Valeant Pharmaceuticals Reports 2011 Third Quarter Financial Results

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    MISSISSAUGA, Ontario, Nov. 3, 2011 /CNW/ --

    --  2011 Third Quarter Total Revenue $601 million
        --  Total pro forma revenue growth for the combined company was
            approximately 40%
    --  Pro forma organic growth, excluding the impact of foreign exchange and
        acquired sales, was 15%,
        --  This organic growth rate has not been adjusted for the effect of
            the wholesaler inventory drawdown in the U.S. which would have had
            a positive impact
        --  YTD pro forma organic growth was over 8%
    --  2011 Third Quarter GAAP EPS $0.13; Cash EPS $0.66
    --  2011 Third Quarter GAAP Cash Flow from Operations was $174 million;
        Adjusted Cash Flow from Operations was $208 million
    --  2011 Cash EPS Guidance updated to $2.80 - $2.95, which does not
include
        the potential $45 million milestone for the U.S. launch of Potiga (now
        1Q 2012 Event)
    --  Board Approves New $1.5 Billion Securities Repurchase Program


    >>

Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces third quarter financial results for 2011.

"Our operations delivered strong double-digit organic revenue growth in the third quarter and we remain on track to deliver 8% plus pro forma organic growth for the year," stated J. Michael Pearson, chairman and chief executive officer. "We are especially pleased with the performance of our U.S. Dermatology division, which is outpacing our expectations, as well as both of our branded generic divisions that continue to outperform their respective markets. With strong third quarter performance, we are raising our fourth quarter Cash EPS guidance to $0.80 to $0.95, which does not include the potential milestone of $45 million from GlaxoSmithKline that is now scheduled to occur in the first quarter of 2012."

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    Revenue
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Total revenue was $600.6 million in the third quarter of 2011 as compared to $208.3 million in the third quarter of 2010. Product sales were $570.4 million in the third quarter of 2011, as compared to $201.4 million in the year-ago quarter. These increases are primarily due to the acquisition of Valeant Pharmaceuticals International (Legacy Valeant) by Biovail Corporation (Legacy Biovail) which was completed on September 27, 2010. In connection with the acquisition, Biovail was renamed Valeant Pharmaceuticals International, Inc. GAAP results for the third quarter of 2010 only reflect Legacy Biovail revenues and do not include any revenues from Legacy Valeant.

Total pro forma revenue growth for the combined company (Legacy Biovail and Legacy Valeant) was approximately 40% for the third quarter of 2011. Pro forma organic revenue growth for the combined company, excluding the impact of foreign exchange and acquired sales, was 15% for the third quarter of 2011. No adjustment as made for the third quarter wholesaler inventory impact.

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    Operating Expenses and Gain on Investments
    >>

The Company's cost of goods sold, excluding amortization of intangibles, was $162.6 million in the third quarter of 2011 and represented 28% of product sales. This number in the third quarter of 2011 included $5.0 million in acquisition step-up and amortization primarily related to the acquisition of Sanitas AB.

Selling, General and Administrative expenses were $134.8 million in the third quarter of 2011, which includes a $11.1 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. Excluding the step-up in stock based compensation, SG&A was approximately 21% of product sales and service and other revenue. Research and Development expenses were $17.5 million in the third quarter of 2011, or approximately 3% of revenue.

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    Net Income and Cash Flow from Operations
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The Company reported net income of $40.9 million for the third quarter of 2011, or $0.13 per diluted share. On a Cash EPS basis, income was $212.1 million, or $0.66 per diluted share.

GAAP cash flow from operations was $174 million in the third quarter of 2011, and adjusted cash flow from operations was $208 million in the third quarter of 2011.

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    Securities Repurchase Program
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Since June 30, 2011, under the Company's existing securities repurchase program, which expires on November 7, 2011, the Company repurchased 1.8 million shares and $95 million principal amount of the 5.375% senior convertible notes due 2014, for an aggregate purchase price of $275 million, bringing the aggregate repurchases to $328 million of the $350 million face value of the 5.375% convertible notes.

The Company's Board of Directors approved a new $1.5 billion securities repurchase program effective November 8, 2011.

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    2011 Guidance
    >>

The Company is revising its previous Cash EPS guidance to $2.80 to $2.95 in 2011, as compared to prior guidance of $2.70 to $3.00. The prior guidance included a potential $45 million milestone payment from GlaxoSmithKline in the fourth quarter for the U.S. launch of Potiga. The launch and subsequent milestone payment is now expected to occur in the first quarter of 2012.

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    Conference Call and Webcast Information

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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), November 3, 2011 to discuss its third quarter financial results for 2011. The dial-in number to participate on this call is (877) 295-5743, confirmation code 18668216. International callers should dial (973) 200-3961, confirmation code 18668216. A replay will be available approximately two hours following the conclusion of the conference call through November 10, 2011 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 18668216. 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.

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    About Valeant
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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.

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    Forward-looking Statements
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This press release may contain forward-looking statements, including, but not limited to, statements regarding our expected growth and Cash EPS guidance for 2011 and our securities repurchase program. 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, factors that could affect our operating results, market conditions and the price of our securities, 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 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.

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    Note on Guidance
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The guidance contained in this press release is only effective as of the date given, November 3, 2011, and will not be updated or affirmed until the Company publicly announces updated or affirmed guidance.

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    Non-GAAP Information
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To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures such as Cash EPS measures, organic growth, and adjusted cash flow from operations. Non-GAAP financial measures exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment 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 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.

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

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

    Financial Tables follow.

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    Valeant Pharmaceuticals
     International, Inc.                                                      
Table 1
    Condensed Consolidated Statement
     of Income
    For the Three and Nine Months Ended September 30, 2011 and 2010
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                                                                  Three Months
Ended                     Nine Months Ended
                                                                     September
30,                         September 30,
                                                                    
-------------                         -------------
    (In thousands, except per share                                           
%                                       %
     data)                                                          2011      
2010  (a)  Change       2011            2010  (a)  Change
                                                                    ----      
----      -------       ----            ----      -------
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    <<
    Product sales                                               $570,423      
$201,372         NM   $1,600,879        $644,650         NM
    Alliance and royalty                                          22,471      
6,150         NM      146,873          15,146         NM
    Service and other                                              7,690      
745         NM       27,245           6,877         NM
                                                                   -----      
---                  ------           -----
        Total revenues                                           600,584      
208,267         NM    1,774,997         666,673         NM
                                                                 -------      
-------               ---------         -------
    >>

    <<
    Cost of goods sold (exclusive
     amortization of intangible assets
     shown separately below)                                     162,568      
62,142         NM      501,767         184,947         NM
    Cost of services                                               3,078      
532         NM        9,683           7,211         NM
    Cost of alliances                                                  -      
-         NM       30,735               -         NM
    Selling, general and
     administrative ("SG&A")                                     134,801      
60,187         NM      423,964         148,794         NM
    Research and development                                      17,476      
13,766         NM       48,910          49,987         NM
    Contingent consideration fair
     value adjustments                                             6,904      
-         NM        9,042               -         NM
    Acquired in-process research and
     development                                                       -      
-         NM        4,000          61,245         NM
    Legal settlements                                                  -      
38,500         NM        2,400          38,500         NM
    Restructuring and acquisition-
     related costs                                                25,372      
123,953         NM       73,913         135,024         NM
    Amortization of intangible assets                            138,027      
35,499         NM      365,016         102,098         NM
                                                                 -------      
------                 -------         -------
                                                                 488,226      
334,579               1,469,430         727,806
                                                                 -------      
-------               ---------         -------
    Operating income (loss)                                      112,358      
(126,312)                305,567         (61,133)
    >>

    <<
    Interest expense, net                                        (86,452)     
(11,092)               (236,387)        (30,449)
    Loss on extinguishment of debt                               (10,315)     
-                 (33,325)              -
    Gain (loss) on investments, net                                 (140)     
(5,005)                 22,787          (5,552)
    Other income (expense), net
     including translation and
     exchange                                                     (3,590)     
(5,473)                     64          (5,429)
                                                                  ------      
------                     ---          ------
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    Income (loss) before (recovery)
     provision for income taxes                                   11,861      
(147,882)                 58,706        (102,563)
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    (Recovery of) provision for income
     taxes                                                       (29,001)     
60,000                 (44,998)         74,500
                                                                 -------      
------                 -------          ------
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    Net income (loss)                                            $40,862      
$(207,882)               $103,704       $(177,063)
                                                                 =======      
=========                ========       =========
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Earnings per share:

    <<
    Basic:
        Net income (loss)                                          $0.13      
$(1.27)                  $0.34          $(1.11)
                                                                   =====      
======                   =====          ======
        Shares used in per share
         computation                                             302,702      
163,295                 303,285         160,082
                                                                 =======      
=======                 =======         =======
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    Diluted:
        Net income (loss)                                          $0.13      
$(1.27)                  $0.32          $(1.11)
                                                                   =====      
======                   =====          ======
        Shares used in per share
         computation                                             322,783      
163,295                 329,010         160,082
                                                                 =======      
=======                 =======         =======
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    (a) Prior year amounts have been modified to conform to the 2011
     disclosure.


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    Valeant Pharmaceuticals International, Inc.                               
Table 2
    Reconciliation of GAAP EPS to Adjusted Non-GAAP (Cash) EPS
    For the Three and Nine Months Ended September 30, 2011 and 2010
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Three Months
                                                                             
Ended            Nine Months Ended
                                                                        
September 30,           September 30,
                                                                        
-------------           -------------
    (In thousands, except per share data)                                2011 
2010      2011            2010  (a)
                                                                         ---- 
----      ----            ----
    >>

Net income (loss) $40,862 $(207,882) $103,704 $(177,063)

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    Non-GAAP adjustments (b)(c):
    Inventory step-up (d)                                               2,768 
-    48,939               -
    Alliance product assets & pp&e step-up (e)                            138 
-    19,478               -
    Stock-based compensation step-up (f)                               11,149 
-    50,556               -
    Contingent consideration fair value adjustment                      6,904 
-     9,042               -
    Restructuring, integration and acquisition-related costs (g)       25,372 
123,953    73,913         135,024
    Acquired in-process research and development (IPR&D)                    - 
-     4,000          61,245
    Legal settlements                                                       - 
38,500     2,400          38,500
    Amortization and other non-cash charges                           140,500 
38,147   371,897         110,225
                                                                      ------- 
------   -------         -------
                                                                      186,831 
200,600   580,225         344,994
    Amortization of deferred financing costs, debt discounts and ASC
     470-20 (FSP APB 14-1) interest                                    12,686 
15,340    19,034          23,622
    Loss on extinguishment of debt                                     10,315 
-    33,325               -
    (Gain) loss on investments, net                                         - 
5,005    (1,769)          5,552
    Tax                                                               (38,601)
59,500   (77,098)         64,500
                                                                      ------- 
------   -------          ------
    Total adjustments                                                 171,231 
280,445   553,717         438,668
    >>

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    Adjusted income                                                  $212,093 
$72,563  $657,421        $261,605
                                                                     ======== 
=======  ========        ========
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    GAAP earnings  per share - diluted                                  $0.13 
$(1.27)    $0.32          $(1.11)
                                                                        ===== 
======     =====          ======
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    Adjusted Non-GAAP (Cash) earnings per share - diluted               $0.66 
$0.42     $2.00           $1.58
                                                                        ===== 
=====     =====           =====
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    Shares used in diluted per share calculation - Adjusted Non-
     GAAP (Cash) earnings per share                                   322,783 
173,247   329,010         165,145
                                                                      ======= 
=======   =======         =======


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(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 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 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 nine months ended
     September 30, 2011 the total impact is $2.8 million and $48.9 million,
respectively. For the three and
     nine months ended September 30, 2011 a total of  $0.4 million and $27.7
million related to the merger
     with Valeant Pharmaceutical International, $0.0 million and $18.8 million
related to the acquisition of
     Pharma Swiss SA on March 10, 2011, and $2.4 million and $2.4 million
related to the acquisition of
     Sanitas on August 19th, 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
     nine months ended September 30, 2011 the total impact is $0.1 million and
$19.5 million, respectively.
    >>

    <<
    (f) Total stock-based compensation for the three and nine months ended
September 30, 2011 was $17.1
     million and $72.4 million, of which $11.1 million and $50.6 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 nine months ended
     September 30, 2011 represent costs related to the merger of Legacy
Valeant and Legacy Biovail, the
     acquisition of Pharma Swiss SA, and the acquisition of Sanitas. These
include $0.9 million and $18.0
     million related to facility related costs, $6.7 million and $16.9 million
related to contract
     cancellation fees, consulting, legal and other, $5.0 million and $14.3
million related to employee
     severance costs, $(0.7) million and $2.9 million related to
(decreases)/increases in deferred stock unit
     values related to directors retired as a result of the merger between
Legacy Valeant and Legacy Biovail,
     $9.5 million and $12.9 million related to acquisition costs, $1.1 million
and $4.4 million related to
     manufacturing integration, and $2.9 million and $4.5 million related to
wind down costs, respectively.


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Table 2
    Valeant Pharmaceuticals International, Inc.                               
(a)
    Reconciliation of Non-GAAP Adjustments
    For the Three Months Ended September 30, 2011 and 2010
    >>

    <<
                                                                              
Three Months Ended
                                                                              
September 30, 2011
                                                                              
------------------
                                              Inventory
                                                 step-      Alliance  
Stock-based     Contingent         Restructuring,  Amortization Amortization  
Loss on       Tax
                                             ----------     --------  
-----------     ----------         --------------  ------------ ------------  
-------       ---
                                                                              
integration    and other         of
                                                  up         product  
compensation   consideration             and           non-       deferred   
extinguishment
                                                 ---         -------  
------------   -------------        ------------   ----------    ---------   
--------------
                                                                              
cash
                                                            assets &    
step-up       fair value          acquisition-      charges    financing      
of debt
                                                            --------    
-------       ----------          ------------     --------    ---------      
-------
                                                           pp&e step-         
related                      costs,
                                                                up            
adjustment              costs                        debt
                                                           -----------        
----------            --------                     -------
                                                                              
discounts
                                                                              
---------
                                                                              
and ASC
                                                                              
470-
                                                                              
--------
                                                                              
20 (FSP
                                                                              
APB
                                                                              
--------
                                                                              
14-1)
                                                                              
interest
                                                                              
---------
    Product Sales                                    - -           - -        
- -             - -                  - -           268      - -               
- -      - -
    Cost of goods sold
     (exclusive
     amortization of
     intangible assets
     shown separately
     below)                                     2,768        138       209    
- -               - -           2,205    - -             - -    - -
    Selling, general and
     administrative
     ("SG&A")                                        - -           - -      
10,579             - -                  - -           - -      - -            
- -      - -
    Research and
     development                                     - -           - -        
361             - -                  - -           - -      - -               
- -      - -
    Contingent
     consideration fair
     value adjustments                               - -           - -        
- -           6,904                  - -           - -      - -               
- -      - -
    Restructuring and
     acquisition-
     related costs                                   - -           - -        
- -             - -               25,372           - -      - -               
- -      - -
    Amortization of
     intangible assets                               - -           - -        
- -             - -                  - -       138,027      - -               
- -      - -
    Interest expense,
     net                                             - -           - -        
- -             - -                  - -           - -       12,686           
- -      - -
    Loss on
     extinguishment of
     debt                                            - -           - -        
- -             - -                  - -           - -          - -         
10,315      - -
    Tax                                              - -           - -        
- -             - -                  - -           - -          - -           
- -  (38,601)
    Total Adjustments                             $2,768          $138     
$11,149          $6,904              $25,372      $140,500      $12,686       
$10,315 $(38,601)
                                                  ======          ====     
=======          ======              =======      ========      =======       
======= ========


    >>

    <<
                                                      Three Months Ended
                                                    September 30, 2010
                                                    ------------------
                                                                      
Amortization      Gain (loss)
                       Restructuring,    Legal      Amortization            
of               on      Tax
                       --------------    -----      ------------      
-------------     ------------ ---
                         integration                 and other
                             and      settlements       non-             
deferred       investments,
                        ------------  -----------   ----------           
--------       ------------
                                                        cash            
financing
                        acquisition-                   charges            
costs,            net
                        ------------                  --------         
----------           ---
                           related                                         
debt
                            costs                                       
discounts
                          --------                                     
----------
                                                                           and
ASC
                                                                          
470-20
                                                                         
--------
                                                                          (FSP
APB
                                                                           
14-1)
                                                                        
---------
                                                                         
interest
                                                                         
--------
    Product Sales                 - -         - -            268            -
-                   - -     - -
    Cost of goods sold
     (exclusive
     amortization of
     intangible assets
     shown separately
     below)                    - -      - -       2,118         - -           
- -         - -
    Legal settlements             - -      38,500            - -            -
-                   - -     - -
    Restructuring and
     acquisition-
     related costs            123,953         - -            - -            -
-                   - -     - -
    Amortization of
     intangible assets            - -         - -         35,499            -
-                   - -     - -
    Interest expense,
     net                          - -         - -            - -             
15,340              - -     - -
    Gain (loss) on
     investments, net             - -         - -            - -              
- -            5,005     - -
    Tax                           - -         - -            262              
- -              - -  59,500
    Total Adjustments        $123,953     $38,500        $38,147            
$15,340           $5,005 $59,500
                             ========     =======        =======            
=======           ====== =======


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    <<
                                                                              
Table 2
    Valeant Pharmaceuticals International, Inc.                               
(b)
    Reconciliation of Non-GAAP Adjustments
    For the Nine Months Ended September 30, 2011 and 2010
    >>

    <<
                                                                              
Nine Months Ended
                                                                              
September 30, 2011
                                                                              
------------------
                                              Inventory                 Stock-
Acquired                                 Amortization                        
Gain
                                                 step-    Alliance      based 
Contingent       Restructuring,          in-          Legal       Amortization
of            Loss on       (loss) on     Tax
                                             ----------   --------     -------
----------       --------------      ---------        -----       ------------
-------------       -------      ----------     ---
                                                           product            
integration                                     and other
                                                  up       assets  
compensation   consideration           and             process     settlements
non-        deferred      extinguishment investments,
                                                 ---      -------- 
------------   -------------      ------------         -------     -----------
----------      --------      -------------- ------------
                                                           & pp&e             
research                        cash       financing
                                                           step-up     step-up
fair value        acquisition-           and                         charges  
costs,          of debt          net
                                                          -------      -------
----------        ------------       ---------                      --------  
----------         -------          ---
                                                                              
related                                                        debt
                                                                              
adjustment            costs          development                              
discounts
                                                                              
----------          --------         -----------                              
----------
                                                                              
and ASC
                                                                              
(IPR&D)                                     470-20
                                                                              
-------                                    --------
                                                                              
(FSP APB
                                                                              
14-1)
                                                                              
---------
                                                                              
interest
                                                                              
--------
    Product Sales                                    - -        - -          -
-             - -                - -              - -           - -           
804      - -                    - -          - -       - -
    Cost of goods sold
     (exclusive
     amortization of
     intangible assets
     shown separately
     below)                                    48,939     643       529       
- -             - -            - -           - -       6,077      - -         
- -          - -         - -
    Cost of alliances                                - -     18,835          -
-             - -                - -              - -           - -           
- -      - -                    - -          - -       - -
    Selling, general and
     administrative
     ("SG&A")                                        - -        - -      
49,401             - -                - -              - -           - -      
- -      - -                    - -          - -       - -
    Research and
     development                                     - -        - -         
626             - -                - -              - -           - -         
- -      - -                    - -          - -       - -
    Contingent
     consideration fair
     value adjustments                               - -        - -          -
-           9,042                - -              - -           - -           
- -      - -                    - -          - -       - -
    Acquired in-process
     research and
     development                                     - -        - -          -
-             - -                - -            4,000           - -           
- -      - -                    - -          - -       - -
    Legal settlements                                - -        - -          -
-             - -                - -              - -         2,400           
- -      - -                    - -          - -       - -
    Restructuring and
     acquisition-
     related costs                                   - -        - -          -
-             - -             73,913              - -           - -           
- -      - -                    - -          - -       - -
    Amortization of
     intangible assets                               - -        - -          -
-             - -                - -              - -           - -        
365,016      - -                    - -          - -       - -
    Interest expense,
     net                                             - -        - -          -
-             - -                - -              - -           - -           
- -        19,034               - -          - -       - -
    Loss on
     extinguishment of
     debt                                            - -        - -          -
-             - -                - -              - -           - -           
- -           - -            33,325          - -       - -
    Gain (loss) on
     investments, net                                - -        - -          -
-             - -                - -              - -           - -           
- -           - -               - -       (1,769)      - -
    Tax                                              - -        - -          -
-             - -                - -              - -           - -           
- -           - -               - -          - -   (77,098)
    Total Adjustments                            $48,939    $19,478     
$50,556          $9,042            $73,913           $4,000        $2,400     
$371,897       $19,034           $33,325      $(1,769) $(77,098)
                                                 =======    =======     
=======          ======            =======           ======        ======     
========       =======           =======      =======  ========


    >>

    <<
                                                            Nine Months Ended
                                                            September 30, 2010
                                                            ------------------
                                         Acquired                             
Amortization         Gain
                        Restructuring,      in-        Legal         
Amortization       of          (loss) on    Tax
                        --------------  ---------      -----         
------------ -------------    ----------    ---
                          integration                                  and
other                   investments,
                              and        process    settlements           non-
deferred          net
                         ------------    -------    -----------      
----------      --------     -------------
                                         research                         cash
financing
                         acquisition-       and                         
charges       costs,
                         ------------   ---------                      
--------    ----------
                            related                                           
debt
                             costs     development                            
discounts
                           --------    -----------                            
----------
                                                                              
and ASC
                                         (IPR&D)                              
470-20
                                         -------                              
--------
                                                                              
(FSP APB
                                                                              
14-1)
                                                                              
---------
                                                                              
interest
                                                                              
--------
    Product Sales                  - -         - -          - -               
804      - -                  - -     - -
    Cost of goods sold
     (exclusive
     amortization of
     intangible assets
     shown separately
     below)                     - -      - -       - -           6,536        
- -             - -     - -
    Legal settlements              - -         - -       38,500               
- -      - -                  - -     - -
    Restructuring and
     acquisition-
     related costs             135,024         - -          - -               
- -      - -                  - -     - -
    Acquired in-process
     research and
     development                   - -      61,245
    Amortization of
     intangible assets             - -         - -          - -           
102,098           - -             - -     - -
    Interest expense,
     net                           - -         - -          - -               
- -        23,622             - -     - -
    Gain (loss) on
     investments, net              - -         - -          - -               
- -           - -           5,552     - -
    Tax                            - -         - -          - -               
787           - -             - -  64,500
    Total Adjustments         $135,024     $61,245      $38,500          
$110,225       $23,622          $5,552 $64,500
                              ========     =======      =======          
========       =======          ====== =======


    >>

    <<
    Valeant Pharmaceuticals International, Inc.                               
Table 3
    Statement of Revenue - by Segment
    For the Three and Nine Months Ended September 30, 2011 and 2010
    (In thousands)
                                                                              
Three Months Ended
                                                                              
September 30,
                                                                              
-------------
    Revenue (a)(b)                                                            
%              2011        2011    %
                                                               2011     2010 
Change        currency  excluding  Change
                                                            GAAP      GAAP    
(c)         impact     currency    (c)
                                                            ----      ----    
---         ------      impact     ---
                                                                              
non-GAAP
                                                                              
--------
      U.S. Neurology & Other                               $182,288 $138,035  
32%            $-    $182,288      32%
      U.S. Dermatology                                      131,642   34,720  
279%          (136)    131,506     279%
                                                            -------   ------  
----     -------
          Total U.S.                                        313,930  172,755  
82%          (136)    313,794      82%
    Canada/Australia                                         84,644   27,750  
205%        (7,268)     77,376     179%
                                                             ------   ------  
------      ------
        Specialty Pharmaceuticals                           398,574  200,505  
99%        (7,404)    391,170      95%
                                                            -------  -------  
------     -------
    Branded Generics - Europe                               134,055    7,762  
1627%        (7,054)    127,001    1536%
    Branded Generics -Latin
     America                                                 67,955        -  
NM            (2,706)     65,249   NM
                                                             ------      ---  
------      ------
        Branded Generics                                    202,010    7,762  
NM            (9,760)    192,250   NM
                                                            -------    -----  
------     -------
    Total Revenue                                          $600,584 $208,267  
188%      $(17,164)   $583,420     180%
                                                           ======== ========  
========    ========
    >>

    <<
                                                                            
Nine Months Ended
                                                                              
September 30,
                                                                              
-------------
    Revenue (a)(b)                                                            
%              2011        2011    %
                                                               2011     2010 
Change        currency  excluding  Change
                                                            GAAP      GAAP    
(c)         impact     currency    (c)
                                                            ----      ----    
---         ------      impact     ---
                                                                              
non-GAAP
                                                                              
--------
      U.S. Neurology & Other                               $626,390 $445,413  
41%            $-    $626,390      41%
      U.S. Dermatology                                      394,202  115,112  
242%          (354)    393,848     242%
                                                            -------  -------  
----     -------
          Total U.S.                                      1,020,592  560,525  
82%          (354)  1,020,238      82%
    Canada/Australia                                        238,888   81,146  
194%       (18,861)    220,027     171%
                                                            -------   ------  
-------     -------
        Specialty Pharmaceuticals                         1,259,480  641,671  
96%       (19,215)  1,240,265      93%
    Branded generics - Europe                               326,448   25,002  
1206%       (21,412)    305,036    1120%
    Branded generics -Latin
     America                                                189,069        -  
NM           (11,314)    177,755   NM
                                                            -------      ---  
-------     -------
        Branded Generics                                    515,517   25,002  
NM           (32,726)    482,791   NM
                                                            -------   ------  
-------     -------
    Total Revenue                                        $1,774,997 $666,673  
166%      $(51,941) $1,723,056     158%
                                                         ========== ========  
========  ==========


    >>

    <<
    (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
and nine months ended
     September 30, 2011 as compared to Legacy Biovail alone for the three and
nine months ended September
     30, 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 Months Ended September 30, 2011
    (In thousands)
                                                                       Three
Months Ended                                                   Nine Months
Ended
    Cost of goods sold
     (a)                                                                
September 30,                                                        September
30,
                                                                        
-------------                                                       
-------------
                                                2011          %               
2011               2011          %         2011    %                        
2011         2011     %
                                               as                         
fair value         excluding                     as                           
excluding
                                            reported         of              
step-              fair              of    reported    of            fair
value step-     fair         of
                                                                              
up            value step-                                                     
value step-
                                              GAAP        product         
adjustment             up           product     GAAP   product           up
adjustment        up      product
                                                                              
to             adjustment                                                     
adjustment
                                              ----          sales         
inventory              to             sales     ----    sales             to
inventory        to        sales
                                                                              
and                                                                           
inventory
                                                                        
amortization         inventory                                                
and
                                                            -----             
(b)                and            -----             -----                 and 
amortization   -----
                                                                        
-------------       amortization                                        
amortization (b)    non-GAAP
                                                                              
non-GAAP                                           ----------------   
--------
                                                                              
--------
    U.S. Neurology &
     Other                                   $32,826            19%           
$2,205            $30,621            17% $114,601       20%                
$15,525      $99,076       17%
    U.S. Dermatology                          10,140             9%           
-             10,140             9%   57,134       20%                   7,696
49,438       17%
    Canada/Australia                          26,365            31%           
419             25,946            31%   71,292       30%                  
3,885       67,407       28%
    Branded Generics -
     Europe                                   64,331            49%           
2,349             61,982            47%  176,553       54%                 
22,928      153,625       48%
    Branded Generics -
     Latin America                            28,640            42%           
-             28,640            42%   81,186       43%                   4,981
76,205       40%
    >>

    <<
    Corporate                                    266                          
-                266                   1,001                                 -
1,001
                                                 ---                          
---                ---                   -----                              
---        -----
    >>

    <<
                                            $162,568            28%           
$4,973           $157,595            28% $501,767       31%                
$55,015     $446,752       28%
                                            ========                          
======           ========                ========                          
=======     ========


    >>

    <<
    (a) See footnote (b) to Table 2.
    (b) For the three and nine months ended September 30, 2011 U.S. Neurology
and Other and U.S. Dermatology include $0 and $9.4 million and $0 and $7.7
     million of fair value step-up adjustment to inventory, respectively and
in the three and nine months ended September 30, 2011 U.S. Neurology and
     Other includes $2.2 million and $6.1 million of amortization,
respectively.


    >>

    <<
         Valeant Pharmaceuticals International, Inc.                          
Table 5
         Consolidated  Balance Sheet and Other Data
         (In thousands)
                                                                       As of  
As of
                                                                     September
December
                                                                        30,   
31,
     5.1 Cash                                                             2011
2010
                                                                          ----
----
    >>

    <<
         Cash and cash equivalents                                    $254,559
$394,269
         Marketable securities                                           2,967
6,083
                                                                         -----
-----
         Total cash and marketable securities                         $257,526
$400,352
                                                                      ========
========
    >>

Debt

    <<
         Convertible notes                                             $41,798
$417,555
         Senior notes                                                4,327,336
2,185,822
         Senior Secured Term Loan facility                             590,000
-
         Term loan A facility                                                -
975,000
         Revolving credit facility                                     200,000
-
         Sanitas Term Loan Facility                                     45,312
-
         Sanitas Revolving Credit Lines                                  4,943
-
         Other                                                          17,522
16,900
                                                                        ------
------
                                                                     5,226,911
3,595,277
         Less: Current portion                                        
(38,943)       (116,900)
                                                                       -------
--------
                                                                    $5,187,968
$3,478,377
                                                                    ==========
==========
    >>

    <<
     5.2 Summary of Cash Flow Statement                                Three
Months Ended
                                                                         
September 30,
                                                                         
-------------
                                                                          2011
2010
                                                                          ----
----
         Cash flow provided by (used in):
    >>

    <<
         Net cash provided by (used in) operating activities (GAAP)   $173,708
$110,924
         Restructuring and acquisition-related costs                    25,372
123,953
         Effect of ASC 470-20 (FSP APB 14-1)                             3,362
-
         Tax benefits from stock options exercised (a)                   2,042
-
          Changes in working capital related to restructuring and
          acquisition-related costs                                      3,918
(127,860)
         Adjusted cash flow from operations (Non-GAAP) (b)            $208,402
$107,017
                                                                      ========
========


    >>

    <<
     (a) Includes stock option tax benefit which will reduce taxes in future
periods.
     (b) See footnote (b) to Table 2.


    >>

    <<
    Valeant Pharmaceuticals International
    Pro Forma Organic Growth - by Segment
    For the Three and Nine Months Ended September 30, 2011
    (In thousands)
    >>

    <<
                                                                              
Three Month Ending
                                                                              
September 30,
                                                                              
-------------
                                                (b) (f)      (b) (c)       (g)
(a)
                                                                              
September 2011
                                                                          
Total       Total                                                  excluding
                                               September   September    
Proforma    Proforma                                                  currency
                                                   2011        2010   
Acquisitions  QTD 2010          Divestitures/     %                     
impact        %
                                               ----------  ----------
------------- ---------        Discontinuations Change              
--------------- Change
                                                                              
September
                                                                              
2011
                                                                              
currency
                                                                              
---------------- ------      impact                   ------
                                                                              
----------
      U.S. Dermatology                           $110,546     $65,820       
$6,000    $70,122                 $1,698      58%         $-         $110,546 
58%
      U.S. Neurology &
       Other (d)                                  177,780     186,224         
-    186,224                      -      -5%       (301)         177,479     
-5%
                                                  -------     -------         
---    -------                    ---                ----          -------
         Total U.S.                               288,326     252,044        
6,000    256,346                  1,698      12%       (301)         288,025  
12%
    >>

    <<
    Canada/Australia                               83,144      64,120         
-     64,120                      -      30%     (6,464)          76,680     
20%
                                                   ------      ------         
---     ------                    ---              ------           ------
         Specialty
          Pharmaceuticals                         371,470     316,164        
6,000    320,466                  1,698      16%     (6,765)         364,705  
14%
    Branded generics -
     Latin America                                 67,955      51,539         
-     51,539                      -      32%     (2,708)          65,247     
27%
    Branded generics -
     Europe                                       130,998      50,098       
62,533    112,631                      -      16%     (6,395)         124,603 
11%
                                                  -------      ------       
------    -------                    ---              ------          -------
         Branded Generics                         198,953     101,637       
62,533    164,170                      -      21%     (9,103)         189,850 
16%
                                                  -------     -------       
------    -------                    ---              ------          -------
    >>

    <<
    Total product sales                          $570,423    $417,801      
$68,533   $484,636                 $1,698      18%   $(15,868)        $554,555
14%
                                                 ========    ========      
=======   ========                 ======            ========         ========
    >>

    <<
    Add:  JV Revenue (e)                            1,093         417         
-        417                      -                   -            1,093
                                                    -----         ---         
---        ---                    ---                 ---            -----
    >>

    <<
    Total                                        $571,516    $418,218      
$68,533   $485,053                 $1,698      18%   $(15,868)        $555,648
15%
                                                 ========    ========      
=======   ========                 ======            ========         ========
    >>

    <<
                                                                              
Nine Months Ended
                                                                              
September 30,
                                                                              
-------------
                                                (b) (f)      (b) (c)       (g)
(a)
                                                                              
September 2011
                                                                          
Total       Total                                                  excluding
                                               September   September    
Proforma    Proforma                                                  currency
                                                   2011        2010   
Acquisitions  QTD 2010          Divestitures/     %                     
impact        %
                                               ----------  ----------
------------- ---------        Discontinuations Change              
--------------- Change
                                                                              
September
                                                                              
2011
                                                                              
currency
                                                                              
---------------- ------      impact                   ------
                                                                              
----------
      U.S. Dermatology                           $286,303    $216,334      
$15,531   $228,210                 $3,655      27%         $-         $286,303
27%
      U.S. Neurology &
       Other (d)                                  571,342     579,190       
20,625    599,815                      -      -5%          -          571,342 
-5%
                                                  -------     -------       
------    -------                    ---                 ---          -------
         Total U.S.                               857,646     795,524       
36,156    828,025                  3,655       4%          -          857,645 
4%
    Canada/Australia                              234,777     188,460        
5,034    193,494                      -      21%    (17,908)         216,869  
12%
                                                  -------     -------        
-----    -------                    ---             -------          -------
         Specialty
          Pharmaceuticals                       1,092,423     983,984       
41,190  1,021,519                  3,655       7%    (17,908)       1,074,515 
6%
    Branded generics -
     Latin America                                189,069     145,368        
6,471    151,839                      -      25%    (11,314)         177,755  
17%
    Branded generics -
     Europe                                       319,388     149,828      
117,931    267,759                      -      19%    (20,314)         299,074
12%
                                                  -------     -------         
-------                    ---             -------          -------
         Branded Generics                         508,456     295,196      
124,402    419,598                      -      21%    (31,628)         476,829
14%
                                                  -------     -------      
-------    -------                    ---             -------          -------
    >>

    <<
    Total product sales                        $1,600,879  $1,279,180     
$165,592 $1,441,117                 $3,655      11%   $(49,536)     
$1,551,343       8%
                                               ==========  ==========     
======== ==========                 ======            ========      
==========
    >>

    <<
    Add:  JV Revenue (e)                            2,313         481         
-        481                      -                   -            2,313
                                                    -----         ---         
---        ---                    ---                 ---            -----
    >>

    <<
    Total                                      $1,603,192  $1,279,661     
$165,592 $1,441,598                 $3,655      11%   $(49,536)     
$1,553,656       8%
                                               ==========  ==========     
======== ==========                 ======            ========      
==========


    >>

    <<
    (a) See footnote (a) to Table 3.
    (b) See footnote (b) to Table 2.
    (c) Combined Q3 Legacy Biovail and Legacy Valeant product sales of $201.4
million and $210.4 million, respectively (see note (d)).
     Total proforma revenue of $467.5 million also includes $7.0 million and
$48.7 million of Service, Alliance and Royalty revenue recorded
     by Legacy Biovail and Legacy Valeant, respectively.  Total proforma
revenue includes $37.2 million of discontinued revenues relating to
     Ribavirin and GSK Alliance revenues.  Combined YTD Legacy Biovail and
Legacy Valeant product sales of $655.1 million and $953.9
     million, respectively.  Total proforma revenue of $1,609.0 million also
includes $19.8 million and $146.2 million of Service, Alliance
     and Royalty revenue recorded by Legacy Biovail and legacy Valeant,
respectively.  Total proforma revenue includes $70.9 million of
     discontinued revenues relating to Ribavirin and GSK Alliance revenues.
    (d)  2010 data includes adjustments for timing of revenues on certain
partnered products of $5.8M in Sept QTD and $0.0M in Sept YTD.
    (e) Represents Valeant's attributable portion of revenue from joint
ventures (JV) not included in Consolidated Valeant revenues.
    (f)  Includes all acquisitions.
    (g)  Includes proforma historical revenue for acquisitions with a purchase
price > $20 million.





    >>

SOURCE Valeant Pharmaceuticals International, Inc.

For further information: Web Site: http://www.valeant.com


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