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Valeant Pharmaceuticals Reports Second Quarter Financial Results
Date:8/4/2009

ALISO VIEJO, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Valeant Pharmaceuticals International (NYSE: VRX) today announced second quarter financial results for 2009.

"The second quarter once again demonstrated the strength of our diversified business model," stated J. Michael Pearson, chairman and chief executive officer. "We delivered sales and earnings growth at the high end of our expectations, with all businesses and regions reporting solid results. The performance of our Branded Generic business units was particularly strong and reinforces our confidence in our growth strategies for the regions in which they operate."

Revenues:

Total revenue was $191.7 million in the second quarter of 2009 as compared to $153.6 million in the second quarter of 2008, an increase of 25%. As part of the company's 2008 restructuring efforts, the company brought down its wholesaler inventory levels. The impact of this change was a planned reduction in shipments to wholesaler customers in the United States, Canada and Mexico of approximately $20 million in the second quarter of 2008. Our second quarter growth in product sales at constant currency, net of acquisitions and divestitures and inventory drawdown was 15%.

Specialty Pharmaceutical product sales were $96.6 million in the second quarter of 2009, as compared to $64.4 million in the second quarter of 2008, an increase of 50%. Excluding the impact of acquisitions, divestitures, wholesaler inventory drawdown and currency, Specialty Pharmaceutical product sales increased 13%. Service revenue generated by the company's Dow Pharmaceutical Sciences subsidiary (Dow) was $5.6 million in the second quarter of 2009. Because the company acquired Dow in December 2008, no service revenue was recorded in the second quarter of 2008.

Product sales in Branded Generics - Latin America were $36.2 million in the second quarter of 2009 as compared to $35.8 million in the same period in 2008, an increase of 1%. At constant exchange rates, product sales in Latin America in the second quarter of 2009 increased 27% as compared to the second quarter of 2008. Excluding the impact of acquisitions, divestitures, wholesaler inventory drawdown and currency, Branded Generics - Latin America product sales increased 17%.

Product sales in Branded Generics - Europe were $34.0 million in the second quarter of 2009 as compared to $38.5 million in the same period in 2008, a decrease of 12%. At constant exchange rates, product sales in the second quarter of 2009 increased 27% as compared to the second quarter of 2008. Excluding the impact of acquisitions, divestitures, wholesaler inventory drawdown and currency, Branded Generics - Europe product sales increased 19%.

Total alliance revenue, including $2.8 million of revenue from the GlaxoSmithKline (GSK) collaboration, increased 30% to $19.2 million in the second quarter of 2009 as compared to $14.8 million in the second quarter of 2008.

Operating Expenses/Earnings:

The company's cost of goods sold was 26% of product sales for the second quarter of 2009 as compared to 35% in the second quarter of 2008. The company's cost of goods in the second quarter of 2008 was negatively impacted by increased inventory obsolescence charges and exchange rates.

Selling, General and Administrative expenses decreased 12% in the second quarter of 2009 to $62.5 million as compared to $70.8 million in the second quarter of 2008, primarily attributable to the benefit of cost reduction activities and exchange rates, partially offset by increased costs attributable to acquisitions completed in the last twelve months.

Research and development costs decreased 59% to $9.1 million in the second quarter of 2009 as compared to $22.6 million in the same period in 2008 primarily as a result of the company's new leveraged R&D model.

Income from continuing operations was $33.0 million for the second quarter of 2009, or $0.39 per diluted share, as compared to a loss from continuing operations of $52.0 million, or a loss of $0.58 per diluted share, for the second quarter of 2008. On a non-GAAP Cash EPS basis, adjusted income from continuing operations was $42.9 million, or $0.51 per diluted share, in the second quarter of 2009 as compared to adjusted income from continuing operations of $4.9 million, or $0.05 per diluted share, in the second quarter of 2008.

Adjusted cash flow from operations for the second quarter of 2009 was $55 million. GAAP cash flow from operations for the second quarter of 2009 was $44 million, which includes the impact of FSP APB 14-1 and acquisition transaction costs related to EMO-FARM Ltd.

Debt:

During the second quarter of 2009, the company issued $365 million principal amount of 8.375% senior notes due 2016.

Retigabine Update:

The company, along with its collaboration partner GSK, is still targeting a third quarter 2009 New Drug Application (NDA) submission for retigabine and is committed to completing this event in 2009. The Marketing Authorization Application (MAA) submission is targeted for one month later.

2009 Guidance:

The company has provided an update to its previous Cash EPS target and is now targeting Cash EPS between $1.90 and $2.10 in 2009, up from prior guidance of $1.70 to $1.90. This calculation of Cash EPS will exclude 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 new non-cash accounting charge for interest on the company's convertible debt related to FSP APB 14-1, which the company adopted on January 1, 2009, and the tax effect of such charges.

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. EDT (7:00 a.m. PDT) to discuss its second quarter financial results for 2009. The dial-in number to participate on this call is (877) 295-5743, confirmation code 20797641. International callers should dial (973) 200-3961, confirmation code 20797641. A replay will be available approximately two hours following the conclusion of the conference call through August 18, 2009 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 20797641. The company will webcast the conference call live over the Internet. The webcast 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 guidance with respect to expected non-GAAP cash earnings per share, the growth and future development of the company, and the expected timing of the retigabine NDA submission. 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 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 new non-cash accounting charge for interest on the convertible debt related to 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 table 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 new non-cash accounting charge for interest on the company's convertible debt related to FSP APB 14-1 and the tax effect of such charges. The company has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the exact amount of the items excluded from the non-GAAP financial measures that will be included in the comparable GAAP financial measures.

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 Six Months Ended June 30, 2009 and 2008

                         Three Months Ended          Six Months Ended
                              June 30,                   June 30,
    (In thousands,       ------------------          ----------------
     except per                                %                         %
     share data)           2009      2008    Change   2009      2008   Change
                           ----      ----    ------   ----      ----   ------

    Product sales       $166,865  $138,751     20%  $319,698  $277,961   15%
    Service revenue        5,606         -     NM     12,344         -   NM
    Alliance revenue (a)  19,227    14,805     30%    37,579    27,578   36%
                          ------    ------            ------    ------
        Total revenues   191,698   153,556     25%   369,621   305,539   21%
                         -------   -------           -------   -------

    Cost of goods sold    42,750    47,874    -11%    82,447    83,629   -1%
    Cost of services       5,337         -     NM      9,663         -   NM
    Selling, general and
     administrative
     ("SG&A")             62,535    70,772    -12%   126,751   140,211  -10%
    Research and
     development
     costs, net            9,145    22,567    -59%    17,880    51,861  -66%
    Special charges and
     credits including
     acquired in-process
     research and
     development (b)       1,974         -     NM      1,974         -   NM
    Restructuring, asset
     impairments and
     dispositions          1,694    13,957     NM      2,905       767   NM
    Amortization expense  17,105    12,799     34%    34,109    26,128   31%
                          ------    ------            ------    ------
                         140,540   167,969    -16%   275,729   302,596   -9%
                         -------   -------           -------   -------
        Income (loss)
         from
         operations       51,158   (14,413)           93,892     2,943
    Interest expense,
     net                  (7,826)   (8,089)          (14,004)  (16,749)
    Gain on early
     extinguishment
     of debt               2,777         -             7,376         -
    Other income
     (expense),
     net including
     translation and
     exchange               (647)     (300)              564    (1,833)
                            ----      ----               ---    ------

    Income (loss) from
     continuing operations
     before income taxes  45,462   (22,802)           87,828   (15,639)

    Provision for income
     taxes                12,427    29,215            23,996    33,874
                          ------    ------            ------    ------
    Income (loss) from
     continuing
     operations           33,035   (52,017)           63,832   (49,513)

    Income (loss) from
     discontinued
     operations,
     net                    (175)  (26,313)              223   (23,020)
                            ----   -------               ---   -------

    Net income (loss)    $32,860  $(78,330)          $64,055  $(72,533)
                         =======  ========           =======  ========

    Earnings per share:

    Basic:
        Income (loss)
         from
         continuing
         operations        $0.40    $(0.58)            $0.77    $(0.55)
        Discontinued
         operations            -     (0.29)                -     (0.26)
                             ---     -----               ---     -----
        Basic earnings
        (loss)
         per
         share             $0.40    $(0.87)            $0.77    $(0.81)
                           =====    ======             =====    ======
        Shares used in
         per share
         computation      82,794    89,802            82,733    89,696
                          ======    ======            ======    ======

    Diluted:
        Income (loss)
         from continuing
         operations        $0.39    $(0.58)            $0.76    $(0.55)
        Discontinued
         operations            -     (0.29)             0.01     (0.26)
                             ---     -----              ----     -----
        Diluted earnings
         (loss)
         per share         $0.39    $(0.87)            $0.77    $(0.81)
                           =====    ======             =====    ======
        Shares used in
         per share
         computation      83,673    89,802            83,566    89,696
                          ======    ======            ======    ======

    (a) Alliance revenue for the three and six months ended June 30, 2009
    relates to ribavirin royalty of $12.6 million and $25.8 million, alliance
    revenue from the GSK collaboration of $2.8 million and $6.1 million and
    dermatology royalties of $3.8 million and $5.7 million, respectively.
    Alliance revenue for the three and six months ended June 30, 2008 includes
    ribavirin royalties of $14.8 million and $27.5 million, respectively and
    in the six months ended June 30, 2008 a $0.1 million payment from an
    unrelated third party for a license to certain intellectual property
    assets.
    (b) Special charges and credits including acquired in-process research and
    development for the three and six months ended June 30, 2009 relates
    primarily to the acquisition of product rights to market Opana in Canada,
    Australia and New Zealand.



    Valeant Pharmaceuticals International                         Table 2
    Reconciliation of GAAP EPS to Cash EPS
    For the Three and Six Months Ended June 30, 2009 and 2008


                                     Three Months Ended   Six Months Ended
                                          June 30,           June 30,
     (In thousands, except           ------------------   ----------------
     per share data)                   2009      2008     2009       2008
                                       ----      ----     ----       ----

    Income (loss) from
     continuing operations           $33,035  $(52,017) $63,832   $(49,513)

    Non-GAAP adjustments (a):
    Acquisition transaction fees         909         -      909          -
    Special charges and credits
     including acquired in-process
     research and development          1,974         -    1,974          -
    Restructuring, asset impairments
     and dispositions                  1,694    13,957    2,905        767
    Amortization expense              17,105    12,799   34,109     26,128
                                      ------    ------   ------     ------
                                      21,682    26,756   39,897     26,895
    FSP APB 14-1 interest              2,695     3,725    6,174      7,379
    Gain on early
     extinguishment of debt           (2,777)        -   (7,376)         -
    Tax                              (11,715)   26,420  (21,552)    27,091
                                     -------    ------  -------     ------
    Total adjustments                  9,885    56,901   17,143     61,365

    Adjusted income from
     continuing operations           $42,920    $4,884  $80,975    $11,852
                                     =======    ======  =======    =======

    GAAP earnings (loss)  per
     share - diluted                   $0.39    $(0.58)   $0.76     $(0.55)
                                       =====    ======    =====     ======

    Cash earnings per
     share - diluted                   $0.51     $0.05    $0.97      $0.13
                                       =====     =====    =====      =====

    Shares used in diluted per share
     calculation - GAAP earnings
     (loss)  per share                83,673    89,802   83,566     89,696
                                      ======    ======   ======     ======

    Shares used in adjusted
     diluted per share
     calculation - Cash
     earnings per share               83,673    90,876   83,566     90,561
                                      ======    ======   ======     ======


    (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 acquisition
    transaction fees included within SG&A, special charges and credits
    including acquired in-process research and development, restructuring,
    asset impairments and dispositions, amortization expense, FSP APB 14-1
    interest, gain 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.

    This table includes Cash Earnings Per Share, which is a non-GAAP financial
    measure that represents earnings per share, excluding acquisition
    transaction fees included within SG&A, special charges and credits
    including acquired in-process research and development, restructuring,
    asset impairments and dispositions, amortization expense, FSP APB 14-1
    interest, gain 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 Six Months Ended June 30, 2009 and 2008
    (In thousands)

                            Three Months Ended          Six Months Ended
    Revenue                      June 30,                    June 30,
                          ----------------------      --------------------
                                            %                         %
                          2009    2008    Change      2009    2008  Change
                          ----    ----    ------      ----    ----  ------
    Specialty
     pharmaceuticals
    U.S.
      Dermatology (a)   $29,486  $15,360   92%      $60,454  $42,993  41%
      Neurology &
       Other             41,841   25,436   64%       77,852   56,366  38%
                         ------   ------             ------   ------
      Total U.S. (a)     71,327   40,796   75%      138,306   99,359  39%
    Canada               15,831   13,911   14%       30,319   27,624  10%
    Australia (a)         9,475    7,426   28%       14,321   11,660  23%
                          -----    -----             ------   ------
                         96,633   62,133   56%      182,946  138,643  32%
    Divested business         -    2,280   NM             -    5,784  NM
                            ---    -----                ---    -----
      Specialty
       pharmaceuticals
       product sales     96,633   64,413   50%      182,946  144,427  27%
    Services and
     alliance revenue    12,196        -   NM        24,101        -  NM
                         ------      ---             ------      ---
    Total specialty
     pharmaceuticals
     revenue            108,829   64,413   69%      207,047  144,427  43%

    Branded generics
     - Latin America
     product sales       36,200   35,838    1%       67,382   57,081  18%
    Branded generics
     - Europe
     product sales (a)   34,032   38,500  -12%       69,370   76,453  -9%

    Alliances
     (ribavirin
     royalties)          12,637   14,805  -15%       25,822   27,578  -6%
                         ------   ------             ------   ------

    Total revenue      $191,698 $153,556   25%     $369,621 $305,539  21%
                       ======== ========           ======== ========
    Total
     product
     sales
     included
     above             $166,865 $138,751   20%     $319,698 $277,961  15%

    Currency impact and revenue excluding currency impact (b)(c)



                                      Three Months Ended June 30,
                             -----------------------------------------------
                                              2009
                                 2009      excluding
                                currency    currency                   %
                                impact       impact       2008       Change
                             -----------   ----------     ----      --------
    Specialty
     pharmaceuticals
    U.S.                              $-      $71,327    $40,796         75%
    Canada                         2,456       18,287     13,911         31%
    Australia                      2,283       11,758      7,426         58%
                                   -----       ------      -----
                                   4,739      101,372     62,133         63%
    Divested business                  -            -      2,280         NM
                                     ---          ---      -----
      Specialty
       pharmaceuticals
       product sales               4,739      101,372     64,413
    Services and alliance
     revenue                         271       12,467          -         NM
                                     ---       ------        ---
    Total specialty
     pharmaceuticals revenue       5,010      113,839     64,413         77%

    Branded generics - Latin
     America product sales         9,338       45,538     35,838         27%
    Branded generics -
     Europe product sales         15,046       49,078     38,500         27%

    Alliances (ribavirin
     royalties)                        -       12,637     14,805        -15%
                                     ---       ------     ------

    Total revenue                $29,394     $221,092   $153,556         44%
                                 =======     ========   ========
    Total product sales
     included above              $29,123     $195,988   $138,751         41%


                                        Six Months Ended June 30,
                             -----------------------------------------------
                                             2009
                                 2009      excluding
                               currency     currency                   %
                                impact       impact       2008       Change
                             -----------   ----------     ----      --------
    Specialty
     pharmaceuticals
    U.S.                              $-     $138,306    $99,359         39%
    Canada                         5,868       36,187     27,624         31%
    Australia                      4,049       18,370     11,660         58%
                                   -----       ------     ------
                                   9,917      192,863    138,643         39%
    Divested business                  -            -      5,784         NM
                                     ---          ---      -----
      Specialty
       pharmaceuticals
       product sales               9,917      192,863    144,427
    Services and alliance
     revenue                         537       24,638          -         NM
                                     ---       ------        ---
    Total specialty
     pharmaceuticals revenue      10,454      217,501    144,427         51%

    Branded generics - Latin
     America product sales        19,406       86,788     57,081         52%
    Branded generics -
     Europe product sales         28,961       98,331     76,453         29%

    Alliances (ribavirin
     royalties)                        -       25,822     27,578         -6%
                                     ---       ------     ------

    Total revenue                $58,821     $428,442   $305,539         40%
                                 =======     ========   ========
    Total product sales
     included above              $58,284     $377,982   $277,961         36%

    (a) Product sales in the U.S., Australia and Branded generics - Europe in
    the three months ended June 30, 2009 include the sales of products
    acquired in the fourth quarter of 2008 from Coria in the U.S. and
    DermaTech in Australia, and products acquired in the second quarter 2009
    from Emo-Farm in Branded generics - Europe of $9.3 million, $2.2 million
    and $2.3 million, and $19.2 million, $3.7 million and $2.3 million in the
    six months ended June 30, 2009, respectively.
    (b) 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.
    (c) 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 Six Months Ended June 30, 2009 and 2008
    (In thousands)

    Cost of goods sold        Three Months Ended        Six Months Ended
                                    June 30,                 June 30,
                           ------------------------- -------------------------
                                 % of         % of         % of         % of
                                product      product      product      product
                           2009  sales  2008  sales  2009  sales  2008  sales
                           ---- ------- ---- ------- ----  ------ ---- -------
    Specialty
     pharmaceuticals     $18,181  19% $16,168  25% $33,544   18% $29,667   21%
    Branded
     generics -
     Latin America         9,598  27%  14,517  41%  17,496   26%  23,545   41%
    Branded
     generics -
     Europe               14,984  44%  18,136  47%  31,401   45%  31,298   41%

    Corporate                (13)        (947)           6          (881)
                             ---         ----          ---          ----

                         $42,750  26% $47,874  35% $82,447   26% $83,629   30%
                         =======      =======      =======       =======

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




                                    Three Months Ended June 30,
                      --------------------------------------------------------
                                                    2009
                                 %        2009   excluding   %            %
                                of      currency  currency   of          of
                      2009    revenue    impact    impact revenue 2008 revenue
                      ----    -------  --------- -------- ------- ---- -------
    Specialty
    pharmaceuticals  $49,843      46%    $1,716    $51,559    45% $(3,888) -6%
    Branded
     generics -
     Latin America    14,627      40%     3,860     18,487    41%   6,265  17%
    Branded
    generics -
    Europe             8,196      24%     3,198     11,394    23%   6,755  18%
                       -----              -----     ------          -----

                      72,666      41%     8,774     81,440    39%   9,132   7%

    Alliances
     & Corporate         174                  -        174          3,211
                         ---                ---        ---          -----

                     $72,840      38%    $8,774    $81,614    37% $12,343   8%
                     =======             ======    =======        =======



                                      Six Months Ended June 30,
                      --------------------------------------------------------
                                                    2009
                                 %        2009   excluding   %             %
                                of      currency  currency   of           of
                      2009    revenue    impact    impact revenue 2008 revenue
                      ----    -------  --------- -------- ------- ---- -------


    Specialty
     pharmaceuticals  $94,084    45%    $3,936    $98,020    45%  $4,539    3%
    Branded
     generics -
     Latin America     27,614    41%     8,266     35,880    41%   4,876    9%
    Branded
     generics -
     Europe            17,294    25%     6,521     23,815    24%  19,774   26%
                       ------            -----     ------         ------

                      138,992    40%    18,723    157,715    39%  29,189   11%

    Alliances
     & Corporate       (5,203)               -     (5,203)           649
                       ------              ---     ------            ---

                     $133,789    36%   $18,723   $152,512    36% $29,838   10%
                     ========          =======   ========        =======

    (a) See footnote (a) to Table 2 and footnote (b) to Table 3.
    (b) Non-GAAP operating income of $72.8 million and $133.8 million for the
    three and six months ended June 30, 2009 excludes the following GAAP items
    from GAAP operating income of $51.2 million and $93.9 million: acquisition
    transaction fees included within SG&A of $0.9 million and $0.9 million,
    special charges and credits including acquired in-process research and
    development of $2.0 million and $2.0 million, restructuring, asset
    impairments and dispositions of $1.7 million and $2.9 million and
    amortization expense of $17.0 million and $34.1 million, respectively.
    Non-GAAP operating income of $12.3 million and $29.8 million for the three
    and six months ended June 30, 2008 excludes the following GAAP items from
    GAAP operating income (loss) of ($14.4) million and $2.9 million:
    restructuring, asset impairments and dispositions of $13.9 million and
    $0.8 million and amortization expense of $12.8 million and $26.1 million,
    respectively.



    Valeant Pharmaceuticals International                        Table 5
    Consolidated  Balance Sheet and Other Data
    (In thousands)
                                             As of        As of
                                           June 30,   December 31,
    Cash                                     2009         2008
                                             ----         ----

    Cash and cash equivalents              $345,620     $199,582
    Marketable securities                   107,359       19,193
                                            -------       ------
      Total cash and marketable securities $452,979     $218,775
                                           ========     ========




    Other Data                         Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                            --------            --------
                                          2009     2008      2009      2008
                                          ----     ----      ----      ----
    Cash flow provided by (used in):

    Operating activities, continuing
     operations (GAAP)                 $44,461   $5,631   $82,283   $56,057
    Effect of FSP APB 14-1 (a)(b)        9,710        -    22,987         -
    Acquisition transaction fees
     (a)(b)                                866        -       866         -
                                           ---      ---       ---       ---
    Operating activities, continuing
     operations (Non-GAAP) (a)(b)       55,037    5,631   106,136    56,057
    Operating activities,
     discontinued operations              (285)   3,103    (2,434)   (4,354)

    Investing activities (GAAP) (c)   (151,028) (48,788) (187,594)   87,717
    Acquisition transaction fees
     (a)(b)                               (866)       -      (866)        -
                                          ----      ---      ----       ---
    Investing activities (Non-GAAP)
     (a)(b)(c)                        (151,894) (48,788) (188,460)   87,717

    Financing activities (GAAP) (c)    305,512      902   261,775       554
    Effect of FSP APB 14-1 (a)(b)       (9,710)       -   (22,987)        -
                                        ------      ---   -------       ---
    Financing activities (Non-GAAP)
     (a)(b)(c)                         295,802      902   238,788       554
    Effect of exchange rate changes
     on cash and cash equivalents (c)    7,051    7,355    (7,992)   16,961
                                         -----    -----    ------    ------

    Net increase (decrease) in
     cash and cash equivalents (c)     205,711  (31,797)  146,038   156,935
    Net increase in marketable
     securities (c)                    101,429   62,522    88,166    31,562
                                       -------   ------    ------    ------

    Net increase in cash and
     marketable securities (c)        $307,140  $30,725  $234,204  $188,497
                                      ========  =======  ========  ========

    (a) See footnote (a) to Table 2.
    (b) Cash flow for the three and six months ended June 30, 2009 includes
     $9.7 million and $23.0 million, respectively relating to payments of
     accreted interest on long-term debt and notes payable made during these
     periods as determined by and pursuant to FSP APB 14-1, as well as $0.9
     million in both the three and six months ended June 30, 2009 for
     acquisition transaction fees related to the purchase of Emo-Farm.
    (c) Includes results from discontinued operations.




                                                        Three months ended
    GSK Collaboration - Retagibine                         June 30, 2009
                                                           -------------

    Valeant SG&A                                                  $56
    Valeant R&D                                                 5,477
                                                                -----
                                                                5,533
    GSK incurred cost                                           7,976
                                                                -----
                                                              $13,509
                                                              =======
    Equalization (difference between individual partner
     costs and 50% of total)                                  $(1,222)
                                                              =======




                                      Three months ended June 30, 2009
                                  ------------------------------------------
                                                   Alliance
                                  Balance sheet    revenue     SG&A     R&D
                                  -------------   ----------  ------   -----
    Accounting impact

    Upfront payment from GSK          $125,000           $-      $-      $-
    Release from upfront payment
     in prior quarters                 (20,926)           -       -       -
    Incurred cost in current
     quarter                                 -            -      56   5,477
    Release from upfront payment
     in current quarter                 (9,555)      (2,800)   (295) (6,460)
                                        ------
    Remaining upfront payment
     from GSK                          $94,519            -       -       -
                                       =======

    Equalization payable to GSK        $(1,222)           -     239     983
                                       =======          ---     ---     ---
                                                    $(2,800)     $-      $-
                                                    =======      ==      ==



    Valeant Pharmaceuticals International                   Supplemental Table
    Reconciliation of Product Sales Excluding Acquisitions, Divestitures, Estimated Wholesaler Inventory Reductions, and Currency Impact
    For the Three Months Ended June 30, 2009 and 2008
    (In thousands)

                                  Three Months Ended June 30, 2009
                           ---------------------------------------------------
                                                                     2009
                                          2009                    excluding
                                        acquisition      2009      currency &
                              2009      impact at       currency  acquisition
                           as reported  2009 rates       impact     impact
                          -----------  ------------    ---------- ------------
    Specialty
     pharmaceuticals
    U.S.                     71,327        $(9,266)          $-      $62,061
    Canada                   15,831              -        2,456       18,287
    Australia                 9,475         (2,253)       1,746        8,968
                              -----         ------        -----        -----
                             96,633        (11,519)       4,202       89,316
    Divested business             -              -            -            -
                                ---            ---          ---          ---
      Specialty
       pharmaceuticals
       product sales         96,633        (11,519)       4,202       89,316

    Branded generics -
     Latin America product
     sales                   36,200              -        9,338       45,538
    Branded generics -
     Europe product sales    34,032         (2,297)      13,947       45,682
                             ------         ------       ------       ------


    Total product sales    $166,865       $(13,816)     $27,487     $180,536
                           ========       ========      =======     ========



                             Three Months Ended June 30, 2008
                  ------------------------------------------------------------
                                                                     Q2
                                                                 2009 growth
                                                                 at constant
                                                                  currency,
                                                                    net of
                                                                 acquisitions,
                                                        2008         2008
                                            2008      excluding  divestitures,
                                          estimated  divestiture & estimated
                    2008                  wholesaler      &        wholesaler
                     as        2008       inventory   wholesaler   inventory
                  reported divestitures  reductions    impact     reductions
                  -------- ------------  ----------- ----------- -------------
    Specialty
     pharmaceuticals
    U.S.          $40,796         $-      $15,000      $55,796
    Canada         13,911          -        2,000       15,911
    Australia       7,426          -            -        7,426
                    -----        ---          ---        -----
                   62,133          -       17,000       79,133         13%
    Divested
     business       2,280     (2,280)           -            -
                    -----     ------          ---          ---
      Specialty
       pharmaceuticals
       product
       sales       64,413     (2,280)      17,000       79,133

    Branded
     generics
     -Latin
      America
     product
     sales         35,838          -        3,000       38,838         17%
    Branded
     generics
     -Europe
     product
     sales         38,500          -            -       38,500         19%
                   ------        ---          ---       ------


    Total
     product
     sales       $138,751    $(2,280)     $20,000     $156,471         15%
                 ========    =======      =======     ========

    See footnote (a) to Table 2.

(Logo: http://www.newscom.com/cgi-bin/prnh/20081125/VALEANTLOGO)


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