Valeant Pharmaceuticals International 8-K Valeant Pharmaceuticals Reports Fourth Quarter and Year-end 2003 Results

EXHIBIT 99.1

Contact: Jeff Misakian, Valeant Pharmaceuticals
714-545-0100 ext. 3309

VALEANT PHARMACEUTICALS REPORTS
FOURTH QUARTER AND YEAR-END 2003 RESULTS

— Product Sales in Fourth Quarter Up 26 Percent Over Previous Year –

     COSTA MESA, Calif., March 4, 2004 – Valeant Pharmaceuticals (NYSE: VRX) today reported fourth quarter revenues of $176.2 million, compared with revenues of $199.6 million in the same period last year. Specialty pharmaceutical product sales were $145.5 million in the 2003 fourth quarter, a 26 percent increase over the $115.7 million in product sales in the same period last year.

     Valeant reported a net loss in the 2003 fourth quarter of $1.8 million, or $0.02 per diluted share. Income from continuing operations in the 2003 fourth quarter was $2.9 million, or $0.03 per diluted share. Included in the fourth quarter 2003 results is an after-tax loss of $7.9 million on the early extinguishment of $140 million in principal amount of the company’s 6 1/2 percent convertible subordinated notes. Excluding the loss on extinguishment of debt, income from continuing operations in the 2003 fourth quarter was $10.8 million, or $0.13 per diluted share.

     In the 2002 fourth quarter, the company reported a net loss of $100.7 million, or $1.20 per diluted share, and a loss from continuing operations of $13.1 million, or $0.16 per diluted share. Excluding the effect of non-recurring and unusual items that are primarily related to the company’s past restructuring activities, income from continuing operations in the 2002 fourth quarter was $9.7 million, or $0.12 per diluted share.

     A reconciliation of GAAP results to those excluding non-recurring and unusual items is provided in Table 2.

     Robert W. O’Leary, Valeant’s chairman and chief executive officer, commented, “We finished 2003 on a strong note, capping a year of significant accomplishments with fourth quarter results that reflect the steady and measured progress we have made in building our specialty pharmaceuticals business. This progress was demonstrated by our strong sales performance, lower expense ratios and expanded operating margins. As per our plan, we have made strategic investments in our operations in the fourth

quarter, particularly in manufacturing and research and development. Valeant expects to continue these investments in 2004 as we build a platform for accelerated growth in future years.”

     The stronger product sales reflect improvement in nearly all regions, with North America showing the most significant year-over-year improvement. Worldwide sales were aided by a net favorable impact from foreign currency translation, which added $6.6 million to sales. The increased product sales were offset by a 63 percent decline in royalty revenue to $30.7 million in the 2003 fourth quarter. The decline in royalty revenue was anticipated and reflects a decrease in sales of Rebetol® by Schering-Plough in the quarter. Ribavirin is also marketed by F. Hoffmann-La Roche under the brand name Copegus®.

     North American product sales in the fourth quarter of 2003 increased 138 percent to $28.2 million, compared to the same period in the prior year. The improvement in North America was due to increased sales of Efudex®, Kinerase®, Oxsoralen® and Mestinon®. Last year’s sales were impacted by the company’s wholesale inventory reduction measures, which were completed in early 2003.

     European product sales in the 2003 fourth quarter increased 22 percent to $62.6 million, compared to the same period in the prior year. Results in Europe were driven by an increase in sales of Mestinon and Calcitonin®, along with a growing contribution from Dermatix®, which was introduced by the company earlier in the year. In addition, European product sales were favorably impacted by foreign currency translation.

     Sales in Latin America were essentially flat, at $41.2 million in the fourth quarter of 2003, compared to the same period in the prior year, and reflect a negative impact from foreign currency, partially offset by higher sales volumes and price increases. Sales in the AAA region increased 22 percent to $13.4 million in the 2003 fourth quarter, reflecting increased sales of Mestinon and Nyal®.

     Gross margin increased to 63 percent in the 2003 fourth quarter versus 62 percent in the same period in the prior year. The improved gross margin primarily reflects a favorable mix of higher-margin products and the increase in sales from North America and Europe. These gains were partially offset by implementation of the company’s previously announced manufacturing and supply chain initiative, which includes the impact of severance costs and accelerated depreciation.

     Selling expenses in the 2003 fourth quarter increased four percent compared to the same period last year, while product sales increased 26 percent. General and administrative expenses were down 29 percent, primarily due to reduced legal costs. As a percent of product sales, selling, general and administrative expenses declined to 51 percent in the fourth quarter.

     Research and development costs in the 2003 fourth quarter increased 11 percent over last year to $15.6 million, primarily due to the initiation of Phase 3 trials for Viramidine. Amortization expense in the 2003 fourth quarter was $12.8 million, an increase of 73 percent over the same period last year, primarily due to the amortization of intangible assets recorded in connection with the company’s repurchase of Ribapharm.

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     Valeant restructured its debt obligations in the fourth quarter, issuing $780 million in debt through a series of three private offerings. Total debt at December 31, 2003 was $1.1 billion, compared with $482 million at December 31, 2002. Cash increased to $872 million at December 31, 2003, compared to $245 million at December 31, 2002, primarily as a result of the debt offerings.

     In conjunction with the note offerings, Valeant repurchased $140 million of its 6 1/2 percent convertible subordinated notes, resulting in a pre-tax loss on extinguishment of $12.8 million ($7.9 million after taxes). The company intends to repurchase the remaining $326 million in 6 1/2 percent convertible notes on or prior to the first redemption date in July 2004.

     Other income in the 2003 fourth quarter increased to $4.2 million principally due to currency translation gains on dollar denominated net assets at the company’s foreign subsidiaries.

     Year-End Results:

     Valeant’s revenues for 2003 were $686.0 million, compared with $737.1 million reported in 2002. Royalty revenues in 2003 declined 38 percent to $167.5 million from the $270.3 million reported in 2002. Product sales in 2003 were $518.5 million, an 11 percent increase over the $466.8 million reported in 2002.

     Valeant reported a net loss for 2003 of $55.6 million, or $0.67 per diluted share. The net loss from continuing operations in 2003 was $65.0 million, or $0.78 per diluted share. The 2003 results include a write-off of the purchase price attributable to in-process research and development related to the Ribapharm acquisition in the 2003 third quarter, as well as the $7.9 million after-tax loss on extinguishment of the 6 1/2 percent convertible notes. Excluding these non-recurring and unusual items, Valeant’s income from continuing operations for 2003 was $60.6 million, or $0.71 per diluted share.

     In 2002, the company reported a net loss of $134.8 million, or $1.61 per diluted share, and income from continuing operations of $84.2 million, or $1.00 per diluted share. In 2002, the company reported non-recurring charges of $240.0 million and a loss of $25.7 million on extinguishment of debt, offset by a $261.9 million one-time gain from the Ribapharm initial public offering. Excluding these non-recurring and unusual items, income from continuing operations for 2002 was $87.2 million, or $1.04 per diluted share.

     Timothy C. Tyson, Valeant’s President and Chief Operating Officer, commented, “We have accomplished much in remaking our company this past year and have set the company on the right strategic course for the future. We focused on our global brands and are pleased to report that sales of these products in 2003 increased 27 percent to $117.8 million compared to $92.5 million in 2002. As we look into 2004, we expect to follow our previously announced accelerated investments in research and development and manufacturing. We expect that these actions will have a proportionally greater impact to earnings in the early quarters in 2004. We are focused on strengthening our position as a global, fully integrated specialty pharmaceutical business that delivers

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long-term value for shareholders. We continue to expect to achieve our targets for 2008 and manage within our metric guidance for 2004.”

     About Valeant

     Valeant Pharmaceuticals International (NYSE: VRX) is a global, publicly traded, research-based specialty pharmaceutical company that discovers, develops, manufactures and markets a broad range of pharmaceutical products. More information about Valeant can be found at www.valeant.com.

     FORWARD-LOOKING STATEMENTS

     This press release contains forward looking statements that involve risk and uncertainty, including, but not limited to, projections of future sales, royalty income, operating income, returns on invested assets, regulatory approval processes, competition from generic products, marketplace acceptance of the company’s products, success of the company’s strategic repositioning initiatives and the ability of management to execute them, cost-cutting measures, success of the company’s strategic plan and the ability to achieve financial targets and cost reduction goals, and other risks detailed from time to time in Valeant’s SEC filings. These statements are based on management’s current expectations and involve risks and uncertainties which include, Valeant’s ability to retain key employees, reduce costs, general economic factors and business and capital market conditions, general industry trends and changes in tax law requirements and government regulation. Valeant wishes to caution the reader that these factors, as well as other factors described in Valeant’s SEC filings, are among the factors that could cause actual results to differ materially from the expectations described in the forward looking statements.

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Valeant Pharmaceuticals International	Table 1
Consolidated Condensed Statement of Income
for the three and twelve months ended December 31, 2003 and 2002

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
In thousands, except per share data	2003			2002			% Change			2003			2002			% Change
Product sales	$	145,515		$	115,709			26	%	$	518,471		$	466,809			11	%
Royalties		30,727			83,897			-63	%		167,482			270,265			-38	%
Total revenues		176,242			199,606			-12	%		685,953			737,074			-7	%
Cost of goods sold		54,472			43,653			25	%		184,669			157,013			18	%
Selling expenses		46,861			44,983			4	%		166,707			164,103			2	%
General and administrative expenses		26,771			37,725			-29	%		111,532			126,565			-12	%
Research and development costs		15,585			14,005			11	%		45,286			49,531			-9	%
Acquired in-process research and development (1)		—			—			—			117,609			—			—
Non-recurring & other unusual items (2)		—			35,007			—			—			239,965			—
Amortization expense		12,772			7,387			73	%		38,577			30,661			26	%
		156,461			182,760			-14	%		664,380			767,838			-13	%
Income (loss) from operations		19,781			16,846			17	%		21,573			(30,764	)		—
Interest, net		(6,431	)		(7,265	)					(27,257	)		(37,212	)
Other income (expense), net including translation and exchange		4,231			515						4,727			270,644
Loss on early extinguishment of debt		(12,803	)		—						(12,803	)		(25,730	)
Income (loss) from continuing operations before provision for income taxes and minority interest		4,778			10,096						(13,760	)		176,938
Provision for income taxes		1,816			16,152						39,463			74,963
Minority interest		96			7,060						11,763			17,730
Income (loss) from continuing operations		2,866			(13,116	)					(64,986	)		84,245
Income (loss) from discontinued operations, net		(4,646	)		(87,546	)					9,346			(197,288	)
Cumulative effect of change in accounting principle		—			—						—			(21,791	)
Net loss	$	(1,780	)	$	(100,662	)				$	(55,640	)	$	(134,834	)
Basic earnings per common share
Income (loss) from continued operations	$	0.04		$	(0.16	)				$	(0.78	)	$	1.01
Discontinued operations, net		(0.06	)		(1.04	)					0.11			(2.37	)
Cumulative effect of change in accounting principle		—			—						—			(0.26	)
Net loss	$	(0.02	)	$	(1.20	)				$	(0.67	)	$	(1.62	)
Shares used in per share computation		83,137			83,948						83,602			83,279
Diluted earnings per common share
Income (loss) from continued operations	$	0.03		$	(0.16	)				$	(0.78	)	$	1.00
Discontinued operations, net		(0.05	)		(1.04	)					0.11			(2.35	)
Cumulative effect of change in accounting principle		—			—						—			(0.26	)
Net loss	$	(0.02	)	$	(1.20	)				$	(0.67	)	$	(1.61	)
Shares used in per share computation		85,856			83,948						83,602			83,988

(1)	Expense associated with the write-off of acquired in-process research and development (“IPR&D”) related to the Ribapharm acquistion.
(2)	See Table 2

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Valeant Pharmaceuticals International	Table 2
Reconciliation of earnings per share calculation excluding IPR&D, non-recurring and other items
for the three and twelve months ended December 31, 2003 and 2002

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
In thousands, except per share data	2003			2002			2003			2002
Income (loss) from continuing operations	$	2,866		$	(13,116	)	$	(64,986	)	$	84,245
Excludes:
IPR&D		—						117,609
Non-recurring and other unusual items (1)		—			35,007			—			239,965
Gain on sale of subsidiary stock		—			—			—			(261,937	)
Loss on early extinguishment of debt		12,803			—			12,803			25,730
Tax effect on the non-recurring charges and gain		(4,865	)		(12,168	)		(4,865	)		(814	)
Net income from continuing operations before IPR&D, non- recurring and other items	$	10,804		$	9,723		$	60,561		$	87,189
Diluted EPS from continuing operations before IPR&D, non-recurring and other items	$	0.13		$	0.12		$	0.71		$	1.04
Shares used in per share calculation (2)		85,856			84,083			84,763			83,988
(1) Includes the following charges:
Severance costs				$	23,508					$	54,216
Stock compensation costs related to Employee stock compensation plan					—						61,400
Executive and director bonuses paid in connection with the Ribapham IPO					—						47,839
Transaction fees related to Ribapharm					—						13,000
Incentive compensation costs related to the change of control					—						12,022
Costs incurred in proxy contest					2,468						9,850
Environmental remediation and related expenses					3,086						8,298
Writedown of certain assets					5,945						15,045
International IPO write-off					—						18,295
Non-recurring and other items included in income (loss) from operations (3)				$	35,007					$	239,965
Gain on sale of subsidiary stock	$	—		$	—		$	—		$	(261,937	)
Loss on early extinguishment of debt (4)		12,803			—			12,803			25,730
Non-recurring and other items included in other income, net including translation and exchange	$	12,803		$	—		$	12,803		$	(236,207	)

(2)	The shares used in the diluted EPS from continuing operations before IPR&D, non-recurring and other items includes the dilutive effect of stock options.
(3)	The Company has reclassified $1,578, of non-recurring items that were previously reported in continuing operations to discontinued operations for the three and twelve months ended December 31, 2002 to conform with discontinued operations presentation.
(4)	The Company adopted Statement of Financial Accounting Standards No. 145 (“SFAS No. 145”) in the fourth quarter of 2002, SFAS No. 145 eliminates the exception to record gains and losses related to extinguishment of debt as an extraordinary item.
	Note: The financial results above are adjusted to exclude the effects of IPR&D and non-recurring and other items. The Company’s chief decision makers exclude these items in assessing financial performance, primarily due to their non-operational nature.

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Valeant Pharmaceuticals International	Table 3
Consolidated Condensed Statement of Revenue and Operating Income
for the three and twelve months ended December 31, 2003 and 2002
(in thousands)

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
Revenues	2003			2002			% Change			2003			2002			% Change
North America	$	28,237		$	11,860			138	%	$	99,074		$	90,011			10	%
Latin America		41,206			41,508			-1	%		136,008			135,527			0	%
Europe		62,635			51,293			22	%		232,031			189,925			22	%
AAA		13,437			11,048			22	%		51,358			51,346			0	%
Total pharmaceuticals		145,515			115,709			26	%		518,471			466,809			11	%
Royalty revenues		30,727			83,897			-63	%		167,482			270,265			-38	%
Consolidated revenues	$	176,242		$	199,606			-12	%	$	685,953		$	737,074			-7	%
Cost of goods sold	$	54,472		$	43,653			25	%	$	184,669		$	157,013			18	%
Gross profit margin on product sales		63	%		62	%					64	%		66	%
Operating Income (Loss)
North America	$	11,866		$	(7,129	)		—		$	30,763		$	15,483			99	%
Latin America		14,531			16,093			-10	%		44,750			48,535			-8	%
Europe		4,986			(1,755	)		—			29,808			10,625			181	%
AAA		1,448			(849	)		—			4,857			(760	)		—
Total pharmaceuticals		32,831			6,360			416	%		110,178			73,883			49	%
R&D Division (1)		8,010			58,353			-86	%		(22,458	)		203,981			—
Consolidated segment operating income		40,841			64,713			-37	%		87,720			277,864			-68	%
Corporate expenses		(21,060	)		(47,867	)		-56	%		(66,147	)		(308,628	)		-79	%
Total consolidated operating income (loss)	$	19,781		$	16,846					$	21,573		$	(30,764	)
Reconciliation of consolidated operating income to earnings before interest, taxes, depreciation and amortization (“EBITDA”)
	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
	2003			2002			% Change			2003			2002			% Change
Consolidated operating
income (GAAP)	$	19,781		$	16,846			17	%	$	21,573		$	(30,764	)		—
Depreciation and amortization		20,546			12,968			58	%		64,807			53,919			20	%
EBITDA (non-GAAP) (2)		40,327			29,814			35	%		86,380			23,155			273	%
IPR&D, non-recurring and other items (3)		—			35,007			—			117,609			239,965			-51	%
EBITDA (non-GAAP) excluding IPR&D, non-recurring and other items (2)	$	40,327		$	64,821			-38	%	$	203,989		$	263,120			-22	%

(1)	Includes a charge for IPR&D of $117,609.
(2)	Valeant believes that EBITDA is a meaningful non-GAAP financial measure as an earnings derived indicator that approximates cashflow. EBITDA as defined and presented by the Company may not be comparable to similar measures reported by other companies.
(3)	See Table 2

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Valeant Pharmaceuticals International	Table 4
Top Product Sales
for the twelve months ended December 31, 2003 and 2002

							Increase/
	2003 Actual			2002 Actual			(Decrease)			% Change
Dermatology
Efudix/Efudex (1)	$	26,836		$	23,085		$	3,751			16	%
Kinerase (1)		12,633			10,389			2,244			22	%
Dermatix (1)		2,544			338			2,206			653	%
Oxsoralen-Ultra (1)		8,530			4,585			3,945			86	%
Infectious Disease
Virazole (1)		18,793			17,384			1,409			8	%
Ancotil/Ancobon (1)		6,591			5,490			1,101			20	%
Neurology
Mestinon (1)		41,879			31,228			10,651			34	%
Dalmane/Dalmadorm		10,638			10,753			(115	)		-1	%
Primary Care
Bedoyecta		26,955			29,781			(2,826	)		-9	%
Calcitonin		13,638			9,448			4,190			44	%
Librax		11,773			18,209			(6,436	)		-35	%
Nuclosina		11,404			11,081			323			3	%
Other Products		326,257			295,038			31,219			11	%
Total Product Sales	$	518,471		$	466,809		$	51,662			11	%
											��
Total Global Product Sales (1)	$	117,806		$	92,499		$	25,307			27	%
Global Products as a % of Product Sales (1)		23	%		20	%

(1) Global products represent those products with targeted centralized promotional strategy.

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Valeant Pharmaceuticals International	Table 5
Consolidated Condensed Statement of Gross Profit on Product Sales
for the three and twelve months ended December 31, 2003 and 2002
(in thousands)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2003		2002		2003		2002
North America	$	24,215	$	6,061	$	79,733	$	70,648
Latin America		28,552		30,538		96,780		100,002
Europe		32,234		30,537		131,069		114,670
AAA		6,042		4,920		26,220		24,476
Total pharmaceuticals	$	91,043	$	72,056	$	333,802	$	309,796

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Valeant Pharmaceuticals International	Table 6
Consolidated Balance Sheet Data
as of December 31, 2003 and December 31, 2002
(in thousands)

	December 31,		December 31,
	2003		2002
Cash	$	872,056	$	245,184
Accounts receivable, net		162,402		215,776
Inventory, net		91,906		88,862
Long-term debt		1,120,038		482,256
Total equity		605,368		703,690

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Valeant Pharmaceuticals International	Table 7
Supplemental Non-GAAP Information
(in thousands)

	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2003			2002		2003			2002
Consolidated
Product sales	$	145,515		$	115,709	$	518,471		$	466,809
Currency effect		(6,592	)				(22,105	)
Product sales, excluding currency impact	$	138,923				$	496,366
Operating income (loss)	$	19,781		$	16,846	$	21,573		$	(30,764	)
Currency effect		(20	)				(2,585	)
Operating income, excluding currency impact	$	19,761				$	18,988
Geographic Product Sales
North America pharmaceuticals	$	28,237		$	11,860	$	99,074		$	90,011
Currency effect		(885	)				(2,646	)
North America pharmaceuticals, excluding currency impact	$	27,352				$	96,428
Latin America pharmaceuticals	$	41,206		$	41,508	$	136,008		$	135,527
Currency effect		1,939					11,317
Latin America pharmaceuticals, excluding currency impact	$	43,145				$	147,325
Europe pharmaceuticals	$	62,635		$	51,293	$	232,031		$	189,925
Currency effect		(6,274	)				(26,533	)
Europe pharmaceuticals, excluding currency impact	$	56,361				$	205,498
AAA pharmaceuticals	$	13,437		$	11,048	$	51,358		$	51,346
Currency effect		(1,372	)				(4,243	)
AAA pharmaceuticals, excluding currency impact	$	12,065				$	47,115

Note: Currency effect is determined by comparing adjusted 2003 reported amounts, calculated using 2002 monthly average exchange rates, to the actual 2002 reported amounts. Constant currency sales is not a GAAP defined measure of revenue growth. Constant currency sales as defined and presented by the Company may not be comparable to similar measures reported by other companies.

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