Valeant Pharmaceuticals Reports 2009 Fourth Quarter and Full Year Financial Results

February 22, 2010

- Fourth quarter revenue $240.5 million; Full year 2009 revenue $830.5 million - Fourth quarter GAAP EPS $1.89, Adjusted Non-GAAP (Cash) EPS $0.67; Full year 2009 GAAP EPS $3.07, Adjusted Non-GAAP (Cash) EPS $2.21 - Full year 2009 GAAP Cash Flow from Operations $188 million, Adjusted Cash Flow from Operations $226 million
ALISO VIEJO, Calif., Feb 22, 2010 /PRNewswire via COMTEX/ -- Valeant Pharmaceuticals International (NYSE: VRX) today announced fourth quarter and full year financial results for 2009.

"Across the organization, Valeant delivered on its commitments in 2009," stated J. Michael Pearson, chairman and chief executive officer. "We intend to continue our strong performance in 2010, with a focus on growth through market-driven innovation, improvements in our operating leverage, and the progression of our pipeline products."

Fourth Quarter 2009 Discussion:

Total revenue was $240.5 million in the fourth quarter of 2009 as compared to $183.0 million in the fourth quarter of 2008, an increase of 31%.

Product sales in the Specialty Pharmaceuticals segment were $119.3 million in the fourth quarter of 2009, as compared to $89.2 million in the fourth quarter of 2008, an increase of 34%. At constant exchange rates, Specialty Pharmaceuticals product sales increased 27%. Within the Specialty Pharmaceuticals segment, alliance and service revenue was $23.3 million in the fourth quarter of 2009 as compared to $4.4 million in the fourth quarter of 2008. Since the company acquired Dow in December 2008 and the 1% clindamycin and 5% benzoyl peroxide product (IDP-111) was launched in August 2009, no service revenue or profit share income was recorded in the fourth quarter of 2008.

Product sales in Branded Generics - Latin America were $47.2 million in the fourth quarter of 2009 as compared to $36.9 million in the same period in 2008, an increase of 28%. At constant exchange rates, product sales in Latin America in the fourth quarter of 2009 increased 25% as compared to the fourth quarter of 2008.

Product sales in Branded Generics - Europe were $42.0 million in the fourth quarter of 2009 as compared to $35.9 million in the same period in 2008, an increase of 17%. At constant exchange rates, product sales in Europe in the fourth quarter of 2009 increased 14% as compared to the fourth quarter of 2008.

Ribavirin royalties were $8.7 million in the fourth quarter of 2009 as compared to $16.6 million in the fourth quarter of 2008, a decrease of 48%. This expected decrease is primarily attributable to the expiration of royalty terms in most European countries.

The company's cost of goods sold was 28% of product sales for the fourth quarter of 2009 as compared to 26% for the fourth quarter of 2008. This increase is primarily due to the impact of our Tecnofarma and EMO-FARM acquisitions.

Selling, general and administrative expenses were essentially flat in the fourth quarter of 2009 at $65.5 million as compared to $66.4 million in the fourth quarter of 2008.

Research and development costs increased 25% to $14.8 million in the fourth quarter of 2009 as compared to $11.9 million in the same period of 2008.

Net interest expense increased to $12.4 million in the fourth quarter of 2009 as compared to $4.5 million in the fourth quarter of 2008. The increase primarily reflects interest expense related to $365 million aggregate principal amount of senior notes issued in June 2009.

Income tax in the fourth quarter of 2009 was a tax benefit of $97.8 million as compared to a tax expense of $1.0 million in the fourth quarter of 2008. The tax benefit amount is primarily related to the release of the valuation allowance recorded previously against the net deferred tax assets, primarily comprised of net operating losses in the U.S.

Income from continuing operations was $156.2 million for the fourth quarter of 2009, or $1.89 per diluted share, as compared to a loss from continuing operations of $150.6 million, or a loss of $1.82 per diluted share, for the fourth quarter of 2008. On an adjusted non-GAAP (Cash) EPS basis, adjusted income from continuing operations was $55.4 million, or $0.67 per diluted share, in the fourth quarter of 2009 as compared to adjusted income from continuing operations of $43.2 million, or $0.52 per diluted share, in the fourth quarter of 2008.

GAAPcashflow from operations for the fourth quarter of 2009 was $52 million, which includes the effect of the accreted discount on convertible debt from the newly implemented accounting requirements and acquisition transaction fees. Adjusted cash flow from operations for the fourth quarter of 2009 was $55 million. Interest on our senior notes is paid in June and December. GAAP cash flow from operations and adjusted cash flow from operations for the fourth quarter included $15.8 million of interest expense related to our senior notes, an expense that we did not have prior to the fourth quarter.

Full Year 2009 Discussion:

Total revenue in 2009 was $830.5 million as compared to $657.0 million in 2008, an increase of 26%.

Product sales in the Specialty Pharmaceuticals segment were $403.9 million in 2009, as compared to $303.7 million in 2008, an increase of 33%. At constant exchange rates, Specialty Pharmaceuticals product sales increased 35%.

Product sales in Branded Generics - Latin America were $155.2 million in 2009 as compared to $136.6 million in 2008, an increase of 14%. At constant exchange rates, product sales in Latin America in 2009 increased 34% as compared to those in 2008.

Product sales in Branded Generics - Europe were $151.7 million in 2009 as compared to $152.8 million in 2008, a decrease of 1%. At constant exchange rates, product sales in Europe in 2009 increased 25% as compared to those in 2008.

Ribavirin royalties were $46.7 million in 2009 as compared to $59.4 million in 2008, a decrease of 21%. This expected decrease is primarily attributable to the expiration of royalty terms of most European countries on the ten-year anniversary of product launches in the respective countries.

The company's cost of goods sold was 27% of product sales for 2009 as compared to 28% for 2008.

Selling, general and administrative expenses were $255.8 million in 2009 as compared to $278.0 million in 2008, a decrease of 8%.

Research and development costs decreased 49% to $44.0 million in 2009 as compared to $87.0 million in 2008.

Net interest expense increased to $39.3 million in 2009 as compared to $28.3 million in 2008, primarily reflecting additional interest expense related to $365 million aggregate principal amount of senior notes issued in June 2009.

Income tax for 2009 was a tax benefit of $58.3 million compared to a tax expense of $34.7 million for 2008. The 2009 tax benefit amount is primarily related to the release of the valuation allowance recorded as of December 31, 2008 against our net deferred tax assets, primarily comprised of net operating losses in the U.S.

Income from continuing operations was $257.6 million for 2009, or $3.07 per diluted share, as compared to a loss from continuing operations of $207.4 million, or a loss of $2.37 per diluted share, for 2008. On an adjusted non-GAAP (Cash) EPS basis, adjusted income from continuing operations was $185.2 million, or $2.21 per diluted share, in 2009 as compared to adjusted income from continuing operations of $71.7 million, or $0.81 per diluted share, in 2008.

GAAPcash flow from operations for 2009 was $186 million, which includes the effect of accreted discount on convertible debt from the newly implemented accounting requirements andacquisition transaction fees. Adjusted cash flow from operations for 2009 was $226 million.

2010 Guidance

The company reaffirms its adjusted non-GAAP (Cash) EPS guidance of $2.45 - $2.70 in 2010.

Conference Call and Webcast Information:

Valeant will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. EST (7:00 a.m. PST) to discuss its fourth quarter and full year financial results for 2009. The dial-in number to participate on this call is (877) 295-5743, confirmation code 53708100. International callers should dial (973) 200-3961, confirmation code 53708100. A replay will be available approximately two hours following the conclusion of the conference call through March 1, 2010 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 53708100. The live webcast of the conference call may be accessed through the investor relations section of Valeant's corporate Web site at www.valeant.com.

About Valeant:

Valeant Pharmaceuticals International (NYSE:VRX) is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology and dermatology. 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 ability to continue our performance and growth in 2010 and guidance with respect to expected adjusted non-GAAP (cash) earnings per share. 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, 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.

Non-GAAP Information:

To supplement the consolidated financial results prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as acquisition transaction fees, special charges and credits including acquired IPR&D, restructuring, asset impairments and dispositions, amortization expense, gain on early extinguishment of debt, the new non-cash accounting charge for interest on the convertible debt related to ASC 470-20 (FSP APB 14-1), which the company adopted on January 1, 2009, and the non-GAAP tax effect of such charges. Management does not consider the excluded items part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. 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 more 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. A reconciliation of GAAP to non-GAAP measures can be found in the tables below. The company has provided guidance with respect to cash earnings per share, which is a non-GAAP financial measure that represents earnings per share, excluding certain items, such as acquisition transaction fees included within SG&A, special charges and credits including acquired IPR&D, restructuring, asset impairments and dispositions, amortization expense, gain on early extinguishment of debt, the non-cash accounting charge for interest on the company's convertible debt related to ASC 470-20 (FSP APB 14-1) and the tax effect of such charges. The company has not provided a reconciliation of this forward-looking non-GAAP financial measure due to the difficulty in forecasting and quantifying the exact amount of the items excluded from the non-GAAP financial measure that will be included in the comparable GAAP financial measure.

Financial Tables, including a reconciliation of GAAP to non-GAAP financial measures, follow.

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



    Valeant Pharmaceuticals International                              Table 1
    Statement of Income
    For the Three and Twelve Months Ended December 31, 2009 and 2008

                           Three Months Ended      Twelve Months Ended
                              December 31,             December 31,
                              ------------             ------------
    (In thousands, except                       %                        %
     per share data)        2009       2008   Change   2009    2008    Change
                            ----       ----   ------   ----    ----    ------

    Product sales         $208,534   $162,023   29% $710,761  $593,165   20%
    Service revenue          5,010          -         22,389         -
    Alliance revenue        26,978     20,991   29%   97,311    63,812   52%
                            ------     ------         ------    ------
        Total revenues     240,522    183,014   31%  830,461   656,977   26%
                           -------    -------        -------   -------

    Cost of goods sold      58,232     41,589   40%  192,974   167,916   15%
    Cost of services         4,126          -         17,836         -
    Selling, general and
     administrative
     ("SG&A")               65,542     66,350   -1%  255,782   278,019   -8%
    Research and
     development costs,
     net                    14,801     11,867   25%   43,977    86,967  -49%
    Special charges and
     credits including
     acquired in-
     process research and
     development             4,377    186,300          6,351   186,300
    Restructuring, asset
     impairments,
     dispositions
     and acquisition-
     related costs           3,115     17,001         10,068    21,295
    Amortization expense    18,915     12,357   53%   70,640    49,973   41%
                            ------     ------         ------    ------
                           169,108    335,464  -50%  597,628   790,470  -24%
                           -------    -------        -------   -------
        Income (loss) from
         operations         71,414   (152,450)       232,833  (133,493)

    Interest expense, net  (12,403)    (4,520)       (39,250)  (28,256)
    Gain (loss) on early
     extinguishment of debt      -      1,888          7,221   (12,994)
    Other income
     (expense), net
     including translation
     and exchange             (672)     5,445         (1,458)    2,056
                              ----      -----         ------     -----

    Income (loss) from
     continuing
     operations before
     income taxes           58,339   (149,637)       199,346  (172,687)

    Provision (benefit) for
     income taxes          (97,811)       962        (58,270)   34,688
                           -------        ---        -------    ------
    Income (loss) from
     continuing
     operations            156,150   (150,599)       257,616  (207,375)

    Income (loss) from
     discontinued
     operations, net         6,256    (20,586)         6,125   166,548
                             -----    -------          -----   -------

    Net income (loss)     $162,406  $(171,185)      $263,741  $(40,827)
                          ========  =========       ========  ========

    Earnings per share:

    Basic:
        Income (loss) from
         continuing
         operations          $1.95     $(1.82)         $3.15    $(2.37)
        Discontinued
         operations           0.08      (0.25)          0.07      1.90
                              ----      -----           ----      ----
        Basic earnings
         (loss) per share    $2.03     $(2.07)         $3.22    $(0.47)
                             =====     ======          =====    ======
        Shares used in per
         share computation  79,925     82,585         81,781    87,480
                            ======     ======         ======    ======

    Diluted:
        Income (loss) from
         continuing
          operations         $1.89     $(1.82)         $3.07    $(2.37)
        Discontinued
         operations           0.07      (0.25)          0.07      1.90
                              ----      -----           ----      ----
        Diluted earnings
         (loss) per share    $1.96     $(2.07)         $3.14    $(0.47)
                             =====     ======          =====    ======
        Shares used in per
         share computation  82,729     82,585         83,970    87,480
                            ======     ======         ======    ======



    Valeant Pharmaceuticals International                              Table 2
    Reconciliation of GAAP EPS to Cash EPS
    For the Three and Twelve Months Ended December 31, 2009 and 2008


                                   Three Months Ended   Twelve Months Ended
                                       December 31,         December 31,
                                       ------------         ------------
    (In thousands, except per
     share data)                      2009       2008      2009       2008
                                      ----       ----      ----       ----

    Income (loss) from
     continuing operations          $156,150  $(150,599) $257,616  $(207,375)

    Non-GAAP adjustments (a):
    Special charges and
     credits including
     acquired in-process
     research and development (b)      4,377    186,300     6,351    186,300
    Restructuring, asset
     impairments,
     dispositions and
     acquisition-related
     costs (c)                         3,115     17,001    10,068     21,295
    Amortization expense              18,915     12,357    70,640     49,973
                                      ------     ------    ------     ------
                                      26,407    215,658    87,059    257,568
    ASC 470-20 (FSP APB 14-1)
     interest                          1,892      3,723    10,242     14,899
    (Gain) loss on early
     extinguishment of debt                -     (1,888)   (7,221)    12,994
    Tax                             (129,000)   (23,738) (162,463)    (6,362)
                                    --------    -------  --------     ------
    Total adjustments               (100,701)   193,755   (72,383)   279,099

    Adjusted income from
     continuing operations           $55,449    $43,156  $185,233    $71,724
                                     =======    =======  ========    =======

    GAAP earnings (loss)  per
     share - diluted                   $1.89     $(1.82)    $3.07     $(2.37)
                                       =====     ======     =====     ======

    Cash earnings per share -
     diluted                           $0.67      $0.52     $2.21      $0.81
                                       =====      =====     =====      =====

    Shares used in diluted
     per share calculation -
      GAAP earnings (loss)
     per share                        82,729     82,585    83,970     87,480
                                      ======     ======    ======     ======

    Shares used in adjusted
     diluted per share
     calculation - Cash
     earnings per share               82,729     83,738    83,970     88,467
                                      ======     ======    ======     ======


    (a) 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 special charges and
    credits including acquired in-process research and development,
    restructuring, asset impairments and dispositions and acquisition-related
    costs, amortization expense, ASC 470-20 (FSP APB 14-1) interest, gain
    (loss) on early extinguishment of debt and the non-GAAP tax effect of such
    charges. 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 more 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.

    (b) Special charges and credits including acquired in-process research and
    development of $4.4 million and $6.4 million for the three and twelve
    months ended December 31, 2009 relates to $4.4 million and $4.4 million
    primarily related to settlements involving Spear Pharmaceuticals, Inc. and
    $0 and $2.0 million for the acquisition of product rights to market Opana
    in Canada, Australia and New Zealand, respectively. In the three and
    twelve months ended December 31, 2008 the $186.3 million relates to
    acquired in-process research and development from the Dow Pharmaceuticals
    acquisition.

    (c) Restructuring, asset impairments, dispositions and acquisition-related
    costs for the three and twelve months ended December 31, 2009 include
    acquisition-related costs of $2.7 million and $6.5 million and
    restructuring costs of $ 0.4 million and $3.6 million, respectively. In
    the three and twelve months ended December 31, 2008, restructuring, asset
    dispositions and acquisition-related costs include $16.5 million and $55.8
    million related to restructuring and $0.5 million and ($34.5) million
    related to the sale of our operations in Asia, respectively.

    This table includes Cash Earnings Per Share, which is a non-GAAP financial
    measure that represents earnings per share, excluding special charges and
    credits including acquired in-process research and development,
    restructuring, asset impairments and dispositions and acquisition-related
    costs, amortization expense, ASC 470-20 (FSP APB 14-1) interest, gain
    (loss) on early extinguishment of debt and the non-GAAP tax effect of such
    charges.



    Valeant Pharmaceuticals International                              Table 3
    Statement of Revenue - by Segment
    For the Three and Twelve Months Ended December 31, 2009 and 2008

    (In thousands)
                            Three Months Ended      Twelve Months Ended
     3.1 Revenue                December 31,            December 31,
                                ------------            ------------
                                             %                       %
                           2009     2008   Change   2009    2008   Change
                           ----     ----   ------   ----    ----   ------
      Specialty
       pharmaceuticals
      U.S.
        Dermatology      $35,827  $31,599    13% $123,475  $91,708   35%
        Neurology &
         Other            49,453   39,854    24%  175,467  127,641   37%
                          ------   ------         -------  -------
        Total U.S.        85,280   71,453    19%  298,942  219,349   36%
      Canada              18,711   14,161    32%   64,861   56,988   14%
      Australia           15,312    3,558   330%   40,062   21,602   85%
                          ------    -----          ------   ------
                         119,303   89,172    34%  403,865  297,939   36%
      Divested business        -        -               -    5,784
                             ---      ---             ---    -----
        Specialty
         pharmaceuticals
         product sales   119,303   89,172    34%  403,865  303,723   33%
      Alliance            18,288    4,374          50,639    4,374
      Service              5,010        -          22,389        -
      Total specialty
       pharmaceuticals
       revenue           142,601   93,546    52%  476,893  308,097   55%

      Branded generics -
       Latin America
       product sales      47,185   36,930    28%  155,246  136,638   14%
      Branded
       generics -
       Europe product
       sales              42,046   35,921    17%  151,650  152,804   -1%

      Alliances
       (ribavirin
       royalties only)     8,690   16,617   -48%   46,672   59,438  -21%
                           -----   ------          ------   ------

      Total revenue     $240,522 $183,014    31% $830,461 $656,977   26%
                        ======== ========        ======== ========
      Total product
       sales
       included above   $208,534 $162,023    29% $710,761 $593,165   20%



    3.2 Currency impact and revenue excluding currency impact (a)(b)

                                                Three Months Ended
                                                   December 31,
                                                   ------------
                                                   2009
                                      2009      excluding
                                    currency     currency
                                     impact       impact      2008    % Change
                                     ------       ------      ----    --------
      Specialty pharmaceuticals
      U.S.                            $(40)      $85,240    $71,453       19%
      Canada                        (2,344)       16,367     14,161       16%
      Australia                     (3,939)       11,373      3,558      220%
                                    ------        ------      -----
                                    (6,323)      112,980     89,172       27%
      Divested business                  -             -          -
                                       ---           ---        ---
        Specialty pharmaceuticals
         product sales              (6,323)      112,980     89,172       27%
      Alliance                           -        18,288      4,374
      Service                         (240)        4,770          -
      Total specialty
       pharmaceuticals revenue      (6,563)      136,038     93,546       45%

      Branded generics -
       Latin America product
       sales                        (1,127)       46,058     36,930       25%
      Branded generics -
       Europe product sales         (1,199)       40,847     35,921       14%

      Alliances (ribavirin
       royalties only)                   -         8,690     16,617      -48%
                                       ---         -----     ------

      Total revenue                $(8,889)     $231,633   $183,014       27%
                                   =======      ========   ========
      Total product sales
       included above              $(8,649)     $199,885   $162,023       23%



                                               Twelve Months Ended
                                                   December 31,
                                                   ------------
                                                   2009
                                      2009      excluding
                                    currency     currency
                                     impact       impact      2008    % Change
                                     ------       ------      ----    --------
      Specialty pharmaceuticals
      U.S.                            $(40)     $298,902   $219,349       36%
      Canada                         4,536        69,397     56,988       22%
      Australia                        827        40,889     21,602       89%
                                       ---        ------     ------
                                     5,323       409,188    297,939       37%
      Divested business                  -             -      5,784
                                       ---           ---      -----
        Specialty pharmaceuticals
         product sales               5,323       409,188    303,723       35%
      Alliance                           -        50,639      4,374
      Service                          395        22,784          -
      Total specialty
       pharmaceuticals revenue       5,718       482,611    308,097       57%

      Branded generics -
       Latin America product
       sales                        28,341       183,587    136,638       34%
      Branded generics -
       Europe product sales         39,838       191,488    152,804       25%

      Alliances (ribavirin
       royalties only)                   -        46,672     59,438      -21%
                                       ---        ------     ------

      Total revenue                $73,897      $904,358   $656,977       38%
                                   =======      ========   ========
      Total product sales
       included above              $73,502      $784,263   $593,165       32%




                                              Three Months    Twelve Months
                                                  Ended           Ended
                                               December 31,    December 31,
                                               ------------    ------------
                                               2009    2008    2009    2008
                                               ----    ----    ----    ----
    3.3 Alliance Revenue           Segment
    --------------------           -------
    Ribavirin royalty             Alliances  $8,690 $16,617 $46,672 $59,438
    1% clindamycin and 5%
     benzoyl peroxide (IDP
     111) profit share            Specialty   9,538       -  18,073       -
    Other royalties               Specialty   3,310       -  11,230       -
    License payments              Specialty     817       -   6,817       -
    GSK collaboration             Specialty   4,623   4,374  14,519   4,374
                                              -----   -----  ------   -----

    Total alliance revenue                  $26,978 $20,991 $97,311 $63,812
                                            ======= ======= ======= =======

    (a) Note: Currency effect for constant currency sales is determined by
    comparing 2009 reported amounts adjusted to exclude currency impact,
    calculated using 2008 monthly average exchange rates, to the actual 2008
    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 (a) to Table 2.



    Valeant Pharmaceuticals International                              Table 4
    Statement of Cost of Goods Sold and Non-GAAP Operating Income - by Segment
    For the Three and Twelve Months Ended December 31, 2009 and 2008
    (In thousands)
                              Three Months Ended       Twelve Months Ended
    4.1 Cost of goods sold       December 31,              December 31,
                                 ------------              ------------
                               % of          % of          % of         % of
                              product       product       product      product
                        2009   sales   2008  sales   2009  sales  2008  sales
                        ----   -----   ----  -----   ----  -----  ----  ------
      Specialty
       pharmaceuticals $23,068  19%  $18,442  21%  $78,858  20%  $64,027   21%
      Branded
       generics -
       Latin America    15,549  33%    9,193  25%   46,186  30%   46,338   34%
      Branded generics
       - Europe         19,545  46%   13,919  39%   67,798  45%   58,408   38%

      Corporate             70            35           132          (857)
                           ---           ---           ---          ----

                        $58,232 28%  $41,589  26% $192,974  27% $167,916   28%
                        =======      =======       ========     ========



    4.2 Non-GAAP operating income excluding currency impact (a)(b)

                                       Three Months Ended
                                          December 31,
                                          ------------
                                                  2009
                                         2009   excluding
                                 % of  currency currency  % of           % of
                         2009  revenue  impact   impact  revenue  2008 revenue
                         ----  -------  ------   ------  -------  ---- -------
      Specialty
       pharmaceuticals $72,172   51%    $(558)   $71,614    53% $39,143   42%
      Branded
       generics - Latin
       America          18,236   39%    3,161     21,397    46%  13,623   37%
      Branded generics
       - Europe         10,574   25%    3,692     14,266    35%  10,641   30%
                        ------          -----     ------         ------

                       100,982   44%    6,295    107,277    48%  63,407   38%
      Alliances &
       Corporate        (3,161)             -     (3,161)          (199)
                        ------            ---     ------           ----

                       $97,821   41%   $6,295   $104,116    45% $63,208   35%
                       =======         ======   ========        =======


                                      Twelve Months Ended
                                          December 31,
                                          ------------
                                                  2009
                                         2009   excluding
                                 % of  currency currency  % of           % of
                         2009  revenue  impact   impact  revenue  2008 revenue
                         ----  -------  ------   ------  -------  ---- -------

      Specialty
       pharmaceuticals $230,705  48%   $3,378   $234,083    49%  $48,674  16%
      Branded
       generics - Latin
       America           58,928  38%   11,427     70,355    38%   29,670  22%
      Branded generics
       - Europe          39,877  26%   10,213     50,090    26%   46,420  30%
                         ------        ------     ------          ------

                        329,510  42%   25,018    354,528    41%  124,764  21%

      Alliances &
       Corporate         (9,618)            -     (9,618)           (689)
                         ------           ---     ------            ----

                       $319,892  39%  $25,018   $344,910    38% $124,075  19%
                       ========       =======   ========        ========

    (a) See footnote (a) to Table 2 and footnote (b) to Table 3.

    (b) Non-GAAP operating income of $97.8 million and $319.9 million for the
    three and twelve months ended December 30, 2009 excludes the following
    GAAP items from GAAP operating income of $71.4 million and $232.8 million:
    special charges and credits including acquired in-process research and
    development of $4.4 million and $6.4 million, restructuring, asset
    impairments, dispositions and acquisition-related costs of $3.1 million
    and $10.1 million and amortization expense of $18.9 million and $70.6
    million, respectively. Non-GAAP operating income of $63.2 million and
    $124.1 million for the three and twelve months ended December 30, 2008
    excludes the following GAAP items from GAAP operating income of ($152.5)
    million and ($133.5) million: special charges and credits including
    acquired in-process research and development of $186.3 million and $186.3
    million, restructuring, asset impairments, dispositions and acquisition-
    related costs of $17.0 million and $21.3 million and amortization expense
    of $12.4 million and $50.0 million, respectively.



    Valeant Pharmaceuticals International                            Table 5
    Consolidated  Balance Sheet and Other Data
    (In thousands)
                                                          As of
                                                       December 31,
    5.1 Cash                                          2009     2008
                                                      ----     ----

      Cash and cash equivalents                     $68,080 $199,582
      Marketable securities                          13,785   19,193
                                                     ------   ------
        Total cash and marketable securities        $81,865 $218,775
                                                    ======= ========



    5.2 Summary of Cashflow Statement

                                   Three Months Ended     Twelve Months Ended
                                       December 31,           December 31,
                                       ------------           ------------
                                      2009       2008       2009       2008
                                      ----       ----       ----       ----
      Cash flow provided by (used in):

      Operating activities,
       continuing operations
       (GAAP)                       $52,458   $142,009   $186,321   $200,655
      Effect of ASC 470-
       20 (FSP APB 14-1) (a)(b)           -      6,115     35,338      6,115
      Acquisition transaction
       fees (a)(b)                    2,866          -      4,593          -
                                      -----        ---      -----        ---
      Operating activities,
       continuing operations
       (Non-GAAP) (a)(b)             55,324    148,124    226,252    206,770
      Operating activities,
       discontinued operations           92        127     (2,768)     9,759

      Investing activities
       (GAAP) (c)                  (106,729)  (342,366)  (342,480)   169,918
      Acquisition transaction
       fees (a)(b)                   (2,866)         -     (4,593)         -
                                     ------        ---     ------        ---
      Investing activities (Non-
       GAAP) (a)(b)(c)             (109,595)  (342,366)  (347,073)   169,918

      Financing activities
       (GAAP) (c)                  (141,465)   (95,426)    29,909   (468,889)
      Effect of ASC 470-
       20 (FSP APB 14-1) (a)(b)           -     (6,115)   (35,338)    (6,115)
                                        ---     ------    -------     ------
      Financing activities (Non-
       GAAP) (a)(b)(c)             (141,465)  (101,541)    (5,429)  (475,004)
      Effect of exchange rate
       changes on cash and cash
       equivalents (c)                2,165    (26,025)    (2,484)   (21,226)
                                      -----    -------     ------    -------

      Net decrease in cash
       and cash equivalents (c)    (193,479)  (321,681)  (131,502)  (109,783)
      Net decrease in
       marketable securities (c)   (110,565)   (30,556)    (5,408)   (32,929)
                                   --------    -------     ------    -------

      Net decrease in cash
       and marketable
       securities (c)             $(304,044) $(352,237) $(136,910) $(142,712)
                                  =========  =========  =========  =========

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

    (b) Cash flow for the three and twelve months ended December 31, 2009
    includes $0 and $35.3 million relating to payments of accreted interest on
    long-term debt and notes payable made during these periods as determined
    by and pursuant to ASC 470-20 (FSP APB 14-1), $0 and $0.9 million for
    acquisition transaction fees related to the purchase of Emo-Farm in
    Poland, $0.3 million and $1.0 million for acquisition fees related to the
    purchase of Tecnofarma in Mexico, $1.7 million and $1.7 million for
    acquisition fees related to the purchase of Dow in the U.S. and $0.9
    million and $1.0 million for acquisition fees related to the purchase of
    PFI in Australia, respectively.

    (c) Includes results from discontinued operations.



                                              Three Months Ended
    5.3 GSK Collaboration - Retagibine         December 31, 2009
                                               -----------------

      Valeant SG&A                                      $14
      Valeant R&D                                    10,311
                                                     ------
                                                     10,325
      GSK incurred cost                              10,543
                                                     ------
                                                    $20,868
                                                    =======
      Equalization (difference between
       individual partner costs and 50% of total)     $(109)
                                                      =====

                            Three Months Ended December 31, 2009
                            ------------------------------------
                                          Alliance
                          Balance sheet   revenue    SG&A      R&D
                          -------------   -------    -----     ---
      Accounting impact

      Upfront payment
       from GSK              $125,000         $-      $-         $-
      Release from upfront
       payment in prior
       quarters               (43,000)         -       -          -
      Incurred cost in
       current quarter              -          -      14     10,311
      Release from upfront
       payment in current
       quarter                (15,058)    (4,624)   (582)    (9,852)
                              -------
      Remaining upfront
       payment from GSK       $66,942          -       -          -
                              =======

      Equalization
       payable to GSK           $(109)         -     568       (459)
                                =====        ---     ---       ----
                                         $(4,624)     $-         $-
                                         =======     ===        ===




    Valeant Pharmaceuticals International                   Supplemental Table
    Reconciliation of Product Sales Excluding Acquisitions, Divestitures,
     Estimated Wholesaler Inventory Reductions and Currency Impact
    For the Three and Twelve Months Ended December 31, 2009 and 2008
    (In thousands)

                                     Three Months Ended
                                     December 31, 2009
                                     -----------------

                                                                   2009
                                      2009                      excluding
                                    acquisition      2009       currency &
                         2009        impact at     currency     acquisition
                      as reported  2009 rates (a)   impact        impact
                      -----------  --------------   ------        ------
    Specialty
     pharmaceuticals
    U.S.                 85,280      $(2,396)            $-        $82,884
    Canada               18,711         (230)        (2,311)        16,170
    Australia            15,312       (9,964)        (1,398)         3,950
                         ------       ------         ------          -----
      Specialty
       pharmaceuticals
       product sales    119,303      (12,590)        (3,709)       103,004

    Branded generics
     - Latin America
     product sales       47,185       (7,469)        (1,130)        38,586
    Branded
     generics -
     Europe
     product sales       42,046       (2,090)        (1,175)        38,781
                         ------       ------         ------         ------


    Total product
     sales             $208,534     $(22,149)       $(6,014)      $180,371
                       ========     ========        =======       ========


                                     Three Months Ended
                                     December 31, 2008
                                     -----------------
                                                           2008     Q4 2009
                                                2008     excluding  growth at
                                             estimated  divestiture  constant
                                             wholesaler     &       currency,
                      2008 as      2008      inventory  wholesaler    net of
                     reported  divestitures  reductions   impact  acquisitions
                     --------  ------------  ----------   ------  ------------
    Specialty
     pharmaceuticals
    U.S.             $71,453         $-          $-       $71,453      16%
    Canada            14,161          -           -        14,161      14%
    Australia          3,558          -           -         3,558      11%
                       -----        ---         ---         -----
      Specialty
       pharmaceuticals
       product sales  89,172          -           -        89,172      16%

    Branded generics
     - Latin America
     product sales    36,930          -           -        36,930       4%
    Branded
     generics -
     Europe
     product sales    35,921          -           -        35,921       8%
                      ------        ---         ---        ------


    Total product
     sales          $162,023         $-          $-      $162,023      11%
                    ========        ===         ===      ========




                                      Twelve Months Ended
                                       December 31, 2009
                                       -----------------

                                                                   2009
                                       2009                      excluding
                                    acquisition      2009       currency &
                         2009        impact at     currency     acquisition
                      as reported  2009 rates (a)   impact        impact
                      -----------  --------------   ------        ------
    Specialty
     pharmaceuticals
    U.S.                $298,942     $(32,351)          $-        $266,591
    Canada                64,861         (230)       4,569          69,200
    Australia             40,062      (19,010)       1,933          22,985
                          ------      -------        -----          ------
                         403,865      (51,591)       6,502         358,776
    Divested business          -            -            -               -
                             ---          ---          ---             ---
      Specialty
       pharmaceuticals
       product sales     403,865      (51,591)       6,502         358,776

    Branded generics
     - Latin America
     product sales       155,246      (12,142)      27,063         170,167
    Branded generics -
     Europe
     product sales       151,650       (7,659)      37,661         181,652
                         -------       ------       ------         -------


    Total product sales $710,761     $(71,392)     $71,226        $710,595
                        ========     ========      =======        ========




                                       Twelve Months Ended
                                       December 31, 2008
                                       -----------------
                                                                    12mths
                                                                  2009 growth
                                                                  at constant
                                                                   currency,
                                                                    net of
                                                                 acquisitions,
                                                                     2008
                                                           2008  divestitures,
                                                2008     excluding     &
                                             estimated  divestiture estimated
                                             wholesaler     &      wholesaler
                      2008 as      2008      inventory  wholesaler inventory
                     reported  divestitures  reductions   impact   reductions
                     --------  ------------  ----------   ------   ----------
    Specialty
     pharmaceuticals
    U.S.             $219,349         $-      $15,033    $234,382      14%
    Canada             56,988          -        1,950      58,938      17%
    Australia          21,602          -            -      21,602      6%
                       ------        ---          ---      ------
                      297,939          -       16,983     314,922      14%
    Divested business   5,784     (5,784)           -           -
                        -----     ------          ---         ---
      Specialty
       pharmaceuticals
       product sales  303,723     (5,784)      16,983     314,922

    Branded generics
     - Latin America
     product sales    136,638          -        3,000     139,638      22%
    Branded generics
     - Europe product
     sales            152,804          -            -     152,804      19%
                      -------        ---          ---     -------


    Total product
     sales           $593,165    $(5,784)     $19,983    $607,364      17%
                     ========    =======      =======    ========

    (a) Acquisitions excluded from 2009 product sales include Coria in the
    U.S., PFI in the U.S. and Australia, Dr. Renaud in the U.S. and Canada,
    DermaTech and other acquired products in Australia, Tecnofarma S.A. de
    C.V. in Branded generics-Latin America and EMO-Farm in Branded generics-
    Europe.

    See footnote (a) to Table 2 and Table 3.

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