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Valeant Pharmaceuticals Reports 2011 Fourth Quarter Financial Results
Date:2/27/2012

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

Fourth Quarter 2011

  • 2011 Fourth Quarter Total Revenue $688.5 million; an increase of 34% over the prior year
  • Pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 10%
  • 2011 Fourth Quarter GAAP EPS $0.18; Cash EPS $0.94
  • 2011 Fourth Quarter GAAP Operating Cash Flow $190 million; Adjusted Operating Cash Flow $253 million  

  • Full Year 2011

  • Total 2011 revenue was $2.46 billion
  • Total 2011 pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 9%
  • Total 2011 GAAP EPS $0.49; Cash EPS $2.93
  • Total 2011 GAAP Operating Cash Flow $676 million; Adjusted Operating Cash Flow $925 million

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Conference Call and Webcast InformationThe Company will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. ET (7:00 a.m. PT), February 27, 2012 to discuss its fourth quarter financial results for 2011. The dial-in number to participate on this call is (877) 876-8393, confirmation code 49361027. International callers should dial (973) 200-3961, confirmation code 49361027. A replay will be available approximately two hours following the conclusion of the conference call through March 5, 2012 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 49361027. The live webcast of the conference call may be accessed through the investor relations section of the Company's corporate website at www.valeant.com.

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

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

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

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

    Contact Information:
    Laurie W. Little
    949-461-6002
    laurie.little@valeant.com(Logo:  http://photos.prnewswire.com/prnh/20101025/LA87217LOGO)

    Financial Tables follow.Valeant Pharmaceuticals International, Inc. Table 1 Condensed Consolidated Statement of IncomeFor the Three and Twelve Months Ended December 31, 2011 and 2010Three Months EndedTwelve Months EndedDecember 31,December 31,(In thousands, except per share data)

    20112010(a)

    % Change20112010(a)

    % ChangeProduct sales

    $
    54,171$
    488,72134%$
    2,255,050$
    ,133,371NMAlliance and royalty

    25,60019,96328%172,47335,109NMService and other

    8,6825,88048%35,92712,757NMTotal revenues

    688,453514,56434%2,463,4501,181,237NMCost of goods sold (exclusive amortization of intangible assets shown separately below)

    181,983210,648-14%683,750395,595NMCost of services

    2,6282,944-11%12,31110,155NMCost of alliances

    36-30,771-NMSelling, general and administrative ("SG&A")

    148,508127,75216%572,472276,546NMResearch and development

    16,77718,324-8%65,68768,311NMContingent consideration fair value adjustments

    (20,028)-(10,986)-NMAcquired in-process research and development

    105,20028,000276%109,20089,245NMLegal settlements

    9,44114,110-33%11,84152,610NMRestructuring and acquisition-related costs

    56,71844,07829%130,631179,102NMAmortization of intangible assets

    192,798117,66064%557,814219,758NM694,061563,51623%2,163,4911,291,322Operating income (loss)

    (5,608)(48,952)-89%299,959(110,085)Interest expense, net

    (94,055)(52,564)79%(330,442)(88,787)Loss on extinguishment of debt

    (3,519)(32,413)-89%(36,844)(32,413)Gain (loss) on investments, net

    (11)-22,776(5,552)Other income (expense), net including translation and exchange

    26,487229NM26,551574Income (loss) before (recovery) provision for income taxes

    (76,706)(133,700)-43%(18,000)(236,263)Recovery of income taxes

    (132,561)(102,570)29%(177,559)(28,070)Net income (loss)

    $
    55,855$
    (31,130)$
    59,559$
    (208,193)Earnings per share:Basic:Net income (loss)

    $
    .18$
    (0.10)$
    .52$
    (1.06)Shares used in per share computation

    308,706302,005304,655195,808Diluted:Net income (loss)

    $
    .18$
    (0.10)$
    .49$
    (1.06)Shares used in per share computation

    317,390302,005326,119195,808(a) Prior year amounts have been modified to conform to the 2011 disclosure.Valeant Pharmaceuticals International, Inc. Table 2 Reconciliation of GAAP EPS to Adjusted Non-GAAP (Cash) EPS For the Three and Twelve Months Ended December 31, 2011 and 2010Three Months EndedTwelve Months EndedDecember 31,December 31,(In thousands, except per share data)20112010 (a)20112010(a)Net income (loss)$
    55,855$
    (31,130)$
    59,559$
    (208,193)Non-GAAP adjustments
    (b)(c):Inventory step-up (d)10,31753,26659,25653,266Alliance product assets & pp&e step-up (e)214-19,692-Stock-based compensation step-up (f)12,93617,04063,49217,040Contingent consideration fair value adjustment(20,028)-(10,986)-Restructuring, integration and acquisition-related costs (g)56,71844,078130,631179,102Acquired in-process research and development (IPR&D)105,20028,000109,20089,245Legal settlements9,44114,11011,84152,610Amortization and other non-cash charges198,080122,729569,977232,954372,878279,223953,103624,217Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest8,0693,62427,10321,472Loss on extinguishment of debt 3,51932,41336,84432,413(Gain) loss on assets held for sale/impairment, net3,199-3,199-(Gain) loss on investments, net--(1,769)5,552Tax(145,861)(118,870)(222,959)(54,370)Total adjustments241,804196,390795,521629,284Adjusted income$
    297,659$
    5,260$
    955,080$
    421,091GAAP earnings  per share - diluted$
    .18$
    (0.10)$
    .49$
    (1.06)Adjusted Non-GAAP (Cash) earnings per share - diluted$
    .94$
    .50$
    2.93$
    2.05Shares used in diluted per share calculation - Adjusted Non-GAAP (Cash) earnings per share317,390330,452326,119205,529(a) Prior year non-GAAP adjustments have been modified to conform to the 2011 disclosure.(b) To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration and acquisition-related costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP.   Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.(c) This table includes Adjusted Non-GAAP (Cash) Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding amortization of inventory step-up, alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration and acquisition-related costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, (gain) loss on investments, net, and adjusts tax expense to cash taxes. (d) ASC 805, accounting for business combinations requires an inventory fair value step-up. The impact of the amortization of this step-up is included in cost of goods sold. For the three and twelve months ended December 31, 2011 the total impact is $10.3 million and $59.3 million, respectively. For the three and twelve months ended December 31, 2011 a total of  $0.0 million and $27.3 million related to the merger with Valeant Pharmaceutical International, $0.7 million and $1.2 million related to the acquisition of Ganehill Pty Limited on April 4, 2011, $0.0 million and $18.8 million related to the acquisition of PharmaSwiss SA on March 10, 2011, $2.9 million and $5.3 million related to the acquisition of Sanitas on August 19th, 2011, $2.1 million and $2.1 million related to acquisition of Afexa on October 17th, 2011, $0.7 million and $0.7 million related to acquisition of Ortho Dermatologics on December 12th, 2011, $2.8 million and $2.8 million related to the acquisition of Dermik on December 16th, 2011, and  $1.1 million and $1.1 million related to acquisition of iNova on December 21st, 2011, respectively.(e) Alliance product assets & pp&e step-up represents the step up to fair market value from Legacy Valeant's original cost resulting from the merger of Legacy Valeant into Legacy Biovail. The impact of the amortization of this step-up is included in cost of alliance and royalty & SG&A. For the three and twelve months ended December 31, 2011 the total impact is $0.2 million and $19.7 million, respectively. (f) Total stock-based compensation for the three and twelve months ended December 31, 2011 was $20.6 million and $93.0 million, of which $12.9 million and $63.5 million reflect the amortization of the fair value step-up increment resulting from the merger, respectively.(g) Restructuring, integration and acquisition-related costs for the three and twelve months ended December 31, 2011 represent costs related to the merger of Legacy Valeant and Legacy Biovail, the acquisitions of PharmaSwiss SA, Sanitas, Afexa, Ortho Dermatologics, Dermik and iNova. These include $5.9 million and $23.9 million related to facility related costs, $7.8 million and $24.7 million related to contract cancellation fees, consulting, legal and other, $15.0 million and $29.3 million related to employee severance costs, $0.5 million and $3.4 million related to increases in deferred stock unit values related to directors retired as a result of the merger between Legacy Valeant and Legacy Biovail, $20.1 million and $33.0 million related to acquisition costs, $2.8 million and $7.2 million related to manufacturing integration, $1.6 million and $1.6 million related to co-promote expenses and $3.0 million and $7.5 million related to wind down costs, respectively.Valeant Pharmaceuticals International, Inc. Table 2 (a) Reconciliation of Non-GAAP AdjustmentsFor the Three Months Ended December 31, 2011 and 2010Three Months EndedDecember 31, 2011Inventory step-upAlliance product assets & pp&e step-upStock-based compensation step-upContingent consideration fair value adjustmentRestructuring, integration and acquisition-related costsAcquired in-process research and development (IPR&D)Legal settlementsAmortization and other non-cash chargesAmortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interestLoss on extinguishment of debt Gain (loss) on assets held for sale/impairment, netTaxProduct Sales

    - -- -- -- -- -- -- -268- -- -- -- -Cost of goods sold (exclusive amortization of intangible assets shown separately below)

    10,3175788- -- -- -- -5,014- -- -2,797- -Selling, general and administrative ("SG&A")

    - -15712,723- -- -- -- -- -- -- -402- -Research and development

    - -- -125- -- -- -- -- -- -- -- -- -Acquired in-process research and development

    - -- -- -- -- -105,200- -- -- -- -- -- -Legal settlements

    - -- -- -- -- -- -9,441- -- -- -- -- -Contingent consideration fair value adjustments

    - -- -- -(20,028)- -- -- -- -- -- -- -- -Restructuring and acquisition-related costs

    - -- -- -- -56,718- -- -- -- -- -- -- -Amortization of intangible assets

    - -- -- -- -- -- -- -192,798- -- -- -- -Interest expense, net

    - -- -- -- -- -- -- -- -8,069- -- -- -Loss on extinguishment of debt

    - -- -- -- -- -- -- -- -- -3,519- -- -Tax

    - -- -- -- -- -- -- -- -- -- -- -(145,861)Total Adjustments$
    ,317$
    214$
    2,936$
    (20,028)$
    56,718$
    5,200$
    9,441$
    98,080$
    8,069$
    3,519$
    3,199$
    (145,861)Three Months EndedDecember 31, 2010Inventory step-upStock-based compensation step-upRestructuring, integration and acquisition-related costsAcquired in-process research and development (IPR&D)Legal settlementsAmortization and other non-cash chargesAmortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interestLoss on extinguishment of debt TaxProduct Sales

    - -- -- -- -- -268- -- -- -Cost of goods sold (exclusive amortization of intangible assets shown separately below)

    53,266- -- -- -- -7,125- -- -- -Selling, general and administrative ("SG&A")

    - -17,040- -- -- -(2,586)- -- -- -Acquired in-process research and development

    - -- -- -28,000- -- -- -- -- -Legal settlements

    - -- -- -- -14,110- -- -- -- -Restructuring and acquisition-related costs

    - -- -44,078- -- -- -- -- -- -Amortization of intangible assets

    - -- -- -- -- -117,660- -- -- -Interest expense, net

    - -- -- -- -- -- -3,624- -- -Loss on extinguishment of debt

    - -- -- -- -- -- -- -32,413- -Tax

    - -- -- -- -- -262- -- -(118,870)Total Adjustments$
    53,266$
    7,040$
    44,078$
    28,000$
    4,110$
    22,729$
    3,624$
    32,413$
    (118,870)Valeant Pharmaceuticals International, Inc. Table 2 (b) Reconciliation of Non-GAAP AdjustmentsFor the Twelve Months Ended December 31, 2011 and 2010Twelve Months EndedDecember 31, 2011Inventory step-upAlliance product assets & pp&e step-upStock-based compensation step-upContingent consideration fair value adjustmentRestructuring, integration and acquisition-related costsAcquired in-process research and development (IPR&D)Legal settlementsAmortization and other non-cash chargesAmortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interestLoss on extinguishment of debt Gain (loss) on assets held for sale/impairment, netGain (loss) on investments, netTaxProduct Sales

    - -- -- -- -- -- -- -1,072- -- -- -- -- -Cost of goods sold (exclusive amortization of intangible assets shown separately below)

    59,256426617- -- -- -- -11,091- -- -2,797- -- -Cost of alliances

    - -18,837- -- -- -- -- -- -- -- -- -- -- -Selling, general and administrative ("SG&A")

    - -42962,124- -- -- -- -- -- -- -402- -- -Research and development

    - -- -751- -- -- -- -- -- -- -- -- -- -Contingent consideration fair value adjustments

    - -- -- -(10,986)- -- -- -- -- -- -- -- -- -Acquired in-process research and development

    - -- -- -- -- -109,200- -- -- -- -- -- -- -Legal settlements

    - -- -- -- -- -- -11,841- -- -- -- -- -- -Restructuring and acquisition-related costs

    - -- -- -- -130,631- -- -- -- -- -- -- -- -Amortization of intangible assets

    - -- -- -- -- -- -- -557,814- -- -- -- -- -Interest expense, net

    - -- -- -- -- -- -- -- -27,103- -- -- -- -Loss on extinguishment of debt

    - -- -- -- -- -- -- -- -- -36,844- -- -- -Gain (loss) on investments, net

    - -- -- -- -- -- -- -- -- -- -- -(1,769)- -Tax

    - -- -- -- -- -- -- -- -- -- -- -- -(222,959)Total Adjustments$
    59,256$
    9,692$
    3,492$
    (10,986)$
    30,631$
    9,200$
    ,841$
    569,977$
    27,103$
    36,844$
    3,199$
    (1,769)$
    (222,959)Twelve Months EndedDecember 31, 2010Inventory step-upStock-based compensation step-upRestructuring, integration and acquisition-related costsAcquired in-process research and development (IPR&D)Legal settlementsAmortization and other non-cash chargesAmortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interestLoss on extinguishment of debt Gain (loss) on investments, netTaxProduct Sales

    - -- -- -- -- -1,072- -- -- -- -Cost of goods sold (exclusive amortization of intangible assets shown separately below)

    53,266- -- -- -- -13,660- -- -- -- -Selling, general and administrative ("SG&A")

    - -17,040- -- -- -(2,586)- -- -- -- -Legal settlements

    - -- -- -- -52,610- -- -- -- -- -Restructuring and acquisition-related costs

    - -- -179,102- -- -- -- -- -- -- -Acquired in-process research and development

    - -- -- -89,245- -- -- -- -- -- -Amortization of intangible assets

    - -- -- -- -- -219,758- -- -- -- -Interest expense, net

    - -- -- -- -- -- -21,472- -- -- -Loss on extinguishment of debt

    - -- -- -- -- -- -- -32,413- -- -Gain (loss) on investments, net

    - -- -- -- -- -- -- -- -5,552- -Tax

    - -- -- -- -- -1,050- -- -- -(54,370)Total Adjustments$
    53,266$
    7,040$
    79,102$
    89,245$
    52,610$
    232,954$
    21,472$
    32,413$
    5,552$
    (54,370)Valeant Pharmaceuticals International, Inc. Table 3 Statement of Revenue - by SegmentFor the Three and Twelve Months Ended December 31, 2011 and 2010(In thousands) Three Months Ended December 31,Revenue
    (a)(b)

    2011
    GAAP2010
    GAAP% Change (c)2011 currency impact2011 excluding currency impact non-GAAP% Change 
    (c)  U.S. Neurology & Other$
    202,899$
    212,899-5%$
    -$
    202,899-5%  U.S. Dermatology 174,096103,89668%(17)174,07968%  Total U.S.

    376,995316,79519%(17)376,97819%Canada/Australia 101,35280,42226%1,033102,38527%Specialty Pharmaceuticals

    478,347397,21720%1,016479,36321%Branded Generics - Europe 144,33548,310199%9,192153,527218%Branded Generics -
    Latin America65,77169,037-5%5,49171,2623%Branded Generics

    210,106117,34779%14,683224,78992%Total Revenue

    $
    88,453$
    514,56434%$
    5,699$
    704,15237%Twelve Months EndedDecember 31,Revenue
    (a)(b)

    2011
    GAAP2010
    GAAP% Change (c)2011 currency impact2011 excluding currency impact non-GAAP% Change (c)  U.S. Neurology & Other$
    829,289$
    58,31226%$
    -$
    829,28926%  U.S. Dermatology 568,298219,008159%(371)567,927159%  Total U.S.

    1,397,587877,32059%(371)1,397,21659%Canada/Australia340,240161,568111%(17,828)322,412100%Specialty Pharmaceuticals

    1,737,8271,038,88867%(18,199)1,719,62866%Branded generics - Europe 470,78373,312542%(12,220)458,563525%Branded generics -
    Latin America 254,84069,037269%(5,823)249,017261%Branded Generics

    725,623142,349410%(18,043)707,580397%Total Revenue

    $
    2,463,450$
    ,181,237109%$
    (36,242)$
    2,427,208105%(a) Note: Currency effect for constant currency sales is determined by comparing 2011 reported amounts adjusted to exclude currency impact, calculated using 2010 monthly average exchange rates, to the actual 2010 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies. (b) See footnote (b) to Table 2.(c) The % change reflects revenue for the combined company for the three months ended December 31, 2011 as compared to the combined company for the three months ended December 31, 2010.  The % change for the twelve months ended December 31, 2011 is as compared to Legacy Biovail only for nine months ended September 30, 2010 and combined company for three months ended December 31, 2010.Valeant Pharmaceuticals International, Inc.Table 4Reconciliation of GAAP Statement of Cost of Goods Sold to Non-GAAP Statement Cost of Goods Sold - by SegmentFor the Three and Twelve Months Ended December 31, 2011(In thousands) Three Months Ended 4.1Cost of goods sold
    (a)

    December 31,2011
    as reported
    GAAP% of  product sales2011
    fair value step-up adjustment to inventory and Other non-GAAP (b)2011 excluding fair value step-up adjustment to inventory and Other non-GAAP%of product salesU.S. Neurology & Other$
    34,93718%$
    2,025$
    32,91217%U.S. Dermatology

    18,88212%1,72117,16111%Canada/Australia

    32,07032%8,50623,56423%Branded Generics - Europe

    68,90049%2,95265,94847%Branded Generics - 
    Latin America

    27,08541%2,98124,10437%Corporate

    1098821$
    81,98328%$
    8,273$
    3,71025% Twelve Months Ended December 31,2011
    as reported
    GAAP% of product sales2011
    fair value step-up adjustment to inventory and Other non-GAAP (b)2011 excluding fair value step-up adjustment to inventory and Other non-GAAP% of product salesU.S. Neurology & Other

    $
    48,12819%$
    7,550$
    30,57817%U.S. Dermatology

    74,17917%9,41864,76115%Canada/Australia

    106,60931%12,14194,46828%Branded Generics - Europe

    245,45352%26,525218,92848%Branded Generics -
    Latin America

    108,27142%7,936100,33539%Corporate

    1,110617493$
    83,75030%$
    74,187$
    9,56327%(a) See footnote (b) to Table 2.(b) For the three and twelve months ended December 31, 2011 U.S. Neurology and Other and U.S. Dermatology include $0.0 million and $9.4 million and $1.7 million and $9.4 million of fair value step-up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, U.S. Neurology and Other includes $2.0 million and $8.1 million of amortization.  For the three and twelve months ended December 31, 2011 Canada/Australia includes $5.7 million and $9.6 million of fair value step up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, Canada/Australia includes $2.8 million and $2.5 million of accelerated depreciation and PP&E step-up. For the three and twelve months ended December 31, 2011 Branded Generics-Latin America includes $0.0 million and $5.0 million of fair value step up adjustment to inventory, respectively and in the three and twelve months ended December 31, 2011, Branded Generics-Latin America includes $2.9 million and $2.9 million of inventory write-offs. For the three and twelve months ended December 31, 2011 Corporate includes $0.0 million and $0.6 million of stock base compensation step up.Valeant Pharmaceuticals International, Inc.Table 5Consolidated  Balance Sheet and Other Data(In thousands)As ofAs ofDecember 31,December 31,5.1Cash20112010Cash and cash equivalents

    $
    4,111$
    394,269Marketable securities

    6,3386,083Total cash and marketable securities

    $
    70,449$
    400,352DebtRevolving credit facility

    $
    220,000$
    -New Term loan A facility, net of unamortized debt discount of $39,480

    2,185,520-Term loan A facility

    -975,000Senior notes

    4,228,4802,185,822Convertible notes

    17,011417,555Other

    -16,9006,651,0113,595,277Less: Current portion

    (111,250)(116,900)$
    ,539,761$
    3,478,3775.2Summary of Cash Flow StatementThree Months EndedDecember 31,20112010Cash flow provided by (used in):Net cash provided by (used in) operating activities (GAAP)

    $
    89,780$
    (1,399)Restructuring and acquisition-related costs

    56,71844,078Payment of accrued legal settlements

    9,44138,500Effect of ASC 470-20 (FSP APB 14-1)

    1,3904,934Tax Benefit from Stock Options Exercised (a)

    (7,125)-Working Capital changes from Ortho and Dermik

    21,434-Changes in working capital related to restructuring and acquisition-related costs

    (18,510)122,939Adjusted cash flow from operations (Non-GAAP) (b)

    $
    253,128$
    209,052(a) Includes stock option tax benefit which will reduce taxes in future periods.(b) See footnote (b) to Table 2.Valeant Pharmaceuticals InternationalProforma Organic Growth - by SegmentFor the Three and Twelve Months Ended December 31, 2011(In thousands) Three Month Ending December 31,(a) (b) (a) (c) (d)(e)December 2011December 2010 Total Proforma Acquisitions Total Proforma QTD 2010 Divestitures/ Discontinuations % ChangeDecember 2011 currency impactDecember 2011 excluding currency impact% Change   U.S. Dermatology $
    51,360$
    90,330$
    20,083$
    8,715$
    ,69839%$
    -$
    51,36039%   U.S. Neurology & Other (d)195,879201,470-201,470--3%-195,879-3%Total U.S.

    347,239291,80020,083310,1851,69812%-347,23912%Canada/Australia100,01779,5738,31287,885-14%271100,28814%Specialty Pharmaceuticals

    447,256371,37328,395398,0701,69812%271447,52712%Branded generics -
     Latin America65,77169,038-69,038--5%5,49271,2633%Branded generics - Europe141,14448,31091,329139,639-1%8,695149,8397%Branded Generics

    206,915117,34891,329208,677--1%14,187221,1026%Total product sales$
    54,171$
    488,721$
    9,724$
    ,747$
    ,6988%$
    4,458$
    8,62910%Add:  JV Revenue (f)

    1,048177-177--1,048Total$
    55,219$
    488,898$
    9,724$
    ,924$
    ,6988%$
    4,458$
    9,67710% Twelve Months Ended December 31,(a) (b) (a) (c) (d)(e)December 2011December 2010 Total Proforma Acquisitions Total Proforma YTD 2010Divestitures/Discontinuations % ChangeDecember 2011 currency impactDecember 2011 excluding currency impact% Change   U.S. Dermatology $
    437,663$
    306,664$
    35,614$
    336,923$
    5,35532%$
    -$
    437,66332%   U.S. Neurology & Other (d)767,222780,68120,625801,306--4%-767,222-4%Total U.S.

    1,204,8851,087,34556,2391,138,2295,3556%-1,204,8856%Canada/Australia334,794268,03313,346281,379-19%(17,606)317,18813%Specialty Pharmaceuticals

    1,539,6791,355,37869,5851,419,6085,3559%(17,606)1,522,0738%Branded generics -
    Latin America254,840214,4066,471220,877-15%(5,822)249,01813%Branded generics - Europe460,531198,138209,260407,398-13%(11,588)448,94310%Branded Generics

    715,371412,544215,731628,275-14%(17,410)697,96111%Total product sales$
    2,255,050$
    ,767,922$
    285,316$
    2,047,883$
    5,35510%$
    (35,016)$
    2,220,0349%Add:  JV Revenue (f)

    3,361659-659--3,361Total$
    2,258,411$
    ,768,581$
    285,316$
    2,048,542$
    5,35511%$
    (35,016)$
    2,223,3959%(a) See footnote (b) to Table 2.(b)  Includes all acquisitions.(c) Total Q4 revenue of $514.6 million also includes $5.5 million and $20.4 million of Service, Alliance and Royalty revenue recorded by Legacy Biovail and Legacy Valeant, respectively.  Combined YTD proforma revenue includes Legacy Biovail and Legacy Valeant product sales of $879.2 million and $888.7 million, respectively.  Total proforma revenue of $1,928.3 million also includes $27.6 million and $132.8 million of Service, Alliance and Royalty revenue recorded by Legacy Biovail and Legacy Valeant, respectively.(d)  Includes proforma historical revenue for acquisitions with a purchase price > $20 million.(e) See footnote (a) to Table 3.(f) Represents Valeant's attributable portion of revenue from joint ventures (JV) not included in Consolidated Valeant revenues.
    '/>"/>

    SOURCE Valeant Pharmaceuticals International, Inc.
    Copyright©2010 PR Newswire.
    All rights reserved


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