Bausch Health Companies Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - Bausch Health Companies Inc.	d307149d8k.htm

Exhibit 99.1

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International Headquarters

7150 Mississauga Road

Mississauga, Ontario L5N 8M5

Phone: 905.286.3000

Fax: 905.286.3050

Contact Information:

Laurie W. Little

949-461-6002

laurie.little@valeant.com

VALEANT PHARMACEUTICALS REPORTS

2011 FOURTH QUARTER FINANCIAL RESULTS

Fourth Quarter 2011

•

2011 Fourth Quarter Total Revenue $688.5 million; an increase of 34% over the prior year

•

Pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 10%

•

2011 Fourth Quarter GAAP EPS $0.18; Cash EPS $0.94

•

2011 Fourth Quarter GAAP Operating Cash Flow $190 million; Adjusted Operating Cash Flow $253 million

Full Year 2011

•

Total 2011 revenue was $2.46 billion

•

Total 2011 pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 9%

•

Total 2011 GAAP EPS $0.49; Cash EPS $2.93

•

Total 2011 GAAP Operating Cash Flow $676 million; Adjusted Operating Cash Flow $925 million

Mississauga, Ontario — February 27, 2012 — Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2011.

“We are pleased by our financial results for the fourth quarter and the full year,” said J. Michael Pearson, chairman and chief executive officer. “Our performance continues to demonstrate the strength of our diversified model and our capacity to integrate acquisitions and still deliver strong top-line and bottom-line results.”

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Revenue

Total reported revenue was $688.4 million in the fourth quarter of 2011 as compared to $514.6 million in the fourth quarter of 2010 primarily attributable to acquisitions completed in 2011 and the growth of key dermatology brands, partly offset by a negative foreign exchange impact.

Product sales were $654.2 million in the fourth quarter of 2011, as compared to $488.7 million in the 2010 year quarter. Pro forma organic growth for the Company was 10% for the fourth quarter of 2011 and 9% for the full year 2011.

Operating Expenses

The Company’s cost of goods sold was $182.0 million in the fourth quarter of 2011, and represented 28% of product sales, as compared to $210.6 million in the fourth quarter of 2010, representing 43% of product sales. Cost of goods sold in the fourth quarter of 2011 included an $18.3 million fair value adjustment to inventory, amortization and other non-GAAP items, while the comparable quarter in 2010 included $60.4 million fair value adjustment to inventory and other non-GAAP items related to acquisitions. Excluding the adjustments, cost of goods for the fourth quarter of 2011 and 2010 were 25% and 31% of product sales, respectively.

Selling, General and Administrative (SG&A) expenses were $148.5 million in the fourth quarter of 2011 and included a $12.9 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. This compares to SG&A expenses of $127.8 million in the fourth quarter of 2010 including a $17.0 million step-up in stock based compensation. Excluding the step-up in stock based compensation expenses related to the acquisition of Legacy Valeant, SG&A as a percentage of product sales in 2011 and 2010 was 21% and 22%, respectively.

Research and Development expenses were $16.8 million in the fourth quarter of 2011, or 2% of revenue, as compared to $18.3 million in the fourth quarter of 2010, or 4% of revenue.

Merger Related Costs & Expenses

We recorded restructuring and acquisition-related costs of $56.7 million in the quarter, virtually all of which arise from acquisitions and are primarily employee severance costs, contract cancellations fees and facility related costs.

Net Income and Cash Flow from Operations

The Company reported net income of $55.9 million for the fourth quarter of 2011, or $0.18 per diluted share. On an adjusted Cash EPS basis, adjusted income was $297.7 million, or $0.94 per diluted share, as compared to guidance of $0.83 to $0.87 per diluted share.

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GAAP cash flow from operations, which includes acquisition transaction fees, was $189.8 million in the quarter. Adjusted cash flow from operations was $253.1 million in the fourth quarter of 2011, as compared to guidance of greater than $230 million.

Foreign Currency Impact

Valeant’s foreign operations having a functional currency other than the U.S. dollar are translated into U.S. dollars at the exchange rate prevailing at the balance sheet date, and at the average exchange rate for the reporting period for revenue and expense accounts. Due to the strengthening of the U.S. dollar in the fourth quarter of 2011, product sales were negatively impacted by approximately $36 million as compared to originally budgeted rates, consistent with previously announced expectations.

In connection with the acquisition of iNova, Valeant entered into foreign currency forward-exchange contracts to buy AUD$625.0 million, which were settled on December 20, 2011. The Company recorded a $16.4 million foreign exchange gain on the settlement of these contracts, which was recognized in Other Income in the consolidated statements of income for the year ended December 31, 2011.

Cash EPS for the fourth quarter of 2011 was negatively impacted by foreign currency by approximately $0.06 per diluted share, which was offset by the positive impact of approximately $0.05 related to the foreign currency forward-exchange contracts entered into as part of the iNova transaction.

Acquisitions Completed in the Fourth Quarter

During the fourth quarter of 2011, Valeant completed four strategic transactions including: iNova, a company that sells and distributes a range of prescription and OTC products in Australia, New Zealand, Southeast Asia and South Africa; Dermik, a dermatological unit of Sanofi in the U.S. and Canada that manufactures, markets and sells a range of therapeutic and aesthetic dermatology products; Ortho Dermatologics, a division of Janssen Pharmaceuticals, Inc. that develops products to treat skin disorders; and Afexa Life Sciences, Inc., a Canadian company that markets several consumer brands, such as COLD-FX^®, Canada’s leading OTC cold and flu treatment, and COLDSORE-FX^®, a topical OTC cold sore treatment.

2012 Guidance

The Company is not updating 2012 annual guidance of $3.95 - $4.20 Cash EPS provided on January 6, 2012. This guidance does not include transactions announced so far in 2012 and future acquisitions.

Conference Call and Webcast Information

The Company will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. ET (7:00 a.m. PT), February 27, 2012 to discuss its fourth

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quarter financial results for 2011. The dial-in number to participate on this call is (877) 876-8393, confirmation code 49361027. International callers should dial (973) 200-3961, confirmation code 49361027. A replay will be available approximately two hours following the conclusion of the conference call through March 5, 2012 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 49361027. The live webcast of the conference call may be accessed through the investor relations section of the Company’s corporate website at www.valeant.com.

About Valeant

Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. More information about Valeant can be found at www.valeant.com.

Forward-looking Statements

This press release may contain forward-looking statements, including, but not limited to, statements regarding our business model, performance and results of operations, and anticipated Cash EPS for 2012, anticipated closing of pending acquisitions and share repurchases and financing alternatives. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the company's most recent annual or quarterly report filed with the Securities and Exchange Commission (“SEC”) and risks and uncertainties relating to future acquisitions, integration of acquired businesses and results of operations, as detailed from time to time in Valeant’s filings with the SEC and the Canadian Securities Administrators (“CSA”), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes.

Note on Guidance

The guidance contained in this press release is only effective as of the date given, January 6, 2012, and will not be updated or confirmed until the Company publicly announces updated or affirmed guidance.

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Non-GAAP Information

To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, stock-based compensation step-up, restructuring and acquisition-related costs, acquired in-process research and development ("IPR&D"), legal settlements, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, and (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Financial Tables follow.

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Valeant Pharmaceuticals International, Inc.		Table 1

Condensed Consolidated Statement of Income

For the Three and Twelve Months Ended December 31, 2011 and 2010


	Three Months Ended December 31,									Twelve Months Ended December 31,
(In thousands, except per share data)	2011			2010(a)			% Change			2011			2010(a)			% Change
Product sales	$	654,171		$	488,721			34	%	$	2,255,050		$	1,133,371		NM
Alliance and royalty		25,600			19,963			28	%		172,473			35,109		NM
Service and other		8,682			5,880			48	%		35,927			12,757		NM

Total revenues		688,453			514,564			34	%		2,463,450			1,181,237		NM

Cost of goods sold (exclusive amortization of intangible assets shown separately below)		181,983			210,648			-14	%		683,750			395,595		NM
Cost of services		2,628			2,944			-11	%		12,311			10,155		NM
Cost of alliances		36			—						30,771			—		NM
Selling, general and administrative (“SG&A”)		148,508			127,752			16	%		572,472			276,546		NM
Research and development		16,777			18,324			-8	%		65,687			68,311		NM
Contingent consideration fair value adjustments		(20,028	)		—						(10,986	)		—		NM
Acquired in-process research and development		105,200			28,000			276	%		109,200			89,245		NM
Legal settlements		9,441			14,110			-33	%		11,841			52,610		NM
Restructuring and acquisition-related costs		56,718			44,078			29	%		130,631			179,102		NM
Amortization of intangible assets		192,798			117,660			64	%		557,814			219,758		NM

		694,061			563,516			23	%		2,163,491			1,291,322

Operating income (loss)		(5,608	)		(48,952	)		-89	%		299,959			(110,085	)
Interest expense, net		(94,055	)		(52,564	)		79	%		(330,442	)		(88,787	)
Loss on extinguishment of debt		(3,519	)		(32,413	)		-89	%		(36,844	)		(32,413	)
Gain (loss) on investments, net		(11	)		—						22,776			(5,552	)
Other income (expense), net including translation and exchange		26,487			229			NM			26,551			574

Income (loss) before (recovery) provision for income taxes		(76,706	)		(133,700	)		-43	%		(18,000	)		(236,263	)
Recovery of income taxes		(132,561	)		(102,570	)		29	%		(177,559	)		(28,070	)

Net income (loss)	$	55,855		$	(31,130	)				$	159,559		$	(208,193	)

Earnings per share:
Basic:
Net income (loss)	$	0.18		$	(0.10	)				$	0.52		$	(1.06	)

Shares used in per share computation		308,706			302,005						304,655			195,808

Diluted:
Net income (loss)	$	0.18		$	(0.10	)				$	0.49		$	(1.06	)

Shares used in per share computation		317,390			302,005						326,119			195,808

(a)	Prior year amounts have been modified to conform to the 2011 disclosure.


Valeant Pharmaceuticals International, Inc.		Table 2

Reconciliation of GAAP EPS to Adjusted Non-GAAP (Cash) EPS

For the Three and Twelve Months Ended December 31, 2011 and 2010


	Three Months Ended December 31,						Twelve Months Ended December 31,
(In thousands, except per share data)	2011			2010(a)			2011			2010(a)
Net income (loss)	$	55,855		$	(31,130	)	$	159,559		$	(208,193	)
Non-GAAP adjustments (b)(c):
Inventory step-up (d)		10,317			53,266			59,256			53,266
Alliance product assets & pp&e step-up (e)		214			—			19,692			—
Stock-based compensation step-up (f)		12,936			17,040			63,492			17,040
Contingent consideration fair value adjustment		(20,028	)		—			(10,986	)		—
Restructuring, integration and acquisition-related costs (g)		56,718			44,078			130,631			179,102
Acquired in-process research and development (IPR&D)		105,200			28,000			109,200			89,245
Legal settlements		9,441			14,110			11,841			52,610
Amortization and other non-cash charges		198,080			122,729			569,977			232,954

		372,878			279,223			953,103			624,217
Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest		8,069			3,624			27,103			21,472
Loss on extinguishment of debt		3,519			32,413			36,844			32,413
(Gain) loss on assets held for sale/impairment, net		3,199			—			3,199			—
(Gain) loss on investments, net		—			—			(1,769	)		5,552
Tax		(145,861	)		(118,870	)		(222,959	)		(54,370	)

Total adjustments		241,804			196,390			795,521			629,284
Adjusted income	$	297,659		$	165,260		$	955,080		$	421,091

GAAP earnings per share - diluted	$	0.18		$	(0.10	)	$	0.49		$	(1.06	)

Adjusted Non-GAAP (Cash) earnings per share - diluted	$	0.94		$	0.50		$	2.93		$	2.05

Shares used in diluted per share calculation - Adjusted Non-GAAP (Cash) earnings per share		317,390			330,452			326,119			205,529

(a)	Prior year non-GAAP adjustments have been modified to conform to the 2011 disclosure.

(b)

To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration and acquisition-related costs, acquired in-process research and development (“IPR&D”), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

(c)

This table includes Adjusted Non-GAAP (Cash) Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding amortization of inventory step-up, alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration and acquisition-related costs, acquired in-process research and development (“IPR&D”), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, (gain) loss on investments, net, and adjusts tax expense to cash taxes.

(d)

ASC 805, accounting for business combinations requires an inventory fair value step-up. The impact of the amortization of this step-up is included in cost of goods sold. For the three and twelve months ended December 31, 2011 the total impact is $10.3 million and $59.3 million, respectively. For the three and twelve months ended December 31, 2011 a total of $0.0 million and $27.3 million related to the merger with Valeant Pharmaceutical International, $0.7 million and $1.2 million related to the acquisition of Ganehill Pty Limited on April 4, 2011, $0.0 million and $18.8 million related to the acquisition of PharmaSwiss SA on March 10, 2011, $2.9 million and $5.3 million related to the acquisition of Sanitas on August 19th, 2011, $2.1 million and $2.1 million related to acquisition of Afexa on October 17th, 2011, $0.7 million and $0.7 million related to acquisition of Ortho Dermatologics on December 12th, 2011, $2.8 million and $2.8 million related to the acquisition of Dermik on December 16th, 2011, and $1.1 million and $1.1 million related to acquisition of iNova on December 21st, 2011, respectively.

(e)

Alliance product assets & pp&e step-up represents the step up to fair market value from Legacy Valeant’s original cost resulting from the merger of Legacy Valeant into Legacy Biovail. The impact of the amortization of this step-up is included in cost of alliance and royalty & SG&A. For the three and twelve months ended December 31, 2011 the total impact is $0.2 million and $19.7 million, respectively.

(f)	Total stock-based compensation for the three and twelve months ended December 31, 2011 was $20.6 million and $93.0 million, of which $12.9 million and $63.5 million reflect the amortization of the fair value step-up increment resulting from the merger, respectively.

(g)

Restructuring, integration and acquisition-related costs for the three and twelve months ended December 31, 2011 represent costs related to the merger of Legacy Valeant and Legacy Biovail, the acquisitions of PharmaSwiss SA, Sanitas, Afexa, Ortho Dermatologics, Dermik and iNova. These include $5.9 million and $23.9 million related to facility related costs, $7.8 million and $24.7 million related to contract cancellation fees, consulting, legal and other, $15.0 million and $29.3 million related to employee severance costs, $0.5 million and $3.4 million related to increases in deferred stock unit values related to directors retired as a result of the merger between Legacy Valeant and Legacy Biovail, $20.1 million and $33.0 million related to acquisition costs, $2.8 million and $7.2 million related to manufacturing integration, $1.6 million and $1.6 million related to co-promote expenses and $3.0 million and $7.5 million related to wind down costs, respectively.


Valeant Pharmaceuticals International, Inc.		Table 2 (a)

Reconciliation of Non-GAAP Adjustments

For the Three Months Ended December 31, 2011 and 2010


	Three Months Ended December 31, 2011
	Inventory step-up		Alliance product assets & pp&e step-up		Stock-based compensation step-up		Contingent consideration fair value adjustment			Restructuring, integration and acquisition- related costs		Acquired in- process research and development (IPR&D)		Legal settlements		Amortization and other non-cash charges		Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest		Loss on extinguishment of debt		Gain (loss) on assets held for sale/ impairment, net		Tax
Product Sales		—		—		—		—			—		—		—		268		—		—		—		—
Cost of goods sold (exclusive amortization of intangible assets shown separately below)		10,317		57		88		—			—		—		—		5,014		—		—		2,797		—
Selling, general and administrative (“SG&A”)		—		157		12,723		—			—		—		—		—		—		—		402		—
Research and development		—		—		125		—			—		—		—		—		—		—		—		—
Acquired in-process research and development		—		—		—		—			—		105,200		—		—		—		—		—		—
Legal settlements		—		—		—		—			—		—		9,441		—		—		—		—		—
Contingent consideration fair value adjustments		—		—		—		(20,028	)		—		—		—		—		—		—		—		—
Restructuring and acquisition-related costs		—		—		—		—			56,718		—		—		—		—		—		—		—
Amortization of intangible assets		—		—		—		—			—		—		—		192,798		—		—		—		—
Interest expense, net		—		—		—		—			—		—		—		—		8,069		—		—		—
Loss on extinguishment of debt		—		—		—		—			—		—		—		—		—		3,519		—		—
Tax		—		—		—		—			—		—		—		—		—		—		—		(145,861	)

Total Adjustments	$	10,317	$	214	$	12,936	$	(20,028	)	$	56,718	$	105,200	$	9,441	$	198,080	$	8,069	$	3,519	$	3,199	$	(145,861	)


	Three Months Ended December 31, 2010
	Inventory step-up		Stock-based compensation step-up		Restructuring, integration and acquisition- related costs		Acquired in- process research and development (IPR&D)		Legal settlements		Amortization and other non- cash charges			Amortization of deferred financing costs, debt discounts and ASC 470- 20 (FSP APB 14-1) interest		Loss on extinguishment of debt		Tax
Product Sales		—		—		—		—		—		268			—		—		—
Cost of goods sold (exclusive amortization of intangible assets shown separately below)		53,266		—		—		—		—		7,125			—		—		—
Selling, general and administrative (“SG&A”)		—		17,040		—		—		—		(2,586	)		—		—		—
Acquired in-process research and development		—		—		—		28,000		—		—			—		—		—
Legal settlements		—		—		—		—		14,110		—			—		—		—
Restructuring and acquisition-related costs		—		—		44,078		—		—		—			—		—		—
Amortization of intangible assets		—		—		—		—		—		117,660			—		—		—
Interest expense, net		—		—		—		—		—		—			3,624		—		—
Loss on extinguishment of debt		—		—		—		—		—		—			—		32,413		—
Tax		—		—		—		—		—		262			—		—		(118,870	)

Total Adjustments	$	53,266	$	17,040	$	44,078	$	28,000	$	14,110	$	122,729		$	3,624	$	32,413	$	(118,870	)


Valeant Pharmaceuticals International, Inc.		Table 2 (b)

Reconciliation of Non-GAAP Adjustments

For the Twelve Months Ended December 31, 2011 and 2010


	Twelve Months Ended December 31, 2011
	Inventory step-up		Alliance product assets & pp&e step-up		Stock-based compensation step-up		Contingent consideration fair value adjustment			Restructuring, integration and acquisition- related costs		Acquired in- process research and development (IPR&D)		Legal settlements		Amortization and other non-cash charges		Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest		Loss on extinguishment of debt		Gain (loss) on assets held for sale/impairment, net		Gain (loss) on investments, net			Tax
Product Sales		—		—		—		—			—		—		—		1,072		—		—		—		—			—
Cost of goods sold (exclusive amortization of intangible assets shown separately below)		59,256		426		617		—			—		—		—		11,091		—		—		2,797		—			—
Cost of alliances		—		18,837		—		—			—		—		—		—		—		—		—		—			—
Selling, general and administrative (“SG&A”)		—		429		62,124		—			—		—		—		—		—		—		402		—			—
Research and development		—		—		751		—			—		—		—		—		—		—		—		—			—
Contingent consideration fair value adjustments		—		—		—		(10,986	)		—		—		—		—		—		—		—		—			—
Acquired in-process research and development		—		—		—		—			—		109,200		—		—		—		—		—		—			—
Legal settlements		—		—		—		—			—		—		11,841		—		—		—		—		—			—
Restructuring and acquisition-related costs		—		—		—		—			130,631		—		—		—		—		—		—		—			—
Amortization of intangible assets		—		—		—		—			—		—		—		557,814		—		—		—		—			—
Interest expense, net		—		—		—		—			—		—		—		—		27,103		—		—		—			—
Loss on extinguishment of debt		—		—		—		—			—		—		—		—		—		36,844		—		—			—
Gain (loss) on investments, net		—		—		—		—			—		—		—		—		—		—		—		(1,769	)		—
Tax		—		—		—		—			—		—		—		—		—		—		—		—			(222,959	)

Total Adjustments	$	59,256	$	19,692	$	63,492	$	(10,986	)	$	130,631	$	109,200	$	11,841	$	569,977	$	27,103	$	36,844	$	3,199	$	(1,769	)	$	(222,959	)


	Twelve Months Ended December 31, 2010
	Inventory step-up		Stock-based compensation step-up		Restructuring, integration and acquisition- related costs		Acquired in- process research and development (IPR&D)		Legal settlements		Amortization and other non- cash charges			Amortization of deferred financing costs, debt discounts and ASC 470- 20 (FSP APB 14-1) interest		Loss on extinguishment of debt		Gain (loss) on investments, net		Tax
Product Sales		—		—		—		—		—		1,072			—		—		—		—
Cost of goods sold (exclusive amortization of intangible assets shown separately below)		53,266		—		—		—		—		13,660			—		—		—		—
Selling, general and administrative (“SG&A”)		—		17,040		—		—		—		(2,586	)		—		—		—		—
Legal settlements		—		—		—		—		52,610		—			—		—		—		—
Restructuring and acquisition-related costs		—		—		179,102		—		—		—			—		—		—		—
Acquired in-process research and development		—		—		—		89,245		—		—			—		—		—		—
Amortization of intangible assets		—		—		—		—		—		219,758			—		—		—		—
Interest expense, net		—		—		—		—		—		—			21,472		—		—		—
Loss on extinguishment of debt		—		—		—		—		—		—			—		32,413		—		—
Gain (loss) on investments, net		—		—		—		—		—		—			—		—		5,552		—
Tax		—		—		—		—		—		1,050			—		—		—		(54,370	)

Total Adjustments	$	53,266	$	17,040	$	179,102	$	89,245	$	52,610	$	232,954		$	21,472	$	32,413	$	5,552	$	(54,370	)


Valeant Pharmaceuticals International, Inc.			Table 3
Statement of Revenue - by Segment
For the Three and Twelve Months Ended December 31, 2011 and 2010
(In thousands)


	Three Months Ended December 31,
	2011 GAAP		2010 GAAP		% Change (c)			2011 currency impact			2011 excluding currency impact non-GAAP		% Change (c)
Revenue (a)(b)
U.S. Neurology & Other	$	202,899	$	212,899		-5	%	$	—		$	202,899		-5	%
U.S. Dermatology		174,096		103,896		68	%		(17	)		174,079		68	%

Total U.S.		376,995		316,795		19	%		(17	)		376,978		19	%
Canada/Australia		101,352		80,422		26	%		1,033			102,385		27	%

Specialty Pharmaceuticals		478,347		397,217		20	%		1,016			479,363		21	%

Branded Generics - Europe		144,335		48,310		199	%		9,192			153,527		218	%
Branded Generics - Latin America		65,771		69,037		-5	%		5,491			71,262		3	%

Branded Generics		210,106		117,347		79	%		14,683			224,789		92	%

Total Revenue	$	688,453	$	514,564		34	%	$	15,699		$	704,152		37	%


	Twelve Months Ended December 31,
	2011 GAAP		2010 GAAP		% Change (c)			2011 currency impact			2011 excluding currency impact non-GAAP		% Change (c)
Revenue (a)(b)
U.S. Neurology & Other	$	829,289	$	658,312		26	%	$	—		$	829,289		26	%
U.S. Dermatology		568,298		219,008		159	%		(371	)		567,927		159	%

Total U.S.		1,397,587		877,320		59	%		(371	)		1,397,216		59	%
Canada/Australia		340,240		161,568		111	%		(17,828	)		322,412		100	%

Specialty Pharmaceuticals		1,737,827		1,038,888		67	%		(18,199	)		1,719,628		66	%
Branded generics - Europe		470,783		73,312		542	%		(12,220	)		458,563		525	%
Branded generics - Latin America		254,840		69,037		269	%		(5,823	)		249,017		261	%

Branded Generics		725,623		142,349		410	%		(18,043	)		707,580		397	%

Total Revenue	$	2,463,450	$	1,181,237		109	%	$	(36,242	)	$	2,427,208		105	%

(a)

Note: Currency effect for constant currency sales is determined by comparing 2011 reported amounts adjusted to exclude currency impact, calculated using 2010 monthly average exchange rates, to the actual 2010 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies.

(b)	See footnote (b) to Table 2.

(c)

The % change reflects revenue for the combined company for the three months ended December 31, 2011 as compared to the combined company for the three months ended December 31, 2010. The % change for the twelve months ended December 31, 2011 is as compared to Legacy Biovail only for nine months ended September 30, 2010 and combined company for three months ended December 31, 2010.


Valeant Pharmaceuticals International, Inc.		Table 4

Reconciliation of GAAP Statement of Cost of Goods Sold to Non-GAAP Statement Cost of Goods Sold - by Segment

For the Three and Twelve Months Ended December 31, 2011

(In thousands)


4.1	Cost of goods sold (a)	Three Months Ended December 31,
		2011 as reported GAAP		% of product sales			2011 fair value step-up adjustment to inventory and Other non- GAAP(b)		2011 excluding fair value step-up adjustment to inventory and Other non-GAAP		% of product sales
	U.S. Neurology & Other	$	34,937		18	%	$	2,025	$	32,912		17	%
	U.S. Dermatology		18,882		12	%		1,721		17,161		11	%
	Canada/Australia		32,070		32	%		8,506		23,564		23	%
	Branded Generics - Europe		68,900		49	%		2,952		65,948		47	%
	Branded Generics - Latin America		27,085		41	%		2,981		24,104		37	%
	Corporate		109					88		21

		$	181,983		28	%	$	18,273	$	163,710		25	%


		Twelve Months Ended December 31,
		2011 as reported GAAP		% of product sales			2011 fair value step-up adjustment to inventory and Other non- GAAP(b)		2011 excluding fair value step-up adjustment to inventory and Other non-GAAP		% of product sales
	U.S. Neurology & Other	$	148,128		19	%	$	17,550	$	130,578		17	%
	U.S. Dermatology		74,179		17	%		9,418		64,761		15	%
	Canada/Australia		106,609		31	%		12,141		94,468		28	%
	Branded Generics - Europe		245,453		52	%		26,525		218,928		48	%
	Branded Generics - Latin America		108,271		42	%		7,936		100,335		39	%
	Corporate		1,110					617		493

		$	683,750		30	%	$	74,187	$	609,563		27	%

(a)	See footnote (b) to Table 2.

(b)

For the three and twelve months ended December 31, 2011 U.S. Neurology and Other and U.S. Dermatology include $0.0 million and $9.4 million and $1.7 million and $9.4 million of fair value step-up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, U.S. Neurology and Other includes $2.0 million and $8.1 million of amortization. For the three and twelve months ended December 31, 2011 Canada/Australia includes $5.7 million and $9.6 million of fair value step up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, Canada/Australia includes $2.8 million and $2.5 million of accelerated depreciation and PP&E step-up. For the three and twelve months ended December 31, 2011 Branded Generics-Latin America includes $0.0 million and $5.0 million of fair value step up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, Branded Generics-Latin America includes $2.9 million and $2.9 million of inventory write-offs. For the three and twelve months ended December 31, 2011 Corporate includes $0.0 million and $0.6 million of stock base compensation step up.


Valeant Pharmaceuticals International, Inc.		Table 5
Consolidated Balance Sheet and Other Data
(In thousands)


5.1	Cash	As of December 31, 2011			As of December 31, 2010
	Cash and cash equivalents	$	164,111		$	394,269
	Marketable securities		6,338			6,083

	Total cash and marketable securities	$	170,449		$	400,352


	Debt
	Revolving credit facility	$	220,000		$	—
	New Term loan A facility, net of unamortized debt discount of $39,480		2,185,520			—
	Term loan A facility		—			975,000
	Senior notes		4,228,480			2,185,822
	Convertible notes		17,011			417,555
	Other		—			16,900

			6,651,011			3,595,277
	Less: Current portion		(111,250	)		(116,900	)

		$	6,539,761		$	3,478,377


5.2	Summary of Cash Flow Statement	Three Months Ended December 31,
		2011			2010
	Cash flow provided by (used in):
	Net cash provided by (used in) operating activities (GAAP)	$	189,780		$	(1,399	)
	Restructuring and acquisition-related costs		56,718			44,078
	Payment of accrued legal settlements		9,441			38,500
	Effect of ASC 470-20 (FSP APB 14-1)		1,390			4,934
	Tax Benefit from Stock Options Exercised (a)		(7,125	)		—
	Working Capital changes from Ortho and Dermik		21,434			—
	Changes in working capital related to restructuring and acquisition-related costs		(18,510	)		122,939

	Adjusted cash flow from operations (Non-GAAP) (b)	$	253,128		$	209,052

(a)	Includes stock option tax benefit which will reduce taxes in future periods.

(b)	See footnote (b) to Table 2.

Valeant Pharmaceuticals International

Proforma Organic Growth - by Segment

For the Three and Twelve Months Ended December 31, 2011

(In thousands)


	Three Month Ending December 31,
	(a) (b)		(a) (c)		(d)									(e)
	December 2011		December 2010		Total Proforma Acquisitions		Total Proforma QTD 2010		Divestitures/ Discontinuations		% Change			December 2011 currency impact		December 2011 excluding currency impact		% Change
U.S Dermatology	$	151,360	$	90,330	$	20,083	$	108,715	$	1,698		39	%	$	—	$	151,360		39	%
U.S. Neurology & Other		195,879		201,470		—		201,470		—		-3	%		—		195,879		-3	%
Total U.S.		347,239		291,800		20,083		310,185		1,698		12	%		—		347,239		12	%
Canada/Australia		100,017		79,573		8,312		87,885		—		14	%		271		100,288		14	%

Specialty Pharmaceuticals		447,256		371,373		28,395		398,070		1,698		12	%		271		447,527		12	%
Branded generics - Latin America		65,771		69,038		—		69,038		—		-5	%		5,492		71,263		3	%
Branded generics - Europe		141,144		48,310		91,329		139,639		—		1	%		8,695		149,839		7	%

Branded Generics		206,915		117,348		91,329		208,677		—		-1	%		14,187		221,102		6	%

Total product sales	$	654,171	$	488,721	$	119,724	$	606,747	$	1,698		8	%	$	14,458	$	668,629		10	%

Add: JV Revenue (f)		1,048		177		—		177		—					—		1,048

Total	$	655,219	$	488,898	$	119,724	$	606,924	$	1,698		8	%	$	14,458	$	669,677		10	%


	Twelve Months Ended December 31,
	(a) (b)		(a) (c)		(d)									(e)
	December 2011		December 2010		Total Proforma Acquisitions		Total Proforma YTD 2010		Divestitures/ Discontinuations		% Change			December 2011 currency impact			December 2011 excluding currency impact		% Change
U.S Dermatology	$	437,663	$	306,664	$	35,614	$	336,923	$	5,355		32	%	$	—		$	437,663		32	%
U.S. Neurology & Other		767,222		780,681		20,625		801,306		—		-4	%		—			767,222		-4	%
Total U.S.		1,204,885		1,087,345		56,239		1,138,229		5,355		6	%		—			1,204,885		6	%
Canada/Australia		334,794		268,033		13,346		281,379		—		19	%		(17,606	)		317,188		13	%

Specialty Pharmaceuticals		1,539,679		1,355,378		69,585		1,419,608		5,355		9	%		(17,606	)		1,522,073		8	%
Branded generics - Latin America		254,840		214,406		6,471		220,877		—		15	%		(5,822	)		249,018		13	%
Branded generics -Europe		460,531		198,138		209,260		407,398		—		13	%		(11,588	)		448,943		10	%

Branded Generics		715,371		412,544		215,731		628,275		—		14	%		(17,410	)		697,961		11	%

Total product sales	$	2,255,050	$	1,767,922	$	285,316	$	2,047,883	$	5,355		10	%	$	(35,016	)	$	2,220,034		9	%

Add: JV Revenue (f)		3,361		659		—		659		—					—			3,361

Total	$	2,258,411	$	1,768,581	$	285,316	$	2,048,542	$	5,355		11	%	$	(35,016	)	$	2,223,395		9	%

(a)	See footnote (b) to Table 2.

(b)	Includes all acquisitions.

(c)

Total Q4 revenue of $514.6 million also includes $5.5 million and $20.4 million of Service, Alliance and Royalty revenue recorded by Legacy Biovail and Legacy Valeant, respectively. Combined YTD proforma revenue includes Legacy Biovail and Legacy Valeant product sales of $879.2 million and $888.7 million, respectively. Total proforma revenue of $1,928.3 million also includes $27.6 million and $132.8 million of Service, Alliance and Royalty revenue recorded by Legacy Biovail and Legacy Valeant, respectively.

(d)	Includes proforma historical revenue for acquisitions with a purchase price > $20 million.

(e)	See footnote (a) to Table 3.

(f)	Represents Valeant’s attributable portion of revenue from joint ventures (JV) not included in Consolidated Valeant revenues.

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