Valeant Pharmaceuticals International 8-K Results of Operations and Financial Condition

Exhibit 99.1

Table 1

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Income
For the Three and Twelve Months Ended December 31, 2007 and 2006

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
(In thousands, except per share data)	2007			2006			% Change			2007			2006			% Change
				(Restated)									(Restated)
Product sales	$	223,274		$	227,661			-2	%	$	785,770		$	781,562			1	%
Alliance revenue (including ribavirin royalties) (a)		16,949			20,548			-18	%		86,452			81,242			6	%
Total revenues		240,223			248,209			-3	%		872,222			862,804			1	%
Cost of goods sold		70,715			64,337			10	%		233,094			238,141			-2	%
Selling expenses		68,842			61,503			12	%		259,324			244,757			6	%
General and administrative expenses		27,704			30,577			-9	%		111,721			114,583			-2	%
Research and development costs		29,413			31,443			-6	%		98,025			105,442			-7	%
Gain on litigation settlement (b)		—			—						—			(51,550	)		-100	%
Restructuring charges		9,601			41,494			-77	%		23,176			138,181			-83	%
Amortization expense		17,290			16,765			3	%		71,567			65,276			10	%
		223,565			246,119			-9	%		796,907			854,830			-7	%
Income from operations		16,658			2,090						75,315			7,974
Interest expense, net		(5,768	)		(7,439	)					(25,086	)		(31,116	)
Other income (expense), net including translation and exchange		(1,496	)		(88	)					1,060			1,152
Income (loss) from continuing operations before income taxes and minority interest		9,394			(5,437	)					51,289			(21,990	)
Provision for income taxes		16,466			10,548						25,233			34,824
Minority interest		—			1						2			3
Income (loss) from continuing operations		(7,072	)		(15,986	)					26,054			(56,817	)
Loss from discontinued operations, net		(13,261	)		(6,848	)					(32,240	)		(751	)
Net loss	$	(20,333	)	$	(22,834	)				$	(6,186	)	$	(57,568	)
Basic earnings per common share
Income (loss) from continuing operations	$	(0.08	)	$	(0.17	)				$	0.28		$	(0.61	)
Discontinued operations, net		(0.14	)		(0.07	)					(0.35	)		(0.01	)
Net loss	$	(0.22	)	$	(0.24	)				$	(0.07	)	$	(0.62	)
Shares used in per share computation		90,459			94,429						93,029			93,387
Diluted earnings per common share
Income (loss) from continuing operations	$	(0.08	)	$	(0.17	)				$	0.28		$	(0.61	)
Discontinued operations, net		(0.14	)		(0.07	)					(0.35	)		(0.01	)
Net loss	$	(0.22	)	$	(0.24	)				$	(0.07	)	$	(0.62	)
Shares used in per share computation		90,459			94,429						93,976			93,387

(a)	Alliance revenue for the three months ended December 31, 2007 relates to ribavirin royalty of $16.9 million. Alliance revenue for the twelve months ended December 31, 2007 includes ribavirin royalties of $67.3 million and a $19.2 million milestone payment received from Schering-Plough related to the out-licensing of pradefovir.
(b)	Gain on litigation settlement in the twelve months ended December 31, 2006 relates to the settlement of disclosed litigation with Milan Panic, $17.6 million and the Republic of Serbia, $34.0 million.

Table 2

Valeant Pharmaceuticals International
GAAP Reconciliation of Basic and Diluted Earnings Per Share
For the Three and Twelve Months Ended December 31, 2007 and 2006

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except per share data)	2007			2006			2007		2006
				(Restated)					(Restated)
Income (loss) from continuing operations	$	(7,072	)	$	(15,986	)	$	26,054	$	(56,817	)
Non-GAAP adjustments:
Gain on litigation settlement (a)		—			—			—		(51,550	)
Professional fees related to Special Committee option investigation (b)		—			2,382			630		2,382
Restructuring charges (c)		9,601			41,494			23,176		138,181
Product impairment (d)		—			392			310		1,075
Tax (e)		10,577			(1,101	)		1,857		14,395
Adjusted income from continuing operations before the above charges	$	13,106		$	27,181		$	52,027	$	47,666
Adjusted basic EPS from continuing operations	$	0.14		$	0.29		$	0.56	$	0.51
Adjusted diluted EPS from continuing operations	$	0.14		$	0.28		$	0.55	$	0.50
Shares used in adjusted basic per share calculation		90,459			94,429			93,029		93,387
Shares used in adjusted diluted per share calculation		90,978			95,879			93,976		95,114

(a)	Gain on litigation settlement in the twelve months ended December 31, 2006 relates to the settlement of disclosed litigation with Milan Panic, $17.6 million and the Republic of Serbia, $34.0 million.
(b)	Non-recurring professional fees relating to the investigation by the Special Committee into stock option practices and the related restatement of financial statements.
(c)	Charges in the three months ended December 31, 2007 relate to the restructuring announced on February 28, 2008. Charges in all periods up to June 30, 2007 relate to the restructuring announced in April 2006.
(d)	Product impairment on two products sold in Spain.
(e)	Tax effect for non-GAAP adjustments, including tax benefits from U.S. net operating losses not recognized for GAAP purposes, and reversal of the tax benefit of resolving the 1997 — 2001 IRS examination.

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 special charges and credits. Management does not consider the excluded items part of the 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. Guidance is provided only on a non-GAAP basis due to the inherent difficulty in forecasting such items.

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.

Table 3

Valeant Pharmaceuticals International
Reconciliation of Consolidated Income From Operations to Non-GAAP Adjusted
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
For the Three and Twelve Months Ended December 31, 2007 and 2006
(In thousands)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2007		2006		2007		2006
			(Restated)				(Restated)
Consolidated income from operations (GAAP)	$	16,658	$	2,090	$	75,315	$	7,974
Depreciation and amortization		21,798		20,996		88,278		86,667
EBITDA (non-GAAP) (a)		38,456		23,086		163,593		94,641
Other non-GAAP adjustments (b)		9,601		43,876		23,806		89,013
Adjusted EBITDA (non-GAAP) (a)	$	48,057	$	66,962	$	187,399	$	183,654

(a)

We believe that EBITDA and Adjusted EBITDA are meaningful non-GAAP financial measures as earnings-derived indicators of the cash flow generation ability of the company. We calculate EBITDA by adding depreciation and amortization back to consolidated income from operations. Adjusted EBITDA excludes the additional costs set forth in note (b) below. EBITDA and Adjusted EBITDA, as defined and presented by us, may not be comparable to similar measures reported by other companies.

(b)

See table 2 for explanation of non-GAAP adjustments.

Table 4

Valeant Pharmaceuticals International
Supplemental Sales Information
For the Three and Twelve Months Ended December 31, 2007 and 2006
(In thousands)

	Three Months Ended				%			Twelve Months Ended				%
	December 31,				Increase/			December 31,				Increase/
	2007		2006		(Decrease)			2007		2006		(Decrease)
			(Restated)							(Restated)
Neurology
Mestinon®(P)	$	14,641	$	14,046		4	%	$	53,012	$	47,625		11	%
Diastat® AcuDial™(P)		12,130		12,145		0	%		51,264		50,678		1	%
Cesamet®(P)		10,125		5,153		96	%		30,173		18,985		59	%
Librax®		4,747		3,909		21	%		17,170		14,835		16	%
Migranal®(P)		4,139		4,643		(11	%)		13,534		11,592		17	%
Dalmane®/Dalmadorm®(P)		3,289		3,415		(4	%)		11,432		10,957		4	%
Tasmar®(P)		3,195		2,047		56	%		10,262		6,534		57	%
Melleril(P)		2,887		2,115		37	%		8,206		6,431		28	%
Zelapar® (P)		2,346		157		1394	%		5,747		3,981		44	%
Other Neurology		19,436		16,734		16	%		66,677		63,033		6	%
Dermatology
Efudix/Efudex®(P)		24,712		32,287		(23	%)		71,714		78,336		(8	%)
Kinerase®(P)		7,890		6,427		23	%		30,126		28,929		4	%
Dermatix™(P)		3,659		2,779		32	%		14,043		10,139		39	%
Oxsoralen-Ultra®(P)		3,408		2,814		21	%		12,377		10,527		18	%
Other Dermatology		12,509		11,542		8	%		39,059		42,023		(7	%)
Infectious Disease
Virazole®(P)		3,335		4,854		(31	%)		14,350		16,552		(13	%)
Other Infectious Disease		4,486		6,084		(26	%)		19,813		20,144		(2	%)
Other Therapeutic Classes
Bedoyecta™(P)		11,342		13,190		(14	%)		42,384		49,935		(15	%)
Solcoseryl(P) (a)		4,961		6,034		(18	%)		23,749		18,916		26	%
Bisocard(P)		6,426		4,405		46	%		22,559		15,927		42	%
MVI (multi-vitamin infusion)(P)		3,347		4,016		(17	%)		11,708		13,350		(12	%)
Nyal(P)		1,966		1,525		29	%		11,060		10,216		8	%
Espaven(P)		2,524		3,568		(29	%)		8,458		11,147		(24	%)
Protamin(P)		1,973		1,663		19	%		6,924		6,384		8	%
Other Pharmaceutical Products (a)		53,801		62,109		(13	%)		189,969		214,386		(11	%)
Total product sales	$	223,274	$	227,661		(2	%)	$	785,770	$	781,562		1	%
Total promoted product sales(P)	$	128,295	$	127,283		1	%	$	453,082	$	427,141		6	%

(P)	Promoted products represent promoted products with annual sales greater than $5 million.
(a)	Product sales for the three and twelve months ended December 31, 2007 include $0 and $4.1 million respectively, for products (Reptilase, Solcoseryl in Japan and opthalmic business in Netherlands) which have been divested in 2007, compared to $5.3 million and $15.4 million for the same periods in 2006.

Table 5

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Revenue and Operating Income — Regional
For the Three and Twelve Months Ended December 31, 2007 and 2006
(In thousands)

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
Revenues	2007			2006			% Change			2007			2006			% Change
				(Restated)									(Restated)
North America	$	80,166		$	79,156			1	%	$	276,671		$	264,393			5	%
International		55,917			70,181			-20	%		201,310			239,597			-16	%
EMEA		87,191			78,324			11	%		307,789			277,572			11	%
Total specialty pharmaceuticals		223,274			227,661			-2	%		785,770			781,562			1	%
Alliance revenue (including ribavirin royalties) (a)		16,949			20,548			-18	%		86,452			81,242			6	%
Consolidated revenues	$	240,223		$	248,209			-3	%	$	872,222		$	862,804			1	%
Cost of goods sold	$	70,715		$	64,337			10	%	$	233,094		$	238,141			-2	%
Gross profit margin on pharmaceutical sales		68	%		72	%					70	%		70	%
	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
Income from Operations	2007			2006			% Change			2007			2006			% Change
				(Restated)									(Restated)
North America	$	35,921		$	39,046			-8	%	$	100,855		$	90,359			12	%
International		12,849			21,777			-41	%		34,189			71,697			-52	%
EMEA		9,450			17,916			-47	%		55,700			45,822			22	%
		58,220			78,739			-26	%		190,744			207,878			-8	%
Corporate expenses	$	(19,195	)	$	(20,333	)		-6	%	$	(75,525	)	$	(75,382	)		0	%
Total specialty pharmaceuticals		39,025			58,406			-33	%		115,219			132,496			-13	%
Restructuring charges		(9,601	)		(41,494	)		-77	%		(23,176	)		(138,181	)		-83	%
Gain on litigation settlement		—			—						—			51,550			-100	%
Research and development costs		(12,766	)		(14,822	)		-14	%		(16,728	)		(37,891	)		-56	%
Total consolidated income from operations	$	16,658		$	2,090					$	75,315		$	7,974

	Three Months Ended										Twelve Months Ended
	December 31,										December 31,
Gross Profit	2007		%			2006		%			2007		%			2006		%
						(Restated)										(Restated)
North America	$	67,177		84	%	$	66,958		85	%	$	232,654		84	%	$	220,834		84	%
International		37,199		67	%		47,059		67	%		133,656		66	%		161,970		68	%
EMEA		48,183		55	%		49,307		63	%		186,366		61	%		160,617		58	%
Total specialty pharmaceuticals	$	152,559		68	%	$	163,324		72	%	$	552,676		70	%	$	543,421		70	%

(a) Alliance revenue for the three months ended December 31, 2007 relates to ribavirin royalty of $16.9 million. Alliance revenue for the twelve months ended December 31, 2007 includes ribavirin royalties of $67.3 million and a $19.2 million milestone payment received from Schering-Plough related to the out-licensing of pradefovir.

Table 6

Valeant Pharmaceuticals International
Consolidated Balance Sheet and Other Data
(In thousands)

	December 31,		December 31,
Balance Sheet Data	2007		2006
			(Restated)
Cash and cash equivalents	$	309,365	$	325,376
Marketable securities		52,122		10,370
Total cash and marketable securities	$	361,487	$	335,746
Accounts receivable, net	$	191,796	$	227,151
Inventory, net		115,177		130,747
Long-term debt		782,552		778,196

	Twelve Months Ended
	December 31,
Other Data	2007			2006
				(Restated)
Cash flow provided by (used in) continuing operations
Operating activities	$	121,870		$	127,053
Investing activities		(34,207	)		(34,101	)
Financing activities		(127,598	)		(6,998	)
Effect of exchange rate changes on cash and cash equivalents		23,924			15,128
Net increase (decrease) in cash and cash equivalents		(16,011	)		101,082
Net increase (decrease) in marketable securities		41,752			(403	)
Net increase in cash and marketable securities	$	25,741		$	100,679

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
Stock-Based Compensation	2007		2006		2007		2006
			(Restated)				(Restated)
Cost of goods sold	$	92	$	230	$	596	$	1,256
Selling expenses		437		1,055		3,097		3,390
General and administrative expenses		1,776		2,945		8,708		13,697
Research and development costs		186		389		819		2,505
Total	$	2,491	$	4,619	$	13,220	$	20,848

Table 7

Valeant Pharmaceuticals International
Supplemental Non-GAAP Information on Currency Effect
(In thousands)

	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2007			2006		2007			2006
				(Restated)					(Restated)
Consolidated
Product sales	$	223,274		$	227,661	$	785,770		$	781,562
Currency effect		(13,459	)				(34,033	)
Product sales, excluding currency impact	$	209,815				$	751,737
Operating income	$	16,658		$	2,090	$	75,315		$	7,974
Currency effect		(2,284	)				(4,696	)
Operating income, excluding currency impact	$	14,374				$	70,619
Geographic Product Sales
North America pharmaceuticals	$	80,166		$	79,156	$	276,671		$	264,393
Currency effect		(2,059	)				(3,068	)
North America pharmaceuticals, excluding currency impact	$	78,107				$	273,603
International pharmaceuticals	$	55,917		$	70,181	$	201,310		$	239,597
Currency effect		(2,118	)				(5,222	)
International pharmaceuticals, excluding currency impact	$	53,799				$	196,088
EMEA pharmaceuticals	$	87,191		$	78,324	$	307,789		$	277,572
Currency effect		(9,282	)				(25,743	)
EMEA pharmaceuticals, excluding currency impact	$	77,909				$	282,046

Note: Currency effect is determined by comparing adjusted 2007 reported amounts, calculated using 2006 monthly average exchange rates, to the actual 2006 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.

Table 8

Valeant Pharmaceuticals International
Discontinued Operations with Infergen
Summarized Financial Information
For the Three and Twelve Months Ended December 31, 2007 and 2006
(In thousands)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Infergen:
Product sales	$	5,126		$	8,568		$	32,085		$	42,716
Costs and expenses:
Cost of goods sold (a)		10,374			7,978			24,897			18,838
Selling expenses		5,983			5,203			25,602			20,077
General and administrative expenses		326			74			1,693			1,315
Research and development costs		1,197			905			6,476			4,176
Amortization expense		—			1,650			4,950			6,600
Total costs and expenses		17,880			15,810			63,618			51,006
Loss from discontinued operations, Infergen		(12,754	)		(7,242	)		(31,533	)		(8,290	)
Other discontinued operations:
Other income (loss)		—			(649	)		—			5,089
Consolidated discontinued operations:
Loss from discontinued operations		(12,754	)		(7,891	)		(31,533	)		(3,201	)
Benefit for income taxes		229			(36	)		(2	)		(45	)
Discontinued operations, net		(12,983	)		(7,855	)		(31,531	)		(3,156	)
Disposal of discontinued operation, net		(278	)		1,007			(709	)		2,405
Loss from discontinued operations, net	$	(13,261	)	$	(6,848	)	$	(32,240	)	$	(751	)

(a) The twelve months ended December 31, 2007 include a technology transfer payment of $5.3 million.

Supplementary Table

Valeant Pharmaceuticals International
Comparison of Results with Results Disclosed on February 28, 2008
For the Three and Twelve Months Ended 2006 and 2007

				Three Months Ended												Twelve Months Ended
	December 31,												December 31,
(In thousands, except per share data)	2007						2006						2007						2006
							(Restated)												(Restated)
	GAAP			Non-GAAP			GAAP			Non-GAAP			GAAP			Non-GAAP			GAAP			Non-GAAP
Adjusted Income (loss) from continuing operations as previously disclosed on February 28, 2008	$	(6,886	)	$	13,625		$	(14,935	)	$	27,466		$	25,092		$	51,331		$	(55,814	)	$	47,976
Adjustments to income (loss) from continuing operations:
Returns reserve and credit memos in Latin America (1)		1,392			1,392			(780	)		(780	)		272			272			(1,554	)		(1,554	)
Reversal of revenue in Italy (2)		1,840			1,840			50			50			290			290			(290	)		(290	)
Cost of goods bookkeeping in the UK and France (3)		(4,912	)		(4,912	)		—			—			(202	)		(202	)		—			—
European pension accounting (4)		(3	)		(3	)		323			323			(282	)		(282	)		1,401			1,401
Others (5)		930			930			—			—			930			930			—			—
Tax effect on above (6)		(334	)		(667	)		120			886			(947	)		(1,213	)		204			897
Other deferred tax items (7)		901			901			(764	)		(764	)		901			901			(764	)		(764	)
Adjusted income (loss) from continuing operations	$	(7,072	)	$	13,106		$	(15,986	)	$	27,181		$	26,054		$	52,027		$	(56,817	)	$	47,666
Adjusted diluted EPS from continuing operations as previously disclosed on February 28, 2008	$	(0.08	)	$	0.15		$	(0.16	)	$	0.29		$	0.27		$	0.55		$	(0.60	)	$	0.50
Adjusted diluted EPS from continuing operations	$	(0.08	)	$	0.14		$	(0.17	)	$	0.28		$	0.28		$	0.55		$	(0.61	)	$	0.50
Shares used in adjusted diluted per share calculation		90,459			90,978			94,429			95,879			93,976			93,976			93,387			95,114

(1)	Increase in reserves for anticipated product returns based on historical trends and for certain credit memos in Latin America.
(2)	Decrease in revenues associated with sales to certain customers in Italy where preexisting rights of return became known in the fourth quarter of 2007.
(3)	Decrease in costs of goods sold related to bookkeeping errors in recording inventory costing and manufacturing variances in the UK and France.
(4)	Changes in pension expense in the UK, Netherlands, Switzerland and Germany resulting from incorrect application of Statement of Financial Accounting Standards No. 87, EmployersAccounting for Pensions and Statement of Financial Accounting Standards No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.
(5)	Amendment of certain accounting reserves to reflect new information available after the balance sheet date.
(6)	Changes in income tax expense resulting from the income tax effects of the pre-tax adjustments described in (1)-(5) above.
(7)	Increase in income tax expense due to correction of deferred income taxes in certain foreign locations.

See table 2 for reconciliation of non-GAAP income from continuing operations to GAAP income (loss) from continuing operations.