal rates announced monthly by the Internal Revenue Service pursuant to Section 1274(d) of the Internal Revenue Code of 1986, or 9%. To the extent applicable, the largest aggregate amount of indebtedness outstanding which exceeded $60,000 at any time in the company's 2001 fiscal year for directors and executive officers of the company was as follows: (i) the company's directors: Mrs. McMullin, $111,649; Mr. Purcell, $731,326; Mrs. Rice, $69,222; Mr. Waltrip, $119,318 and (ii) the company's executive officers: Mr. Aron, $238,095; Mr. Carpenter, $915,750; Mr. Alan H. Farnsworth, $352,742; Mr. Hahs, $450,734; Mr. Jurij Z. Kushner, $418,298; Mr. John M. Loughlin, $247,653; Mr. McCluski, $479,594; Mr. Sieczkarek, $238,095; and Mr. Robert B. Stiles, $649,162. As of February 1, 2002, the outstanding amount of such indebtedness was as follows: (i) the company's directors: Mrs. McMullin, $110,532; Mr. Purcell, $724,013; Mrs. Rice, $68,530; Mr. Waltrip, $118,125; and (ii) the company's executive officers: Mr. Aron, $235,714; Mr. Farnsworth, $349,214; Mr. Hahs, $446,226; Mr. Kushner, $414,115; Mr. Loughlin, $245,176; Mr. McCluski, $474,798; Mr. Sieczkarek, $235,714; and Mr. Stiles, $642,670.

Bausch & Lomb   17   2002 Proxy Statement

The company entered into an agreement with Mr. Carpenter in connection with the termination of his employment, providing for payment of severance in an aggregate amount equal to two times the annual base salary as set forth in the Summary Compensation Table on page 13 to be paid over thirty-six months. In addition, the agreement provides for a continuation of various benefits through August 2004, continued participation in the Supplemental Executive Retirement Plan II through August 31, 2003 and vesting of unvested stock options through the severance period. The after-tax cost to the company of Mr. Carpenter's termination was $1.8 million.

In connection with Mr. Zarrella's election as chairman of the board and chief executive officer, he and Bausch & Lomb have signed a five-year employment agreement dated November 9, 2001, which is renewed automatically for successive one-year terms, unless otherwise terminated. The terms of the agreement provide for a base salary of $1.1 million during the first two employment years and a bonus during year 2002 of at least 100% of base salary. On November 9, 2001, the Committee on Management of the Board of Directors awarded Mr. Zarrella immediately-vested options to purchase 500,000 shares of the company's common stock at an exercise price of $31.91 under the 1990 Stock Incentive Plan. An additional 500,000 options under this Plan were granted to Mr. Zarrella on January 2, 2002 at an exercise price of $37.685. These options vest in one-third increments over a three-year period. Bausch & Lomb also agreed to pay Mr. Zarrella an amount up to $5 million in cash and stock to compensate him for benefits forfeited at his prior employer in accepting employment with the company (including annual bonus incentive compensation, long-term incentive payments, and stock option value). On January 2, 2002, a resulting cash payment of $2.1 million and a restricted stock grant of 65,561 shares were made to Mr. Zarrella. The restricted stock grant was made under the 1990 Stock Incentive Plan and vests in its entirety on the fifth anniversary of Mr. Zarrella's appointment.

The agreement also provides for a performance-based long-term incentive plan for one, two, and three-year award cycles, each of which shall have a target award of $1 million paid in company restricted stock. For each three-year award cycle thereafter, the target award will be at least $1 million. Awards will be paid in company restricted stock. In addition, Mr. Zarrella will participate in employee welfare and benefits plans and will be provided other standard senior executive perquisites. This includes participation in SERP II. On the effective date of the employment agreement, he was vested at 26% of final average compensation (based on 1999, 2000, and 2001 compensation with his prior employer). The benefit will increase each year up to a maximum of 60% of final average compensation achieved at age 60. If Mr. Zarrella is terminated without cause, or if Mr. Zarrella terminates employment for good reason, both as defined in the agreement, he will be entitled to his annual base salary and the highest annual bonus, plus medical and other benefits, for the remaining period of the employment agreement, and he will vest immediately in the SERP II benefit which would have been received at the end of the five-year employment period under the agreement.

Mr. Zarrella has also entered into a Change of Control employment agreement with the standard features described below. In the event his employment is terminated following a change in the control of the company, he would be entitled to the greater of (i) his remaining benefits under his employment agreement or (ii) benefits under the change of control employment agreement.

The company has entered into a Change of Control agreement, for an indefinite term, with each individual in the Summary Compensation Table on page 13, except for Mr. Waltrip. The agreement for Mr. Carpenter terminated with his termination of employment. Each agreement provides that, in the event of a change of control (as defined in the agreements) which is followed within three years, as determined under the agreements, by (i) termination of the officer's employment, (ii) a downgrading of the officer's position; or (iii) voluntary termination under circumstances specified in the agreements, the officer will be entitled to: (a) salary and pro rata bonus then due and (b) a lump sum separation payment equal to three times annual base salary and bonus as determined under the agreements. In 2001, the company increased the benefits to certain executive officers, including three of the named executive officers included in the Summary Compensation Table on page 13 (Messrs. Hahs, Sieczkarek and Aron), so that they will receive benefits equal to three times his compensation rather than two times his compensation. Each officer will also be entitled to a continuation of certain benefits and perquisites for up to three additional years as determined under the agreements. These benefits and perquisites may be reduced by corresponding benefits or perquisites provided by a subsequent employer during the period in which they are provided.

Bausch & Lomb   18   2002 Proxy Statement

The members of the Audit Committee of the Board of Directors are Jonathan S. Linen (Chair), Domenico De Sole, Ruth R. McMullin, Linda Johnson Rice and William H. Waltrip. None of the Audit Committee members is a former employee of the company, except for Mr. Waltrip, who served as the company's chairman and chief executive officer during interim periods in 1996 and 2001, and as its chairman from 1996 through 1998 and briefly in 2001. In view of the interim nature of Mr. Waltrip's past service with the company, and in view of the fact that Mr. Waltrip's return to service solely as director has been characterized by the independent judgement and oversight which highlighted his ten years of service as an outside director prior to 1996, and from 1999 through the first two quarters of 2001, the Board of Directors has determined that it is in the best interests of the company for Mr. Waltrip to serve on the company's Audit Committee and that Mr. Waltrip's prior positions with the company do not interfere with his exercise of independent judgement as a member of the Audit Committee. None of the Audit Committee members has a business relationship with the company, or is a partner, controlling shareholder or executive officer of an entity that has a material business relationship with the company. In addition, there is no Audit Committee member who is employed as an executive of another company where any of the company's executives serves on that other firm's compensation committee. No member of the Audit Committee is an immediate family member of an individual who is an executive officer of the company or any of its affiliates.

Each member of the Audit Committee is financially literate, in accordance with the qualifications set forth by the company's Board of Directors in its business judgement. In addition, at least one member of the Audit Committee has accounting or related financial management expertise, as the Board of Directors interprets this qualification in its business judgement.

In 2001, the Audit Committee met four times. The Board of Directors has adopted a written Charter setting forth the authority and responsibilities of the Audit Committee. Consistent with its Charter, the Audit Committee took the actions identified on page 3 of this Proxy Statement. In addition, the Audit Committee recommended for Board approval, based on the full scope of its activities, that (i) the audited financial statements be incorporated by reference in the company's annual report on Form 10-K for the year ended December 29, 2001, and (ii) PricewaterhouseCoopers LLP be ratified as the company's independent accountants for 2002.

Audit Fees
In its review, the Audit Committee examined a report from PricewaterhouseCoopers LLP of the fees billed to the company for fiscal year 2001, which included $1,489,000 for the audit of the company's annual financial statements and review of quarterly reports on Form 10-Q.

Financial Information Systems Design and Implementation Fees
PricewaterhouseCoopers LLP received no fees in 2001 for financial information systems design and implementation.

All Other Fees
PricewaterhouseCoopers LLP received $2,619,000 in 2001 in the aggregate for all other fees, which includes $1,906,000 for tax-related services; $103,000 for acquisition and divestiture assistance; $364,000 for statutory audits of subsidiaries; $95,000 for internal audit services and $151,000 for other services.

The Committee has considered whether PricewaterhouseCoopers LLP's provision of non-audit services is compatible with maintaining the accountants' independence.

Bausch & Lomb   19   2002 Proxy Statement

ADDITIONAL INFORMATION
Directors' and Officers' Insurance
The company has purchased insurance from the Federal Insurance Company and National Union Fire Insurance Company, insuring the company against obligations it might incur as a result of the indemnification of its directors and officers for certain liabilities they might incur, and insuring such directors and officers for additional liabilities against which they may not be indemnified by the company. This insurance was renewed effective January 30, 2002 for a period of one year at a cost of $600,000.

Under the company's by-laws, a majority of the votes cast by holders of the company's common and class B stock at a meeting at which a quorum of shares is represented is required for passage of the following shareholder proposal. Abstentions are counted for purposes of determining the presence or absence of a quorum. This has the effect of requiring a higher vote for passage. Broker non-votes are not counted for purposes of determining the presence or absence of a quorum and thus have no effect on the outcome of voting on these proposals. The following proposal has been submitted by a shareholder for consideration and is expected to be presented at the meeting.

Shareholder Proposal - Eliminate Classified Board of Directors
Mr. Gerald W. McEntee, International President of the American Federation of State, County and Municipal Employees, AFL-CIO ("AFSCME"), 1625 L Street, N.W., Washington, DC 20036-5687, on behalf of the AFSCME Employees Pension Plan, beneficial owner of 386 shares of Bausch & Lomb common stock, has proposed the adoption of the following resolution and has furnished the following statement in support of its proposal (which statement is reproduced in its entirety, as written by Mr. McEntee):

RESOLVED: That the shareholders of Bausch & Lomb, Inc. ("Bausch & Lomb" or the "Company") hereby urge the Board of Directors to take the necessary steps to eliminate the classification of the Board of Directors and require that all Directors stand for election annually. The declassification shall be completed in a manner that does not affect the unexpired terms of Directors previously elected.

Supporting Statement
Between July 17, 2000, when Bausch & Lomb's stock closed at $79.0938, and November 5, 2001, the stock has lost over 59% of its value, underperforming its peers in the American Stock Exchange Pharmaceutical Index. Analysts have criticized Bausch & Lomb's strategic direction and inability to predict earnings. The Company's refractive-surgery business has been hit hard by the closure of a number of surgery centers, while its vision-care business is suffering from increasing competitive pressures.

We believe the election of Directors is the most powerful way shareholders influence the strategic direction of our Company. Currently, the Board is divided into three classes, one with two members, one with three and one with four. Each class serves staggered three-year terms. Because of this structure, shareholders may only vote on roughly one third of the Directors each year.

The classified structure of the Board is not in shareholders' best interest because it reduces accountability and is an unnecessary takeover defense. Now is a prudent time to have all Directors annually accountable to shareholders, given the poor performance outlined above. We feel that annual accountability can serve to focus our Directors more closely on the performance of top executives and increasing shareholder value.

Annual election of Directors gives shareholders the power to completely replace their Board, or replace a majority of Directors, if a situation arises warranting such drastic action. We do not believe destaggering the Board will destabilize our Company or affect the continuity of Director service. Our Directors, as well as the directors of the overwhelming majority of other public companies, are routinely elected with over 95% shareholder approval.

A recent study found that firms with the strongest shareholder rights significantly outperform companies with weaker shareholder rights. A 2001 study of 1,500 firms conducted by researchers at Harvard University and the University of Pennsylvania's Wharton School found a significant positive relationship between greater shareholder rights, as measured by a governance index, and both firm valuation and performance from 1990 to 1999. Shareholder rights were measured by a governance index which took into account, among other things, whether a company had a classified board structure.

Bausch & Lomb   20   2002 Proxy Statement

A growing number of shareholders appear to agree with our concerns. Last year a majority of shareholders supported proposals seeking the repeal of classified board structures at 27 companies, including Kroger, Baxter International, and Great Lakes Chemical.

We urge shareholders to vote for this proposal.

Board of Directors' Statement In Opposition To The Proposal
At the 1985 annual meeting, the shareholders voted to amend Paragraph 5 of the company's Certificate of Incorporation ("Certificate") to provide, among other things, for a Board of Directors divided into three classes, serving staggered three-year terms. The Board stated in the proxy statement relating to that meeting its belief that the amendment would reduce the vulnerability of the company to certain potentially abusive takeover tactics and encourage potential acquirers to negotiate with the Board. The Board also stated its belief that the amendment assures continuity and stability of the company's management and policies, since a majority of the directors at any given time have prior experience as directors of the company.

In the opinion of the Board, the above reasons continue to be valid and the classified Board remains in the best interests of the shareholders. In fact, 61.5% of the S&P 500 corporations currently have classified boards. The classified board does not preclude unsolicited acquisition proposals but, by eliminating the threat of imminent removal, puts the incumbent Board in a position to act to maximize value to all shareholders. In addition, the Board does not believe that directors elected for staggered terms are any less accountable to shareholders than they would be if elected annually, since the same standards of performance apply regardless of the term of service.

A vote in favor of the proposal is only a recommendation to the Board. This advisory proposal requires the affirmative vote of a majority of the votes cast at the annual meeting by the holders of shares represented in person or by proxy to pass. An amendment to the Certificate to eliminate the classified board would require Board approval followed by the affirmative vote of 80% of the shares entitled to vote. For the reasons set forth above, the Board of Directors is opposed to such an amendment.

We do not expect any business to come up for shareholder vote at the meeting other than the items described in this booklet. If other business is properly raised, your proxy card authorizes the proxyholders to vote as they deem appropriate.

The company's by-laws contain provisions regarding matters which may properly be brought before the shareholders at an annual meeting. The most recently revised by-laws are attached as Exhibit (3)-a to the company's Form 10-Q filed with the Securities and Exchange Commission on November 10, 1998.

Shareholder Proposals For Next Year
In order to be eligible for inclusion in the company's proxy materials for next year's annual meeting of shareholders, any shareholder proposal (other than the submission of nominees for directors) must be received by the company to the attention of the Secretary at its principal executive offices not later than the close of business on November 24, 2002.

Shareholder proposals received by the company between December 31, 2002 and January 30, 2003 may also be considered at next year's annual meeting of shareholders but may not be included in the proxy materials for next year's annual meeting of shareholders. Nominations for directors submitted by shareholders must be received between those same dates.

Bausch & Lomb   21   2002 Proxy Statement

Annual Report
A summary Annual Report to Shareholders for the year ended December 29, 2001 accompanies the proxy material being mailed to all shareholders. The summary Annual Report is not a part of the proxy solicitation material.

How We Solicit Proxies
Bausch & Lomb pays the costs of soliciting proxies. We are paying Georgeson Shareholder Communications Inc. a fee of $12,000 plus expenses to help with the solicitation. In addition to this mailing, the company may solicit proxies personally, electronically or by telephone. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.

People Needing Special Assistance
If you plan to attend the annual meeting, we can provide reasonable assistance to help you participate in the meeting if you let us know in advance. Please call or write the Secretary at least two weeks before the meeting at the number or address under "Questions?" below.

Questions?
If you have questions or need more information about the annual meeting, write to the

Secretary
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604-2701

or call us at (585) 338-6010.

For additional information about the company, we invite you to visit Bausch & Lomb's Internet site at www.bausch.com. Internet site materials are for your general information and are not part of this proxy solicitation.

According to rules of the Securities and Exchange Commission ("SEC"), the information presented in this proxy statement under the captions "Report of the Committee on Management", "Report of the Audit Committee" and "Comparison of Five-Year Cumulative Total Shareholder Return" shall not be deemed to be "soliciting material" or to be filed with the SEC under the Securities Act of 1933 or the Securities Exchange Act of 1934, and nothing contained in any previous filings made by the company under the aforementioned Acts shall be interpreted as incorporating by reference the information presented under the specified captions.

Please vote by calling the toll-free number set forth on your proxy card or

by signing and promptly returning your proxy card in the enclosed envelope.

March 22, 2002

Bausch & Lomb   22   2002 Proxy Statement

This financial review, which should be read in conjunction with the accompanying financial statements, contains management's discussion and analysis of the company's results of operations, liquidity and 2002 outlook. References within this financial review to earnings per share refer to diluted earnings per share.
     Bausch & Lomb Incorporated (the "company") reported net income of $21 or $0.39 per share for the year ended December 29, 2001, compared to 2000 net income of $83 or $1.52 per share and 1999 net income of $445 or $7.59 per share. Income from continuing operations was $42 or $0.78 per share in 2001 compared to $82 or $1.49 per share in 2000 and $103 or $1.75 per share in 1999. The company's results for each of the years presented were impacted by several significant items. A reconciliation of reported net income and earnings per share to comparable basis net income and earnings per share from continuing operations is presented below:

     The following three paragraphs summarize, for each of 2001, 2000 and 1999, significant items impacting company results.
     On January 22, 2002, the company reached agreement with the buyer of its former eyewear segment on certain purchase price adjustments. To reflect this agreement, an adjustment of $21 after taxes to the previously reported 1999 gain was recorded in discontinued operations in the fourth quarter of 2001. Additionally, certain costs totaling $7 before taxes were incurred in the fourth quarter of 2001 in connection with the hiring of the company's new chief executive officer. Severance costs of $3 before taxes for the company's former chief executive officer were recorded in the third quarter of 2001. Restructuring charges and asset write-offs recorded during the fourth quarter of 2001 of $8 before taxes related to the first phase of a restructuring program designed to reduce ongoing operating costs. Additional charges recorded in 2001 of $17 before taxes for Phase II of the 2000 restructuring plan were partially offset by a $4 pre-tax reversal in the fourth quarter reflecting severance and other costs that were not required. Pre-tax gains on the sale of 51% of the company's original equity interest in Charles River Laboratories, Inc. were $19. The adoption of a new accounting standard resulted in a gain of less than $1 before taxes.
     Results in 2000 reflected restructuring charges and asset write-offs associated with the implementation of the company's new organizational structure, partially offset by reversals of prior restructuring reserves, reduced 2000 income from continuing operations by $34 before taxes. Purchase accounting adjustments involving the write-up of inventories to fair value and in-process research and development charges (IPR&D) in 2000 were related to the acquisitions of Groupe Chauvin and Woehlk. The company recognized a $1.4 gain on the extinguishment of long-term debt in the fourth quarter of 2000.

Bausch & Lomb   A1   2002 Proxy Statement

     Income from discontinued operations and gain on disposal in 1999 pertained to the company's former sunglass, hearing aid and biomedical businesses. Restructuring charges and asset write-offs recorded in the fourth quarter of 1999, partially offset by reversals of restructuring charges recorded in prior periods, reduced 1999 income from continuing operations by $54 before taxes. A gain on sale of preferred stock held in connection with a divested business was recognized by the company during 1999.

Effective at the beginning of 2001, the company reorganized from a product line structure to a regionally based management structure for commercial operations. The research and development and product supply functions were also realigned and are managed on a global basis. The company's segments are comprised of the Americas region; the Europe, Middle East and Africa region (Europe); the Asia region; the Research, Development and Engineering organization and the Global Supply Chain organization. In each geographic segment the company markets products in five product categories: lens care, contact lens, pharmaceutical, cataract and refractive. The lens care category includes multi-purpose solutions, enzyme cleaners and saline solutions. The contact lens category includes daily disposable, continuous wear, planned replacement disposable and rigid gas permeable contact lenses. The pharmaceutical category includes prescription ophthalmic drugs, over-the-counter medications and vision accessories. The cataract and refractive categories include products and equipment used for cataract, refractive and other ophthalmic surgery. There are no transfers of products between product categories. Operating income is the primary measure of segment income. Segment income excludes the significant items noted in the Financial Review. Prior year results have been restated to conform to the management reporting structure.
     The following table summarizes net sales and operating income by segment and presents total company operating income. Throughout the remainder of this financial review, the term "purchase accounting adjustments" will be used to refer to purchased in-process research and development and other required purchase accounting adjustments associated with lens and lens care, pharmaceutical and surgical acquisitions.

Net Sales Net sales in 2001 decreased 3% from 2000 and on a constant dollar basis (i.e., excluding the effect of foreign currency exchange rates), decreased 1%. Europe experienced solid sales growth, in part due to acquisitions, which was more than offset by declines in Asia and the Americas. The declines in Asia were primarily due to weak economic conditions in Japan. The decrease in the Americas was primarily due to U.S. reductions in lens care retail inventory carrying requirements, and softness in the U.S. economy that led to delays in purchases of refractive equipment and to consumer postponement of elective surgery. Net sales in 2000 increased $8 or less than one percent over 1999. On a constant dollar basis, net sales increased 3%. Increased sales in Asia and incremental sales from acquisitions in Europe were partially offset by declines in the Americas due to lower inventory requirements among U.S. retailers reacting to lessening consumer demand for lens care products.

Bausch & Lomb   A2   2002 Proxy Statement

Operating Income Operating income is comprised of segment income less corporate administration expenses, restructuring and asset write-offs, purchase accounting adjustments and other significant charges. In 2001, segment income decreased $116 or 42% as compared to the prior year. Decreases in sales of higher-margin lens care and refractive surgery products in the U.S. and the effects of the softening economy in Japan were partially offset by an increase in Europe's operating income, due to incremental sales margins exceeding amortization associated with acquisitions and administrative savings realized through restructuring. Research, Development & Engineering and Global Supply Chain operating costs increased by $7 or 5% and $16 or 26%, respectively, from 2000. These increases were a result of costs previously absorbed by the geographic regions as well as spending for plant expansion for the manufacture of soft toric contact lenses. Corporate administration expense in 2001 of $44 or 2.6% of net sales decreased from the $52 or 2.9% of net sales in 2000, primarily due to lower incentive compensation costs related to performance based programs, continued control over discretionary spending and savings realized through restructuring. Other significant charges in 2001 included $7 related to the hiring costs of the company's new chief executive officer and $3 of severance costs for the company's former chief executive officer. Restructuring charges and asset write-offs are discussed in the Restructuring Charges and Asset Write-offs section below.
     In 2000, segment income decreased $46 or 14% as compared to the prior year, reflecting sales trends noted above offset by amortization associated with acquisitions in Europe. Research, Development & Engineering operating costs increased from 1999 by $20 and Global Supply Chain operating costs decreased by $48, or 17% and 44%, respectively. Corporate administration expense in 2000 of $52, or 2.9% of net sales, decreased from the $56 or 3.2% of net sales in 1999, primarily due to lower incentive compensation costs related to performance based programs. The purchase accounting adjustments for purchased in-process research and development amounted to $24 and inventory adjustments amounted to $3 in 2000. Other significant charges in 2000 include $3 related to a failed acquisition attempt and $20 for the settlement of litigation. The litigation settlement charge included a $15 charge recorded in the fourth quarter of 2000 related to an action filed in the United States District Court for the Middle District of Florida by the Florida Attorney General. The amount recorded reflects the expense the company expects to incur related to this litigation.
     Unless otherwise noted, discussion in the remainder of this financial review excludes the restructuring charges and asset write-offs, purchase accounting adjustments and other significant charges.

Net sales and income represent sales originating in entities physically located in the identified geographic area. A summary of net sales and operating income from continuing businesses by geographic region follows:

2001 Versus 2000 Sales in markets outside the U.S. increased 10% over the prior year and 16% in constant dollars and represented 58% of total net sales in 2001 and 51% in 2000. Net sales in 2001 included $95 of incremental sales from the acquisition in 2000 of Groupe Chauvin and Woehlk and the 2001 acquisition of Fidia Oftal. Growth in Europe in lens and lens care products was more than offset by declines in Asia in lens care, contact lens and cataract products, resulting primarily from the effects of the softened economy in Japan.
     U.S. sales, which represented 42% of total consolidated net sales, decreased 17% from 2000. Higher sales of proprietary and multi-source pharmaceuticals were more than offset by declines in the lens care, refractive and contact lens categories.
     In 2001, operating income in markets outside the U.S. increased 37% from 2000, and represented 189% of total operating income, versus 72% in 2000. Operating income was led by the European region. Higher amortization due to acquisitions was partially offset by lower general and administrative expenses as a result of restructuring initiatives during the current year. Controlled discretionary spending in marketing, advertising and selling expenses also contributed to the improvement in operating income. The Asia segment outside of Japan experienced slight improvement in operating income, but this was more than offset by the impact of declines in sales in Japan and the weakened yen.

Bausch & Lomb   A3   2002 Proxy Statement

2000 Versus 1999 Sales in markets outside the U.S. increased 8% over the prior year and represented 51% of total net sales in 2000 and 47% in 1999. Net sales included $44 from the acquisitions of Groupe Chauvin and Woehlk during the second half of 2000. Gains in cataract, refractive and pharmaceutical sales were offset by the impact of currency changes, primarily from pharmaceutical category sales in Europe. Gains on lens and lens care products in Europe and Asia were also impacted by currency rates. On a constant dollar basis, sales outside the U.S. increased 14%.
     Net sales in Europe advanced 5% as constant dollar growth in all product category sales and incremental sales from acquisitions were moderated by the effects of the weakening euro. Sales in Asia increased 13% over the prior year and increased 11% in constant dollars.
     U.S. sales, which represented 49% of total consolidated net sales, decreased 6% from 1999. Higher sales of proprietary pharmaceutical, refractive surgery and newer contact lens products were more than offset by lens care sales and generic pharmaceutical pricing declines. U.S. cataract and refractive sales, including exports, increased slightly over the prior year.
     In 2000, operating income in markets outside the U.S. increased 27% from 1999, and represented 72% of total operating income, versus 48% in 1999. Operating income was led by the European region, due to improved margins related to restructuring initiatives in lens care and contact lens operations and reductions in marketing and advertising expense. Asia also experienced significant improvement in operating income due to the strong sales growth noted above. In the U.S., 2000 operating income decreased 55% versus the prior year. Lower administrative expenditures were offset by higher R&D costs, increased spending for marketing and advertising of newer products and significant price declines in certain pharmaceutical products which negatively impacted margins.

In each geographic segment the company markets products in five product categories: lens care, contact lens, pharmaceutical, cataract and refractive. The following table presents net sales by product categories for the years 2001, 2000 and 1999:

2001 Versus 2000 Lens care net sales declined 14% in 2001 or 12% in constant dollars. Sales in the Americas decreased 20% and 19% in actual and constant dollars, respectively. Growth in Europe of 9% was more than offset by a decrease in Asia of 17%. In constant dollars, Europe sales increased 13% and Asia decreased by 10%. The decline in the Americas was driven by the U.S., where trade customers continued to reduce lens care inventory carrying requirements, and the overall market for lens care products continued to decline. By year end trade inventory levels had achieved what the company believes to be a balance with consumption. Growth in Europe due to incremental sales from acquisitions was more than offset by weakness in the results for Japan, where the soft economy has resulted in aggressive inventory reduction programs among most of the large publicly held wholesalers as well as the bankruptcy of three privately held distributors with whom the company dealt.

2000 Versus 1999 Lens care net sales declined 6% in 2000. Gains in Asia were more than offset by a 9% decline in the Americas, primarily due to a 10% decline in the U.S. The decline was driven by lessening consumer demand for lens care products, driving reductions in shelf space and lower inventory requirements among U.S. retailers. On a constant dollar basis, Asia had strong growth in lens care, driven primarily by higher sales of the ReNu line. This growth was partially offset by declines in Europe.

2001 Versus 2000 Contact lens product net sales declined 4% in 2001 and 1% in constant dollars. In the Americas, sales were down 8% and 7% in actual and constant dollars, respectively, with strong sales of SofLens66 Toric and PureVision partially offsetting declines in older-technology products. A decline in Asia sales of 14% (5% in constant dollars) was partially offset by increases in Europe of 15% in actual dollars and 21% in constant dollars. Constant dollar losses in Asia were primarily a result of the weak economic conditions and lack of new company products in Japan. Gains in Europe were partially driven by incremental sales from the acquisition of Woehlk.

Bausch & Lomb   A4   2002 Proxy Statement

2000 Versus 1999 Net sales grew 4%, driven by sales of the company's newer contact lens products, including Bausch & Lomb Two Week, SofLens66 Toric and PureVision. In Europe contact lens sales grew 4%, driven by SofLens66 Toric. In Asia, sales increased 3%, primarily as a result of Medalist in Japan. Contact lens sales were up 6% in the Americas, driven by the U.S. market, reflecting the 2000 launch of Bausch & Lomb Two Week, and strong demand for other newer products. These increases were partially offset by declines in older product offerings.

Pharmaceutical Net Sales

2001 Versus 2000 Net sales for pharmaceutical products increased 24% and 26% in actual and constant dollars, respectively, over the prior year. Excluding the impact of recent acquisitions of Groupe Chauvin and Fidia Oftal, sales increased 3% and 4% on an actual and constant dollar basis, respectively. In the Americas, sales were up 5% for the year, reflecting good growth in the proprietary and multi-source business. In the U.S., the company's anti-inflammatory ophthalmic drops, Lotemax and Alrex, continued to gain market share with solid, progressive growth. Year-to-date results reflected lower pricing levels in 2001 as a result of competitive pressure in the Americas, which drove down pricing in the company's generic business in the second half of 2000. In Europe, sales were up significantly, primarily as a result of incremental sales from acquisitions, as well as modest constant dollar growth in sales of the company's other pharmaceutical product lines.

2000 Versus 1999 Net sales in this category decreased 7% from 1999, including a negative impact of $7 related to a change in the method of estimating pricing allowances for generic pharmaceutical products. In constant dollars, sales were down 3% from the prior year.
     In Europe net sales increased 21%, including incremental sales from the acquisition of Groupe Chauvin, as well as moderate constant dollar sales growth in the company's Dr. Mann Pharma subsidiary. These gains were more than offset by the impact of changes in currency rates as well as the results in the Americas, where pharmaceutical sales declined 20%. This was driven by the U.S. market, where strong double-digit growth in sales of proprietary pharmaceuticals was more than offset by declines in the company's lines of generic otic and multi-source ophthalmic products, resulting from significantly intensified competitive pricing pressures in the second half of the year.

2001 Versus 2000 Net sales for the company's cataract products declined 2% compared to 2000, but increased 1% in constant dollars. Sales in the Americas were down 9% for the year, driven by continued supply constraints for key products and postponement of capital equipment purchases because of softness in the U.S. economy. Sales of cataract products in Europe were up 17% and 22% in actual and constant dollars, respectively. In Asia, sales were down 12% and 4% in actual and constant dollars, respectively.

2000 Versus 1999 Sales of cataract products were essentially flat versus 1999. Gains in Asia were offset by declines in the Americas and Europe. Net sales from cataract products were negatively affected by manufacturing constraints for the supply of the company's line of foldable intraocular lenses.

2001 Versus 2000 Sales of refractive products decreased 17% as compared to 2000 or 16% in constant dollars. The decline was driven by the Americas region, where the softness in the U.S. economy delayed capital spending by providers and resulted in consumers postponing elective surgery. Outside the Americas region, sales continued to post solid growth in Europe, and were essentially flat with the prior year in Asia. The company's sales growth outside the U.S. continued to reflect increasing equipment and procedure card sales for the Zyoptix system for personalized refractive procedures.

2000 Versus 1999 Refractive products for 2000 increased 36% over 1999 benefiting from strong demand for the company's Technolas 217 laser outside of the Americas region, as well as the launch of the laser inside the U.S., following initial regulatory approval late in February 2000.

Bausch & Lomb   A5   2002 Proxy Statement

Other Income And Expense Interest and investment income was $48 in 2001, $52 in 2000 and $46 in 1999. The decrease in 2001 from 2000 reflected lower average investment levels and investment rates offset by a gain on the sale of Charles River Laboratories stock of $19 in 2001. The increase in 2000 over 1999 reflected higher investment levels from cash generated by divestitures in mid-to-late 1999.
     Interest expense was $58 in 2001, $69 in 2000 and $88 in 1999. The decreases in 2001 and 2000 from 2000 and 1999, respectively, were primarily due to lower average debt levels and interest rates.
     The company's net gain from foreign currency transactions decreased $3 from 2000 to $8. The decline resulted largely from lower premium income realized on foreign currency exchange contracts utilized in the company's hedging program, which was the result of lower U.S. interest rates. This reduction was partially offset by gains realized on hedging activities associated with a specific transaction. The increase in 2000 of $4 over 1999 was due to an increase in premium income realized from foreign exchange contracts hedging net investments and transaction exposures.
     Other income in 2000 consisted of proceeds from a patent litigation settlement with Alcon Laboratories, Inc. (Alcon). The settlement agreement resolved the patent infringement case Bausch & Lomb filed against Alcon in October 1994. Under the terms of the settlement agreement, Alcon made an up-front payment to Bausch & Lomb of $25, which was recorded as income in the first quarter of 2000. Additionally, Alcon will pay Bausch & Lomb a stream of royalties over the next seven years for a worldwide license under Bausch & Lomb's patent for the simultaneous use of a chemical disinfecting solution with an enzyme cleaning product for contact lens care. Other income of $7 in 1999 resulted from the liquidation of an investment in preferred securities associated with a 1995 divestiture.

Income Taxes The company's reported tax rate for continuing operations was 33.8% in 2001 as compared to 40.8% in 2000 and 36.0% in 1999. The 2001 rate reflects a deferred tax benefit recorded in the first quarter of 2001 to reflect a change in the statutory tax rate associated with the company's joint venture in China. Excluding this item, the effective tax rate would have been 35.0%. The 2000 rate reflects non-deductible purchased IPR&D for which there is no associated tax benefit. Excluding this item, the effective tax rate would have been 35.5%.
     When calculating income tax expense, the company recognizes valuation allowances for tax loss and credit carry forwards, which may not be realized by utilizing a "more likely than not" approach which is more fully described in Note 9 ¾ Provision for Income Taxes.

Minority Interest The impact to results of operations from minority interest was $14, $13 and $16 for 2001, 2000 and 1999, respectively. The reduction in 2000 from the prior year primarily reflects the impact from the restructuring of a limited partnership as described in Note 13 ¾ Minority Interest.

Discontinued Operations During 1999, the company completed the sale of its eyewear segment to Luxottica Group S.p.A (Luxottica) for $636 in cash. The company recorded an after-tax gain on the disposal of discontinued operations of $126 or $2.16 per share. During 2000, Luxottica proposed certain purchase price adjustments related to the sale. On January 22, 2002, the company reached an agreement with Luxottica relative to the proposed adjustments. The net result of the resolution was an after-tax charge to discontinued operations of $21 million, or $0.39 per share. This amount has been reported as a sale price adjustment related to disposal of discontinued operations in the fourth quarter of 2001 in the accompanying Statements of Income.

Bausch & Lomb   A6   2002 Proxy Statement

     On August 30, 1999 the company completed the sale of its hearing aid business to Amplifon S.p.A, a privately held company in Italy. The company recorded an after-tax gain of $11 or $0.19 per share. Also during the third quarter, the company completed the sale of Charles River Laboratories, a biomedical business, to DLJ Merchant Banking Partners II, L.P., for approximately $400 in cash and $43 in promissory notes repaid in fiscal year 2000. The company retained a minority equity interest in the Charles River Laboratories business as discussed in Note 8 ¾ Other Short- And Long-Term Investments. The company recorded an after-tax gain of $171 or $2.91 per share. The hearing aid, biomedical and the skin care businesses (which was sold in 1998) collectively comprised the company's former healthcare segment. The sales reported in 1999 for the sunglass and healthcare segments were $253 and $241, respectively.
     Income from discontinued operations as reported on the company's Statements of Income were net of income taxes of $21 for 1999. The Statement of Cash Flows for the year ended December 25, 1999 has not been restated to reflect the divestitures of these businesses.

Income From Extraordinary Item In 2001 and 2000, retirements of fixed-rate notes payable resulted in recognition of extraordinary gains of less than $0.1 and $1, net of taxes, respectively.

In 2001, 2000 and 1999, the company's Board of Directors approved plans to restructure certain of the company's business segments and corporate administrative functions. The company completed all actions under the 2000 Program as of December 29, 2001 and all actions under the 1999 Program as of December 30, 2000. These plans are described more fully in Note 5 ¾ Restructuring Charges and Asset Write-offs, and represent the company's programs to enhance its competitive position.

2001 Program
In December 2001, the company's Board of Directors approved a comprehensive restructuring plan designed to reduce ongoing operating costs by eliminating approximately 700 jobs on a global basis. As of December 29, 2001, management had identified actions and notified the appropriate personnel in what it considers Phase I of the restructuring program. As a result, a pre-tax amount of $8 was recorded during the fourth quarter of 2001 for Phase I of the restructuring and for asset write-offs. The after-tax impact of this charge was $3 or $0.05 per share. Management anticipates recording approximately $20 of additional charges for Phase II during the first quarter of 2002. The company is reviewing a series of possible additional actions to further reduce costs and improve executional effectiveness.
     The Phase I and Phase II actions are expected to result in cash outflows of approximately $4 and $20, respectively. The majority of the outflows are expected to occur in the second and third quarters of 2002. The company anticipates that cash provided through operations will provide adequate funding for these actions. Actions in this restructuring plan are expected to be completed by the end of 2002.
     Phase I of this program is expected to yield pre-tax cost savings of approximately $3 in 2002 and $5 annually beginning in 2003. Phase II of this program is expected to yield pre-tax cost savings of approximately $22 in 2002 and $28 annually beginning in 2003. These savings are expected to be realized primarily through reduced cost of products sold and selling, administrative and general expenses. These savings are expected to be reinvested into R&D, marketing and other programs designed to accelerate sales growth.

2000 Program
In December 2000, the company's Board of Directors approved a comprehensive restructuring plan designed to facilitate the company's realignment as an integrated operating company with centralized management of R&D and supply chain operations and with commercial operations managed on a regional basis. The plan was implemented in two phases due to the anticipated timing of communication to employees and overall implementation schedule. As a result, a pre-tax amount of $43 was recorded during the fourth quarter of 2000 for Phase I of the restructuring and for asset write-offs. The after-tax impact of this charge was $28 or $0.50 per share. During the first quarter of 2001, a pre-tax amount of $17 was recorded for Phase II of the restructuring and additional asset write-offs. The after-tax impact of this charge was $11 or $0.20 per share.
     Phase I of this program is expected to yield pre-tax cost savings of approximately $35 annually beginning in 2002. Phase II of this program is expected to yield pre-tax cost savings of approximately $10 annually beginning in 2002. These savings are expected to be realized primarily through reduced cost of products sold and selling, administrative and general expenses. These savings are expected to be reinvested into R&D, marketing and other programs designed to accelerate sales growth.

1999 Program
In December 1999, management announced that in order to increase its competitiveness and performance, the company would exit certain manufacturing platforms in the contact lens business and consolidate others into focused facilities, as well as reduce certain global administrative costs. As a result, a pre-tax amount of $57 was recorded during the fourth quarter of 2000 for restructuring and asset write-offs. The after-tax impact of this charge was $36 or $0.62 per share.
     This program yielded pre-tax cost savings of approximately $27 annually, a portion of which have been reinvested into R&D.

Bausch & Lomb   A7   2002 Proxy Statement

Cash Flows From Operating Activities Cash provided by operating activities totaled $183 in 2001, a decrease of $152 from 2000. Contributing to this result were lower net income, increases in inventory and deferred tax assets (due to an increase in tax loss and credit carryforwards), and a decrease in current income taxes payable. This decrease was partially offset by decreases in accounts receivable and other current assets. In 2000, operating activities generated $335 in cash flow, an increase of $112 from 1999. The increase was driven primarily by decreases in accounts receivable, inventory, and other current assets.
     Free cash flow for 2001 was $101, a decrease of $143 from 2000. The decrease was primarily attributable to the operating factors cited above.

Cash Flows From Investing Activities In 2001, cash used in investing activities was $25. The cash outflow resulted primarily from $96 for capital expenditures and $49 for acquisitions of businesses and rights to certain pharmaceutical products, partially offset by the cash inflow of $30 from the sale of a portion of the company's original equity interest in Charles River Laboratories, as well as cash inflow of $97 from the exercise of an option on a Netherlands guilder investment where the majority of the company's equity position was put back to the issuer.
     Cash used in investing activities was $170 in 2000. The cash outflow resulted from $253 for acquisitions and $95 for capital expenditures. These were partially offset by proceeds from the liquidation of an investment of equity securities and collection on a note receivable.

Bausch & Lomb   A8   2002 Proxy Statement

Cash Flows From Financing Activities Financing activities used $275 during 2001 primarily to repay $252 of long-term debt.
     Cash used in financing activities during 2000 was $324. The purchase of 4,619,452 common shares during 2000 completed the stock buyback programs initiated in 1998 and 1999 and resulted in a cash outflow of $251. Additionally, the company reduced its debt by $44.
     In 2001, the company's Board of Directors authorized the repurchase of up to 2,000,000 shares of the company's common stock. The company has executed an agreement with a financial institution covering the purchase of such shares through one or more forward purchase transactions. Such purchases, which may have settlement dates as long as two years, can be settled, at the company's election, on a physical share, net cash or net share basis. As of December 29, 2001, the company has entered into forward purchases covering 750,000 shares.

Financial Position The company's total debt, consisting of short- and long-term borrowings, was $827 and $998 at the end of 2001 and 2000, respectively. The ratio of total debt to capital was 45.9% and 49.0% at year-end 2001 and 2000, respectively. Cash and cash equivalents totaled $534 in 2001 and $660 in 2000.
     Certain tranches of the company's long-term debt due in 2002 contain options that allow holders to put the debt back to the company and certain debt due in 2013 and 2015 allow remarketing agents to call the debt from the holders in 2003 and 2005, respectively, and in certain cases remarket the debt at a higher interest rate than the then current market rate. The company believes that it has adequate cash, credit facilities and access to the financial markets to meet all debt maturity requirements.

Access To Financial Markets The company maintains a $250 syndicated revolving credit agreement expiring in 2004. The interest rate under this agreement is based on LIBOR, or the highest rate based on secondary certificates of deposit, Federal Funds or the base rate of one of the lending banks. In addition, a number of subsidiary companies outside the U.S. have credit facilities to meet their liquidity requirements. The company believes its existing credit facilities provide adequate liquidity to meet obligations, fund capital expenditures and invest in potential growth opportunities.
     The debt ratings as of December 29, 2001 were at BBB- and A3 for Standard & Poor's, and Baa3 and Prime-3 for Moody's Investor Service, for long-term and short-term debt, respectively. On March 11, 2002, the company was downgraded by Moody's Investor Service to Ba1 and Not-Prime for long-term and short-term debt, respectively, in response to its 2001 performance. Certain financial transactions may be terminated at the option of the holder as a result of this downgrade. These include a limited partnership interest which has been recorded as minority interest totaling $200, financing covering its world headquarters facility of $63 and securitized trade receivables of $25. If the holders of the financial instruments were to exercise their rights, the company believes it has sufficient liquidity in the form of cash, existing credit facilities and access to the financial markets.

Working Capital Working capital and the current ratio were $694 and 2.0, respectively, at year end 2001 and $900 and 2.1, respectively, at year end 2000.

Dividends The dividend on Common stock, declared and paid quarterly, totaled $1.04 per share for each of the years ended 2001, 2000 and 1999.

Return On Equity And Capital Return on average shareholders' equity was 2.1% in 2001, compared with 7.9% in 2000 and 43.3% in 1999. The decrease in 2001 reflects the impact from lower income from continuing operations and the inclusion of the reduction to the gain on disposal of discontinued operations of the eyewear segment in the 2001 ratio. The higher return in 1999 was due mainly to the inclusion of the gain on the divestitures.
     Return on invested capital was 3.1% in 2001, 6.1% in 2000 and 21.7% in 1999. The decrease in 2001 was due to lower income from continuing operations and the reduction of the gain on disposal of the discontinued operations of the eyewear segment. The decrease in 2000 was due to the inclusion of the gain from the divestitures in 1999 offset in part by a decrease in equity from the stock repurchase program. The higher return in 1999 was due primarily to the gain on divestitures and the debt repayments associated with the use of proceeds from the divestitures.

The company, as a result of its global operating and financing activities, is exposed to changes in interest rates and foreign currency exchange rates that may adversely affect its results of operations and financial position. In seeking to minimize the risks and/or costs associated with such activities, the company manages exposures to changes in interest rates and foreign currency exchange rates primarily through its use of derivatives. The company does not use financial instruments for trading or other speculative purposes, nor does it use leveraged financial instruments.

Bausch & Lomb   A9   2002 Proxy Statement

     The company primarily uses foreign currency forward contracts to hedge foreign currency transactions and equity investments in non-U.S. subsidiaries. For contracts outstanding at the end of 2001, foreign currencies purchased were primarily Singapore dollars, Swiss francs, Hong Kong dollars, British pounds and the euro. The currencies sold were primarily the euro, Swiss francs, Japanese yen, British pounds, and Australian dollars. With respect to 2000, foreign currencies purchased were primarily Singapore dollars, Hong Kong dollars, British pounds, Swiss francs and the euro and the sale of euros, Japanese yen, British pounds, Singapore dollars and Swiss francs. The magnitude and nature of such hedging activities are explained further in Note 14 ¾ Financial Instruments. A sensitivity analysis to measure the potential impact that a change in foreign currency exchange rates would have, net of hedging activity, on the company's net income indicates that, based on its year-end 2001 and 2000 positions, if the U.S. dollar strengthened against all foreign currencies by 10%, the company's income would have been reduced by approximately $1 for both year ends.
     The company may enter into interest rate swap and cap agreements to effectively limit exposure to interest rate movements within the parameters of its interest rate hedging policy. For foreign currency denominated borrowing and investing transactions, cross-currency interest rate swap contracts may be used, which, in addition to exchanging cash flows derived from interest rates, exchange currencies at both inception and termination of the contract. There were no cross-currency interest rate swap contracts outstanding at December 29, 2001. A sensitivity analysis to measure the potential impact that a change in interest rates would have, net of hedging activity, on the company's net income indicates that a one percentage point decrease in interest rates, which represents a greater than 10% change, would increase the company's net financial expense by approximately $2 and $6 based on 2001 and 2000 year-end positions, respectively.
     Counterparties to the financial instruments discussed above expose the company to credit risks to the extent of non-performance. The credit ratings of the counterparties, which consist of a diversified group of major financial institutions, are regularly monitored and thus credit loss arising from counterparty non-performance is not anticipated.

The company expects to report 2002 sales growth in the mid-to-upper single digits, with gains in each of its product categories, and full-year total company operating margins reaching approximately 9% of net sales. Full-year comparable basis earnings per share are expected to be in the low $1.30's range, before considering the impact on amortization expense from the company's adoption of SFAS No. 142 - Goodwill and Intangible Assets. This adoption is expected to result in an increase of approximately $0.35 per share. These expectations are based on the parameters and assumptions discussed below.
     The company's outlook assumes that there will be no significant changes in the U.S. economic climate, at least until late in 2002, or in the economic climate elsewhere. The company's projections further assume that currency exchange rates remain fairly constant at year-end 2001 levels. As a result of the movements in exchange rates over the course of 2001, currency, particularly the Japanese yen, should continue to hamper reported year-over-year growth.
     Sales for the combined lens and lens care product lines are expected to grow in the mid-to-upper single digits for the full year. This expectation assumes that shipments of lens care products in the U.S. will be in line with consumer off-take, following a period of intense retail inventory destocking. Revenues should also benefit from sales of ReNu MultiPlus No Rub Formula, which was approved by the U.S. FDA in the fourth quarter of 2001. The company's expectations further assume that newer-technology contact lens products, such as PureVision and SofLens66 Toric, will drive growth in this product category. The company will launch SofLens66 Toric in Japan in the first quarter. This is the company's first new contact lens product launch in that market in several years, and additional products are currently awaiting regulatory approval. In the U.S., FDA approval was received in the fourth quarter for a "no-rub" claim for the company's ReNu MultiPlus product.
     Products for cataract surgery are expected to post mid-single digit sales growth in 2002. This expectation assumes that continued progress will be made in resolving product supply issues that have hampered performance in the recent past.
     Refractive surgery sales are expected to grow in the low-to-mid single digits for the year. The economic environment in the U.S. is expected to continue to hamper results in this market, while continued gains are expected overseas. The company anticipates a mid-year U.S. approval for hyperopia for its Technolas 217 laser, to be followed by a late-year approval for its Zyoptix system for personalized refractive surgery. Both of these events should benefit the company when the economy recovers.
     Lastly, the pharmaceutical product category is expected to achieve mid-single digit growth over 2001. This category should benefit from the introduction of Ocuvite PreserVision and continued share gains for the company's lines of proprietary pharmaceutical products.
     The company anticipates full-year improvement in both gross margin and SG&A ratios. Margin improvement is expected to result from favorable sales mix, and both ratios should benefit from savings associated with the recently announced restructuring actions. Research and development expense is also expected to increase, primarily due to the continued investment in Envision TD technology.
     The company projects net financing expense to increase approximately $10 million from 2001, reflecting lower interest income due to lower average interest rates. This projection assumes no change in the company's debt rating. In addition, the company expects the reported tax rate to be 34.5%.
     Free cash flow, after capital spending of approximately $100 million, is expected to exceed $120 million for the full year.

Bausch & Lomb   A10   2002 Proxy Statement

Environment The company believes it is in compliance in all material respects with applicable environmental laws and regulations. The company is presently involved in remedial and investigatory activities at certain locations in which the company has been named the responsible party. At all such locations, the company believes such efforts will not have a materially adverse effect on its results of operations or financial position.

The Euro On January 1, 1999, eleven of the fifteen member countries of the European Union began operating with a new currency, the euro, which was established by irrevocably fixing the value of legacy currencies against this new common currency. The euro was used in business transactions along with legacy currencies until January 1, 2002, at which time it became the sole currency of the participating countries.
     The company had processes in place to address any issues raised by the currency conversion, including the impact on information technology and other systems, currency risk, financial instruments, taxation and competitive implications. The company converted to the euro in 2002 with no issues.

Employee Benefits Effective January 1, 2000, the company's contributory defined benefit pension plan was converted to a noncontributory cash balance plan. This plan covers essentially all U.S. employees. The company's defined contribution plan was also amended to increase the company match. The changes to these plans are not expected to materially affect the company's results.

Critical Accounting Policies The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. The most significant of these involving difficult or complex judgements in 2001 include revenue recognition, foreign currency impacts and hedging activities under SFAS No. 133 and use of estimates. In each situation, management is required to make estimates about the effects of matters or future events that are inherently uncertain.
     The company's overall policies with regard to revenue recognition are set forth in Note 1 ¾ Accounting Policies. As noted therein, revenue is recognized based on the terms of sale with the customer. The terms and arrangements vary by product category, owing to the differing nature of the customers, channels and products across the categories. The company believes its revenue recognition policies are appropriate in all circumstances, and that its policies are reflective of complexities arising from customer arrangements involving such features as rebates, leases, services and other normal course of business arrangements.
     The company enters into various derivative instruments designated as hedging transactions. Such activities require management to assess the effectiveness of the hedge transaction at inception as well as on an ongoing basis. The accounting and reporting under SFAS No. 133 is discussed further in Note 1 ¾ Accounting Policies.
     The financial statements are prepared in conformity with generally accepted accounting principles, and, as such, include amounts based on informed estimated and judgements of management. For example, estimates are used in determining valuation allowances for uncollectible receivables, obsolete inventory, deferred income taxes and purchased intangible assets. Actual results could differ from those estimates.
     The company used what it believes are reasonable assumptions and where applicable, established valuation techniques in making its estimates.

New Accounting Guidance During May 2000, the Emerging Issues Task Force (EITF) issued EITF Issue No. 00-14, Accounting for Certain Sales Incentives. EITF Issue No. 00-14 addresses the income statement classification of various sales incentives. In April 2001, the transition date was revised and the consensus will be effective for the first quarter of 2002. Upon adoption, amounts included in previously issued financial statements will be reclassified to conform to the new presentation. The company has determined that the adoption of EITF Issue No. 00-14 will not have a material effect on its financial position or its results of operations.
     During April 2001, the EITF issued Issue No. 00-25, Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products with an effective date for the first quarter of 2002. The issue addresses the accounting treatment and income statement classification for certain sales incentives, including cooperative advertising arrangements, buydowns, and slotting fees. The consensus requires that these incentives be reclassified from selling, general and administrative expense to a reduction in sales. Upon adoption, amounts included in previously issued financial statements will be reclassified to conform to the new presentation. The company has determined that the adoption of EITF Issue No. 00-25 will not have a material effect on its financial position or its results of operations.
     In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Intangible Assets. SFAS No. 141 provides guidance on the accounting for a business combination at the date the combination is completed. It changes the current accounting guidance by eliminating the pooling-of-interests method and requiring the use of the purchase method of accounting for business combinations. It also provides new criteria that determine whether an acquired intangible asset should be recognized separately from goodwill. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS No. 142 provides guidance on how to account for goodwill and intangible assets after the acquisition is complete. The most substantive change represented by this statement is that goodwill will no longer be amortized; instead, it will be tested for impairment at least annually or more

Bausch & Lomb   A11   2002 Proxy Statement

Information Concerning Forward-Looking Statements When used in this discussion, the words "anticipate", "should", "expect", "estimate", "project", "will", "are likely" and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this report under the heading "Outlook" and elsewhere are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve predictions of future company performance, and are thus dependent on a number of factors affecting the company's performance. Where possible, specific factors that may impact performance materially have been identified in connection with specific forward-looking statements. Additional risks and uncertainties include, without limitation, the impact of competition, seasonality and general economic conditions in the global lens and lens care, ophthalmic cataract and refractive and pharmaceutical markets where the company's businesses compete, changes in global and localized economic and political conditions, effects of war or terrorism, changing currency exchange rates, changing trends in practitioner and consumer preferences and tastes, changes in technology, medical developments relating to the use of the company's products, legal proceedings initiated by or against the company, the impact of company performance on its financing costs, changes in government regulation of the company's products and operations, changes in private and regulatory schemes providing for the reimbursement of patient medical expenses, changes in the company's credit ratings, or the cost of access to sources of liquidity, the financial well-being and commercial success of key customers, the performance by third parties upon whom the company relies for the provision of goods or services, the ability of the company to secure intellectual property protections, including patent rights, with respect to key technologies, difficulties or delays in the development, production, laboratory and clinical testing, regulatory approval or marketing of products, the successful completion and integration of acquisitions announced by the company, the continued successful implementation of efforts in managing and reducing costs and expenses, the effect of changes within the company's organization, including the selection and development of the company's management team and such other factors as are described in greater detail in the company's filings with the Securities and Exchange Commission, including its 2001 Annual Report on Form 10-K.

Bausch & Lomb   A12   2002 Proxy Statement

See Notes To Financial Statements

Bausch & Lomb   A13   2002 Proxy Statement

See Notes To Financial Statements

Bausch & Lomb   A14   2002 Proxy Statement