Valeant Pharmaceuticals International 8-K Valeant Pharmaceuticals Reports Second Quarter Financial Results

Exhibit 99.1

International Headquarters
One Enterprise Aliso Viejo, CA 92656
949.461.6000      FAX 949.461.6636

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

VALEANT PHARMACEUTICALS REPORTS
SECOND QUARTER FINANCIAL RESULTS

     ALISO VIEJO, Calif., August 11, 2008 — Valeant Pharmaceuticals International (NYSE: VRX) today announced second quarter financial results for 2008.

     Total revenue was $206.8 million in the second quarter of 2008 as compared to $220.5 million in the second quarter of 2007. The second quarter of 2008 included planned reductions of shipments to wholesaler customers in the United States, Canada and Mexico of approximately $20.0 million.

     North America product sales were $54.7 million in second quarter of 2008, as compared to $68.6 million in second quarter of 2007. This decrease was due to a planned reduction in shipments to wholesaler customers in the United States and Canada of approximately $17.0 million.

     Sales in the International region in the 2008 second quarter were $45.7 million as compared to $55.8 million in the same period last year. The second quarter of 2008 included planned wholesaler inventory reductions in Mexico of approximately $3.0 million. The second quarter of 2007 included $9.6 million in revenue from certain subsidiaries and business operations in Asia and Argentina, which were divested in the first half of 2008, compared to $2.3 million in revenue from the same operations in the second quarter of 2008.

     Sales in the Europe, Middle East and Africa (EMEA) region were $91.6 million in the 2008 second quarter as compared to $77.1 million in the same period last year, an increase primarily due to favorable currency fluctuations of $12.6 million. Valeant recently announced an agreement to sell a large geographic part of this region in Western and Eastern Europe, Middle East and Africa. The retained area of Central Europe, including Poland, comprised $41.1 million of the $91.6 million sales in the EMEA region. Central Europe sales increased 32% in second quarter 2008 from $31.2 million in the second quarter of 2007.

     Alliance revenue was $14.8 million in the 2008 second quarter as compared to $19.0 million in the same period in 2007, due to reduced ribavirin royalties.

     The company’s gross margin on product sales, including amortization costs, was 56% for the 2008 second quarter as compared to 64% in the second quarter of 2007. This decrease is fully due to the impact of $15 million of increased inventory obsolescence charges required by strategic changes in our commercial focus away from some products and discontinuation of others.

Beginning in the second quarter of 2008, the financial presentation of gross margins has been changed to include amortization expenses.

     Selling expense was 31% of product sales in the second quarter of 2008 as compared to 34% in the same period a year earlier. General and administrative expenses were 22% of product sales in the 2008 second quarter, as compared to 14% in the same period in 2007. Second quarter G&A charges included a legal settlement of $9.0 million and a $3.2 million write-down of an investment in a Swiss biotech fund.

     Research and development costs remained flat at $22.7 million in the 2008 second quarter as compared to $22.7 million reported in the same period in 2007. This continued spending reflects the final completion of the retigabine Phase III trial and the preparation of the New Drug Application and Marketing Authorisation Application submissions for retigabine.

     Provision for income taxes in the 2008 second quarter was $46.9 million as compared to a benefit of $7.5 million reported in the same period in 2007. Based on a change in Valeant’s tax accounting elections for the repatriation of foreign earnings (APB 23), during the second quarter of 2008, Valeant recorded a net tax charge of $57.1 million.

     Net loss from continuing operations was $73.5 million for the second quarter of 2008, or a loss of $0.82 per diluted share as compared to net income from continuing operations of $21.9 million, or $0.23 per diluted share for the second quarter of 2007. Adjusted for non-GAAP items, notably income taxes, net loss from continuing operations was $5.7 million or a loss of $0.06 per diluted share in the second quarter of 2008 as compared to net income of $14.2 million, or $0.15 per diluted share in the second quarter of 2007. Net cash flow from continuing operations in the second quarter was $11.6 million.

     “Our financial results from this quarter, in aggregate, are poor. However, they are largely a reflection of many of the key components of the turnaround program, including planned reductions in wholesaler inventory in Canada, the U.S., and Mexico; changed commercial focus in our product portfolio; resolution of certain litigation; restructuring costs such as severance and the sales of operations in non-core countries,” said J. Michael Pearson, chairman and chief executive officer. “More importantly, we continue to make significant progress toward achieving our 6-point action plan as demonstrated by the recent agreement for the sale of part of our European operations, the retirement of $300 million in senior debt, the expansion of our share repurchase program, and headcount reduction and other cost savings initiatives begun in the quarter.”

Conference Call and Webcast Information:

     Valeant will host a conference call today at 11:00 a.m. EDT (8:00 a.m. PDT) to discuss its 2008 second quarter results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 56788630. International callers should dial (706) 679-0845, confirmation code 56788630. A replay will be available approximately two hours following the conclusion of the conference call through August 18, 2008 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 56788630. The company will also webcast the conference call live over

2

the Internet. The webcast may be accessed through the investor relations section of Valeant’s corporate Web site atwww.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 atwww.valeant.com.

FORWARD-LOOKING STATEMENTS:

     This press release contains forward-looking statements, including, but not limited to, statements regarding the submission of applications for regulatory approval and carrying out the company’s previously announced strategic restructuring plan. 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 related to the company’s ability to consummate the sale of certain of its territories in Western and Eastern Europe, Middle East and Africa and to realize the benefits of its strategic restructuring plan, and other risks and uncertainties discussed in the company’s annual report or Form 10-K for the years ended December 31, 2007 and other filings with the SEC. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this 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 special charges and credits, and the 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.

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

###

3

Table 1

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Income
For the Three and Six Months Ended June 30, 2008 and 2007

	Three Months Ended									Six Months Ended
	June 30,									June 30,
(In thousands, except per share data)	2008			2007			% Change			2008			2007			% Change
Product sales	$	191,958		$	201,587			-5	%	$	373,871		$	369,520			1	%
Alliance revenue (including ribavirin royalties) (a)		14,805			18,955			-22	%		27,578			55,425			-50	%
Total revenues		206,763			220,542			-6	%		401,449			424,945			-6	%
Cost of goods sold		69,479			57,614			21	%		124,369			104,515			19	%
Selling expenses		59,606			67,645			-12	%		123,396			126,085			-2	%
General and administrative expenses		41,482			28,743			44	%		67,588			54,858			23	%
Research and development costs		22,692			22,737			0	%		52,084			43,727			19	%
Restructuring, asset impairments and dispositions		17,583			6,337		NM				4,919			13,575		NM
Amortization expense		18,112			18,666			-3	%		36,178			36,147			0	%
		228,954			201,742			13	%		408,534			378,907			8	%
Income (loss) from operations		(22,191	)		18,800						(7,085	)		46,038
Interest expense, net		(4,275	)		(6,113	)					(9,048	)		(12,554	)
Other income (expense), net including translation and exchange		(137	)		1,682						(3,389	)		2,818
Income (loss) from continuing operations before income taxes and minority interest		(26,603	)		14,369						(19,522	)		36,302
Provision (benefit) for income taxes		46,850			(7,511	)					54,501			899
Minority interest		2			—						4			—
Income (loss) from continuing operations		(73,455	)		21,880						(74,027	)		35,403
Income (loss) from discontinued operations, net		(1,149	)		(4,966	)					8,873			(9,166	)
Net income (loss)	$	(74,604	)	$	16,914					$	(65,154	)	$	26,237
Basic earnings (loss) per common share
Income (loss) from continuing operations	$	(0.82	)	$	0.23					$	(0.83	)	$	0.37
Discontinued operations, net		(0.01	)		(0.05	)					0.10			(0.09	)
Net income (loss)	$	(0.83	)	$	0.18					$	(0.73	)	$	0.28
Shares used in per share computation		89,802			95,049						89,696			94,911
Diluted earnings (loss) per common share
Income (loss) from continuing operations	$	(0.82	)	$	0.23					$	(0.83	)	$	0.37
Discontinued operations, net		(0.01	)		(0.05	)					0.10			(0.10	)
Net income (loss)	$	(0.83	)	$	0.18					$	(0.73	)	$	0.27
Shares used in per share computation		89,802			96,154						89,696			96,090

(a) Alliance revenue for the three and six months ended June 30, 2008 relates to ribavirin royalty of $14.8 million and $27.5 million respectively. Alliance revenue for the six months ended June 30, 2008 also includes a $0.1 million payment from an unrelated third party for a license to certain intellectual property assets. Alliance revenue for the three and six months ended June 30, 2007 includes ribavirin royalties of $19.0 million and $36.2 million respectively and a $19.2 million milestone payment received from Schering-Plough related to the out-licensing of pradefovir in the six months ended June 30, 2007.

Table 2

Valeant Pharmaceuticals International
GAAP Reconciliation of Basic and Diluted Earnings Per Share
For the Three and Six Months Ended June 30, 2008 and 2007

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except per share data)	2008			2007			2008			2007
Income (loss) from continuing operations	$	(73,455	)	$	21,880		$	(74,027	)	$	35,403
Non-GAAP adjustments:
Professional fees related to Special Committee option investigation (a)		—			—			—			630
Restructuring, asset impairments and dispositions (b)		17,583			6,337			4,919			13,575
Product impairment (c)		85			310			85			310
Tax (d)		50,066			(14,026	)		59,727			(14,854	)
Adjusted income (loss) from continuing operations before the above charges	$	(5,721	)	$	14,501		$	(9,296	)	$	35,064
Adjusted basic EPS from continuing operations	$	(0.06	)	$	0.15		$	(0.10	)	$	0.37
Adjusted diluted EPS from continuing operations	$	(0.06	)	$	0.15		$	(0.10	)	$	0.36
Shares used in adjusted basic per share calculation		89,802			95,049			89,696			94,911
Shares used in adjusted diluted per share calculation		89,802			96,154			89,696			96,090

(a)	Non-recurring professional fees relating to the investigation by the Special Committee into stock option practices and the related restatement of financial statements.
(b)	Net restructuring, asset impairments and dispositions for the three months ended June 30, 2008 of $17.6 million includes $6.5 million in employee related costs, $6.6 million of professional service fees and other cash expenses, $3.8 million relating to the divestitures of our operations in Asia and Argentina and asset impairments of $0.7 million. The six months ended June 30, 2008, includes a net gain on the sale of our operations in Asia of $35.9 million, offset by a loss on the sale of our operations in Argentina of $2.7 million, employee related costs of $18.0 million, professional service fees and other cash expenses of $11.5 million and asset impairments of $8.6 million. Restructuring for the three and six months ended June 30, 2007 relates to the restructuring announced in April 2006.
(c)	Impairment on a certain product sold in Portugal.
(d)	Tax effect for non-GAAP adjustments, including tax effects of the APB 23 revocation.
	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 Six Months Ended June 30, 2008 and 2007

(In thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008			2007		2008			2007
Consolidated income (loss) from operations (GAAP)	$	(22,191	)	$	18,800	$	(7,085	)	$	46,038
Depreciation and amortization		23,606			22,740		46,495			44,136
EBITDA (non-GAAP) (a)		1,415			41,540		39,410			90,174
Other non-GAAP adjustments (b)		17,668			6,647		5,004			14,515
Adjusted EBITDA (non-GAAP) (a)	$	19,083		$	48,187	$	44,414		$	104,689

(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 Six Months Ended June 30, 2008 and 2007
(In thousands)

	Three Months Ended				%			Six Months Ended				%
	June 30,				Increase/			June 30,				Increase/
	2008		2007		(Decrease)			2008		2007		(Decrease)
Neurology
Mestinon®	$	12,754	$	14,014		-9	%	$	24,285	$	24,552		-1	%
Diastat® AcuDial™		8,833		12,386		-29	%		21,012		23,458		-10	%
Cesamet®		9,678		6,859		41	%		19,674		12,770		54	%
Librax®		3,832		4,455		-14	%		7,414		8,122		-9	%
Other Neurology		30,797		28,670		7	%		53,792		53,446		1	%
Dermatology
Efudix/Efudex®		11,972		17,515		-32	%		35,166		29,992		17	%
Kinerase®		5,849		8,133		-28	%		11,459		16,511		-31	%
Other Dermatology		15,068		16,977		-11	%		28,304		31,644		-11	%
Other Therapeutic Classes
Bisocard		7,258		5,575		30	%		14,083		10,269		37	%
Bedoyecta™		9,604		12,237		-22	%		13,591		16,798		-19	%
Solcoseryl		6,754		8,448		-20	%		13,039		13,795		-5	%
Virazole®		3,361		3,045		10	%		8,857		8,564		3	%
Other Pharmaceutical Products		66,198		63,273		5	%		123,195		119,599		3	%
Total product sales (a)	$	191,958	$	201,587		-5	%	$	373,871	$	369,520		1	%

	Three Months Ended				%			Six Months Ended				%
	June 30,				Increase/			June 30,				Increase/
	2008		2007		(Decrease)			2008		2007		(Decrease)
United States	$	40,795	$	56,622		-28	%	$	99,358	$	107,393		-7	%
Mexico		29,917		34,818		-14	%		47,264		55,923		-15	%
Canada		13,911		11,988		16	%		27,624		23,816		16	%
Australia		7,426		6,377		16	%		11,660		9,391		24	%
Brazil		5,922		4,992		19	%		9,817		9,029		9	%
		97,971		114,797		-15	%		195,723		205,552		-5	%
WEEMEA (b)		50,473		45,918		10	%		91,152		85,396		7	%
Central Europe (c)		41,117		31,230		32	%		80,924		61,811		31	%
Other (a)		2,397		9,642		-75	%		6,072		16,761		-64	%
Total	$	191,958	$	201,587		-5	%	$	373,871	$	369,520		1	%

(a)	Product sales for the three and six months ended June 30, 2008 include $2.3 million and $5.7 million for products which were divested in 2008, compared to $9.6 million and $16.8 million for the same periods in 2007. For the three and six months ended June 30, 2008, “Other” also includes $0.1 million and $0.4 million respectively for sales made in connection with our obligation to Invida.
(b)	“WEEMEA” includes Western Europe, Eastern Europe, Middle East and Africa.
(c)	“Central Europe” includes Poland, Hungary, Slovakia and Czech Republic.

Table 5

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Revenue and Operating Income — Regional
For the Three and Six Months Ended June 30, 2008 and 2007
(In thousands)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
Revenues	2008			2007			% Change			2008			2007			% Change
North America	$	54,706		$	68,610			-20	%	$	126,982		$	131,209			-3	%
International		45,662			55,829			-18	%		74,813			91,104			-18	%
EMEA		91,590			77,148			19	%		172,076			147,207			17	%
Total specialty pharmaceuticals		191,958			201,587			-5	%		373,871			369,520			1	%
Alliance revenue (including ribavirin royalties) (a)		14,805			18,955			-22	%		27,578			55,425			-50	%
Consolidated revenues	$	206,763		$	220,542			-6	%	$	401,449		$	424,945			-6	%
Cost of goods sold	$	69,479		$	57,614			21	%	$	124,369		$	104,515			19	%
Gross profit margin on pharmaceutical sales		64	%		71	%					67	%		72	%

	Three Months Ended									Six Months Ended
	June 30,									June 30,
Income (Loss) From Operations	2008			2007			% Change			2008			2007			% Change
North America	$	8,035		$	26,464			-70	%	$	35,448		$	43,795			-19	%
International		7,357			8,341			-12	%		4,704			8,614			-45	%
EMEA		(1,247	)		15,902			—			9,840			34,611			-72	%
		14,145			50,707			-72	%		49,992			87,020			-43	%
Corporate expenses	$	(8,272	)	$	(19,948	)		-59	%	$	(23,699	)	$	(35,908	)		-34	%
Total specialty pharmaceuticals		5,873			30,759			-81	%		26,293			51,112			-49	%
Restructuring, asset impairments and dispositions		(17,583	)		(6,337	)		177	%		(4,919	)		(13,575	)		-64	%
Research and development costs		(10,481	)		(5,622	)		86	%		(28,459	)		8,501			—
Total consolidated income (loss) from operations	$	(22,191	)	$	18,800					$	(7,085	)	$	46,038

	Three Months Ended										Six Months Ended
	June 30,										June 30,
Gross Profit (net of amortization)	2008		%			2007		%			2008		%			2007		%
North America	$	34,263		63	%	$	51,819		76	%	$	86,808		68	%	$	96,618		74	%
International		26,331		58	%		32,438		58	%		41,829		56	%		53,331		59	%
EMEA		46,136		50	%		44,136		57	%		89,414		52	%		85,080		58	%
Total specialty pharmaceuticals (b)	$	106,730		56	%	$	128,393		64	%	$	218,051		58	%	$	235,029		64	%

(a)

Alliance revenue for the three and six months ended June 30, 2008 relates to ribavirin royalty of $14.8 million and $27.5 million respectively. Alliance revenue for the six months ended June 30, 2008 also includes a $0.1 million payment from an unrelated third party for a license to certain intellectual property assets. Alliance revenue for the three and six months ended June 30, 2007 includes ribavirin royalties of $19.0 million and $36.2 million respectively and a $19.2 million milestone payment received from Schering-Plough related to the out-licensing of pradefovir in the six months ended June 30, 2007.

(b)

The specialty pharmaceutical product amortization included in this calculation of gross profit (net of amortization) excludes the amortization of the ribavirin intangible of $2.4 million and $4.7 million for the three and six months ended June 30, 2008 and $3.1 million and $6.2 million for the three and six months ended June 30, 2007.

Valeant Pharmaceuticals International	Table 6
Consolidated Balance Sheet and Other Data
(In thousands)

Balance Sheet Data

	As of		As of
	June 30,		December 31,
	2008		2007
Cash and cash equivalents	$	466,300	$	309,365
Marketable securities		83,684		52,122
Total cash and marketable securities	$	549,984	$	361,487
Accounts receivable, net	$	169,143	$	191,796
Inventory, net		119,185		115,177
Long-term debt		780,963		782,552

Other Data

	Six Months Ended
	June 30,
	2008		2007
Cash flow provided by (used in):
Operating activities	$	65,169	$	62,072
Investing activities		16,917		14,171
Financing activities and discontinued operations		57,888		(32,398	)
Effect of exchange rate changes on cash and cash equivalents		16,961		7,547
Net increase in cash and cash equivalents		156,935		51,392
Net increase (decrease) in marketable securities		31,562		(488	)
Net increase in cash and marketable securities	$	188,497	$	50,904

Valeant Pharmaceuticals International	Table 7
Supplemental Non-GAAP Information on Currency Effect
(In thousands)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008			2007		2008			2007
Consolidated
Product sales	$	191,958		$	201,587	$	373,871		$	369,520
Currency effect		(16,756	)				(30,739	)
Product sales, excluding currency impact	$	175,202				$	343,132
Operating income (loss)	$	(22,191	)	$	18,800	$	(7,085	)	$	46,038
Currency effect		754					(2,906	)
Operating loss, excluding currency impact	$	(21,437	)			$	(9,991	)
Geographic Product Sales
North America pharmaceuticals	$	54,706		$	68,610	$	126,982		$	131,209
Currency effect		(1,168	)				(3,117	)
North America pharmaceuticals, excluding currency impact	$	53,538				$	123,865
International pharmaceuticals	$	45,662		$	55,829	$	74,813		$	91,104
Currency effect		(3,019	)				(4,711	)
International pharmaceuticals, excluding currency impact	$	42,643				$	70,102
EMEA pharmaceuticals	$	91,590		$	77,148	$	172,076		$	147,207
Currency effect		(12,569	)				(22,911	)
EMEA pharmaceuticals, excluding currency impact	$	79,021				$	149,165

Note: Currency effect is determined by comparing adjusted 2008 reported amounts, calculated using 2007 monthly average exchange rates, to the actual 2007 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.