Valeant Pharmaceuticals Reports 2011 Fourth Quarter Financial Results

MISSISSAUGA, Ontario, Feb. 27, 2012 /CNW/ -

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

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."

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.

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 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.

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.

Contact Information:
Laurie W. Little
949-461-6002
laurie.little@valeant.com

(Logo: http://photos.prnewswire.com/prnh/20101025/LA87217LOGO)

Financial Tables follow.

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




Twelve Months Ended




December 31,




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


Twelve Months Ended




December 31,


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,

Revenue (a)(b)

2011
GAAP


2010
GAAP


% Change (c)


2011 currency impact


2011 excluding currency impact non-GAAP


% Change (c)

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,

Revenue (a)(b)

2011
GAAP


2010
GAAP


% Change (c)


2011 currency impact


2011 excluding currency impact non-GAAP


% Change (c)

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)



Three Months Ended

4.1

Cost of goods sold (a)

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)



As of


As of



December 31,


December 31,

5.1

Cash

2011


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 (d)

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 (d)

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.



SOURCE Valeant Pharmaceuticals International, Inc.

For further information:

http://www.valeant.com

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