Valeant Pharmaceuticals International 8-K Valeant Pharmaceuticals Reports Second Quarter 2005 Results

Exhibit 99.1

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

VALEANT PHARMACEUTICALS REPORTS
SECOND QUARTER 2005 RESULTS

— Revenues Increase 20 Percent; Product Sales Advance 22 Percent —

     COSTA MESA, Calif., August 4, 2005 – Valeant Pharmaceuticals International (NYSE: VRX) today announced results for the second quarter of 2005 that reflect higher product sales and increased operating profit driven by strong marketing efforts and continued focus on operating expenses.

Second Quarter 2005 vs. Second Quarter 2004 Highlights:

• Revenues increased 20 percent to $205.0 million compared to $170.4 million.

• Product sales increased 22 percent to $180.8 million compared to $147.7 million.

• Ribavirin royalties increased 6 percent to $24.2 million compared to $22.7 million.

• Net loss was $0.5 million, or $0.01 per diluted share, compared to a net loss of $41.3 million, or $0.49 per diluted share.

• Adjusting for certain non-GAAP items, adjusted income from continuing operations was $7.6 million, or $0.08 per diluted share, compared to $2.0 million, or $0.02 per diluted share.

     A reconciliation of GAAP to non-GAAP results is provided in Tables 2-4.

     “Our specialty pharmaceuticals business continues to deliver excellent results and reflects the success of our strategic initiatives,” said Timothy C. Tyson, Valeant’s president and chief executive officer. “Our plan to grow the top line is clearly working. We have rapidly integrated newly acquired products to quickly deliver top line results and continued to focus on our global brands and important regional products with strong marketing and medical support. Our success in growing the North America business has been accelerated with products acquired from Xcel. We are making great progress in achieving our financial metrics; operating income from the specialty pharmaceuticals business is up 63 percent in the quarter. In addition to our excellent results in the base business, our research and development pipeline is advancing rapidly. We now have four important products in late-stage development. We recently announced the start of Viramidine^® trials in Japan, exciting 24-week interim results for pradefovir and the initiation of Phase 3 trials for retigabine, while we also await approval for Zelapar™ from the U.S. Food and Drug Administration.”

Revenues:

     Growth in product sales in the 2005 second quarter was led by a combination of products that were acquired in the acquisition of Xcel Pharmaceuticals in the 2005 first quarter, continued global brand growth and strong sales of important regional products. Sales of promoted products in North America, where the company has focused specific growth initiatives, were particularly strong. Global brand growth of 25 percent was led by increased sales of Efudex^® and Kinerase^®.

     The impact of foreign currency translation increased product sales by $8.0 million in the 2005 second quarter, while the net impact to operating income was $2.4 million in the same period.

     The increase in ribavirin royalty revenues was primarily due to increased sales of Rebetol in Japan, offset by declining sales in the United States due to generic competition.

Regional Sales Performance:

     North America product sales increased 71 percent in the 2005 second quarter to $60.4 million compared to $35.3 million in the same period last year. The increase in North America was primarily driven by sales of acquired products and continued strong growth of promoted brands, including Efudex, Kinerase and Cesamet™, moderated by a decline in sales of other products. Sales of products acquired in the Xcel transaction totaled $24.3 million in the 2005 second quarter, 54 percent higher than the $15.8 million in sales recorded by Xcel in the 2004 second quarter. The rapid integration of the Xcel sales force and new sales training has resulted in increased demand, corresponding acceleration of Diastat^® sales, which were $14.3 million in the second quarter of 2005, and the successful launch of the improved Migranal® nasal spray.

     European product sales increased 3 percent in the 2005 second quarter to $61.8 million, compared to $60.1 million in the same period last year. The European region benefited from the impact of foreign currency translation of $4.6 million. A number of products in Europe, including Mestinon, Bisocard and Dermatix™ performed well; however, the challenging environment in Europe continues to be very difficult and performance in the quarter was impacted by government-imposed price reductions in many countries.

     Sales in Latin America increased 13 percent to $41.4 million in the 2005 second quarter, compared to $36.5 million in the same period last year. The increase was primarily due to a 97 percent increase in sales of Bedoyecta™ in the quarter as a result of increased promotional activities and strong consumer demand. The Latin America region also benefited from the impact of foreign currency translation of $2.1 million.

     Sales in the Asia, Australia and Africa (AAA) region increased 9 percent in the 2005 second quarter to $17.3 million, compared to $15.8 million in the same period last year, primarily due to increased sales of Nyal^™ in Australia.

Financial Metrics:

     The company’s gross margin increased for the 2005 second quarter to 71 percent, compared to 69 percent in the same period last year. The improved gross margin primarily reflects increased sales in North America and a favorable mix of higher margin products.

     Selling expenses as a percent of sales were 34 percent for the 2005 second quarter, the same rate experienced in the 2004 second quarter, adjusted for non-GAAP items. General and administrative expenses were 14 percent of sales for the 2005 second quarter, compared to 16 percent, adjusted for non-GAAP items, in the same period last year.

     Research and development expenses were 15 percent of sales for the 2005 second quarter, compared to 14 percent in the same period last year. The increase reflects investments in the company’s late-stage pipeline for the continued development of Viramidine^® and pradefovir, and early expenses associated with the start of Phase 3 clinical trials for retigabine.

Balance Sheet Information:

     Cash and marketable securities at June 30, 2005 totaled $357 million, compared to $462 million at December 31, 2004. The reduction of cash was primarily due to the acquisition of Xcel Pharmaceuticals.

Conference Call Information:

     Valeant will host a conference call today at 10:00 a.m. EDT (7:00 a.m. PDT) to discuss its 2005 second quarter results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 7748675. International callers should dial (706) 679-0845, confirmation code 7748675. The company will also webcast the conference call live over 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 global, publicly traded, research-based specialty pharmaceutical company that discovers, develops, manufactures and markets pharmaceutical products primarily in the areas of neurology, infectious disease and dermatology. More information about Valeant can be found at www.valeant.com.

     Viramidine, Diastat, Efudex, Kinerase, Bedoyecta, Cesamet and Nyal are trademarks or registered trademarks of Valeant Pharmaceuticals International or its related companies. All other trademarks are the trademarks or the registered trademarks of their respective owners.

FORWARD-LOOKING STATEMENTS:

     This press release contains forward-looking statements that are based on management’s current expectations and involve risks and uncertainties, including, but not limited to, risks and uncertainties relating to projections of future sales, returns on invested assets and clinical development, regulatory approval processes, 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, general economic factors and business and capital market conditions, general industry trends, changes in tax law requirements and government regulation, adverse events that would require clinical trials to be prematurely terminated, clinical results that

indicate continuing clinical and commercial pursuit of product candidates is not advisable, and the fact that Phase 2 clinical trial results are not always indicative of those seen in Phase 3 clinical trials, and other risks detailed from time to time in Valeant’s SEC filings. 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.

Financial Tables Follow

###

Table 1

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Income
For the three and six months ended June 30, 2005 and 2004

	Three Months Ended									Six Months Ended
	June 30,									June 30,
(In thousands, except per share data)	2005			2004			% Change			2005			2004			% Change
Product sales	$	180,828		$	147,634			22	%	$	342,631		$	279,959			22	%
Ribavirin royalties		24,206			22,734			6	%		43,541			48,111			-9	%
Total revenues		205,034			170,368			20	%		386,172			328,070			18	%
Cost of goods sold		52,940			45,938			15	%		101,661			92,650			10	%
Selling expenses		61,454			53,575			15	%		114,269			101,317			13	%
General and administrative expenses		25,985			24,849			5	%		50,562			48,724			4	%
Research and development costs		27,559			20,921			32	%		53,283			39,384			35	%
Acquired in-process research and development (a)		—			384			—			126,399			11,770			974	%
Restructuring charges (b)		(1,324	)		20,185			—			371			20,185			-98	%
Amortization expense		17,211			14,133			22	%		31,179			27,420			14	%
		183,825			179,985			2	%		477,724			341,450			40	%
Income (loss) from operations		21,209			(9,617	)					(91,552	)		(13,380	)
Interest, net		(6,944	)		(11,174	)					(13,610	)		(23,073	)
Loss on early extinguishment of debt		—			(5,898	)					—			(5,898	)
Other expense, net including translation and exchange		(2,631	)		(632	)					(4,422	)		(1,678	)
Income (loss) from continuing operations before provision for income taxes and minority interest		11,634			(27,321	)					(109,584	)		(44,029	)
Provision for income taxes		10,059			(99	)					26,426			(6,281	)
Minority interest		134			103						305			89
Income (loss) from continuing operations		1,441			(27,325	)					(136,315	)		(37,837	)
Loss from discontinued operations, net		(1,988	)		(13,966	)					(3,491	)		(17,027	)
Net loss	$	(547	)	$	(41,291	)				$	(139,806	)	$	(54,864	)
Basic earnings per common share
Income (loss) from continuing operations	$	0.02		$	(0.32	)				$	(1.50	)	$	(0.45	)
Discontinued operations, net		(0.03	)		(0.17	)					(0.04	)		(0.21	)
Net loss	$	(0.01	)	$	(0.49	)				$	(1.54	)	$	(0.66	)
Shares used in per share computation		92,568			83,880						90,712			83,663
Diluted earnings per common share
Income (loss) from continuing operations	$	0.02		$	(0.32	)				$	(1.50	)	$	(0.45	)
Discontinued operations, net		(0.03	)		(0.17	)					(0.04	)		(0.21	)
Net loss	$	(0.01	)	$	(0.49	)				$	(1.54	)	$	(0.66	)
Shares used in per share computation		95,591			83,880						90,712			83,663

(a)	Expense associated with the write-off of acquired in-process research and development (“IPR&D”) related to the Xcel Pharmaceuticals, Inc. acquisition in 2005 and the Amarin acquisition in 2004.
(b)	Restructuring charges related to our manufacturing rationalization plan. In the second quarter of 2005, we sold two manufacturing sites and recorded a net gain on the sale of these sites.

Table 2

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments

	Three Months Ended
	June 30, 2005
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales	$	180,828		$	—		$	180,828
Ribavirin royalties		24,206			—			24,206
Total revenues		205,034			—			205,034
Cost of goods sold		52,940			—			52,940
Selling expenses		61,454			—			61,454
General and administrative expenses		25,985			—			25,985
Research and development costs		27,559			—			27,559
Restructuring charges		(1,324	)		1,324	(a)		—
Amortization expense		17,211			(1,532	)(b)		15,679
		183,825			(208	)		183,617
Income from operations		21,209			208			21,417
Interest, net		(6,944	)		—			(6,944	)
Other expense, net including translation and exchange		(2,631	)		—			(2,631	)
Income from continuing operations before provision for income taxes and minority interest		11,634			208			11,842
Provision for income taxes		10,059			(5,914	)(c)		4,145
Minority interest		134			—			134
Income from continuing operations		1,441			6,122			7,563
Loss from discontinued operations, net		(1,988	)		—			(1,988	)
Net income (loss)	$	(547	)	$	6,122		$	5,575
Basic earnings per common share
Income from continuing operations	$	0.02					$	0.08
Discontinued operations, net		(0.03	)					(0.02	)
Net income (loss)	$	(0.01	)				$	0.06
Shares used in per share computation		92,568						92,568
Diluted earnings per common share
Income from continuing operations	$	0.02					$	0.08
Discontinued operations, net		(0.03	)					(0.02	)
Net income (loss)	$	(0.01	)				$	0.06
Shares used in per share computation		95,591						95,591

(a)	Net gain on sale of two manufacturing sites.
(b)	Impairment charges on products sold in Spain and North America.
(c)	The tax adjustment of $5.9 million includes $6.8 million attributable to tax benefits from U.S. net operating losses (“NOL”) not recognized for GAAP purposes partially offset by the reversal of foreign tax valuation allowances and the net tax benefit of the non-GAAP adjustments.

We use certain non-GAAP financial measures, including adjusted net income (loss) from continuing operations and adjusted earnings per share, both of which exclude acquired IPR&D, sales force reduction costs, restructuring costs, impairment charges and various tax issues. We exclude these items in assessing our financial performance, primarily due to their non-operational nature or because they are outside of our normal operations. The non-GAAP financial measures should not be considered as an alternative to, or more meaningful than the GAAP financial measures.

Table 2.1

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments

	Three Months Ended
	June 30, 2004
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales		147,634		$	—		$	147,634
Ribavirin royalties		22,734			—			22,734
Total revenues		170,368			—			170,368
Cost of goods sold		45,938			—			45,938
Selling expenses		53,575			(3,351	)(a)		50,224
General and administrative expenses		24,849			(1,159	)(a)		23,690
Research and development costs		20,921			—			20,921
Acquired in-process research and development		384			(384	)(b)		—
Restructuring charges		20,185			(20,185	)(c)		—
Amortization expense		14,133			—			14,133
		179,985			(25,079	)		154,906
Income (loss) from operations		(9,617	)		25,079			15,462
Interest, net		(11,174	)		—			(11,174	)
Other expense, net including translation and exchange		(6,530	)		5,898	(d)		(632	)
Income (loss) from continuing operations before provision for income taxes and minority interest		(27,321	)		30,977			3,656
Provision for income taxes		(99	)		1,635	(e)		1,536
Minority interest		103			—			103
Income (loss) from continuing operations		(27,325	)		29,342			2,017
Loss from discontinued operations, net		(13,966	)		10,080	(f)		(3,886	)
Net loss	$	(41,291	)	$	39,422		$	(1,869	)
Basic earnings per common share
Income (loss) from continuing operations	$	(0.32	)				$	0.02
Discontinued operations, net		(0.17	)					(0.04	)
Net loss	$	(0.49	)				$	(0.02	)
Shares used in per share computation		83,880						83,880
Diluted earnings per common share
Income (loss) from continuing operations	$	(0.32	)				$	0.02
Discontinued operations, net		(0.17	)					(0.04	)
Net loss	$	(0.49	)				$	(0.02	)
Shares used in per share computation		83,880						86,435	(g)

(a)	Sales force reduction costs.
(b)	In-process research and development charge related to the acquisition of Amarin.
(c)	Restructuring charges were primarily related to our manufacturing rationalization plan and include impairment charges on manufacturing sites and severance charges.
(d)	Loss on early extinguishment of debt.
(e)	Tax effect for non-GAAP adjustments.
(f)	Environmental reserve, net of tax.
(g)	Shares used in adjusted diluted EPS includes the effect of diluted shares which are anti-dilutive to GAAP EPS.

See non-GAAP financial measure disclosure on Table 2.

Table 3

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments

	Six Months Ended
	June 30, 2005
				Non-GAAP
	GAAP			Adjustments			Adjusted
In thousands, except per share data
Product sales	$	342,631		$	—		$	342,631
Ribavirin royalties		43,541			—			43,541
Total revenues		386,172			—			386,172
Cost of goods sold		101,661			—			101,661
Selling expenses		114,269			—			114,269
General and administrative expenses		50,562			—			50,562
Research and development costs		53,283			—			53,283
Acquired in-process research and development		126,399			(126,399	)(a)		—
Restructuring charges		371			(371	)(b)		—
Amortization expense		31,179			(1,532	)(c)		29,647
		477,724			(128,302	)		349,422
Income (loss) from operations		(91,552	)		128,302			36,750
Interest, net		(13,610	)		—			(13,610	)
Other income (expense), net including translation and exchange		(4,422	)		—			(4,422	)
Income (loss) from continuing operations before provision for income taxes and minority interest		(109,584	)		128,302			18,718
Provision for income taxes		26,426			(19,875	)(d)		6,551
Minority interest		305			—			305
Income (loss) from continuing operations		(136,315	)		148,177			11,862
Income (loss) from discontinued operations, net		(3,491	)		—			(3,491	)
Net income (loss)	$	(139,806	)	$	148,177		$	8,371
Basic earnings per common share
Income (loss) from continuing operations	$	(1.50	)				$	0.13
Discontinued operations, net		(0.04	)					(0.04	)
Net income (loss)	$	(1.54	)				$	0.09
Shares used in per share computation		90,712						90,712
Diluted earnings per common share
Income (loss) from continuing operations	$	(1.50	)				$	0.13
Discontinued operations, net		(0.04	)					(0.04	)
Net income (loss)	$	(1.54	)				$	0.09
Shares used in per share computation		90,712						94,213	(e)

(a)	Expense associated with the write-off of acquired IPR&D related to the Xcel Pharmaceuticals acquisition.
(b)	Impairment charge on our manufacturing site in China and net gain on sale of three manufacturing sites.
(c)	Impairment charges on products sold in Spain and North America.
(d)	The acquired IPR&D charge and the restructuring charge are not deductible for income tax purposes. The tax adjustment of $19.9 million includes $21.7 million relating to our estimate of expenses associated with various tax issues raised by the Internal Revenue Service and $10.2 million attributable to U.S. NOLs not recognized for GAAP purposes partially offset by the reversal of foreign tax valuation allowances.
(e)	Shares used in adjusted diluted earnings per share (“EPS”) includes the effect of diluted shares which are anti-dilutive to GAAP EPS.

See non-GAAP financial measure disclosure on Table 2.

Table 3.1

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments

	Six Months Ended
	June 30, 2004
				Non-GAAP
	GAAP			Adjustments			Adjusted
In thousands, except per share data
Product sales	$	279,959		$	—		$	279,959
Ribavirin royalties		48,111			—			48,111
Total revenues		328,070			—			328,070
Cost of goods sold		92,650			—			92,650
Selling expenses		101,317			(3,351	)(a)		97,966
General and administrative expenses		48,724			(1,159	)(a)		47,565
Research and development costs		39,384			—			39,384
Acquired in-process research and development		11,770			(11,770	)(b)		—
Restructuring charges		20,185			(20,185	)(c)		—
Amortization expense		27,420			—			27,420
		341,450			(36,465	)		304,985
Income (loss) from operations		(13,380	)		36,465			23,085
Interest, net		(23,073	)		—			(23,073	)
Other income (expense), net including translation and exchange		(7,576	)		5,898	(d)		(1,678	)
Loss from continuing operations before provision for income taxes and minority interest		(44,029	)		42,363			(1,666	)
Provision for income taxes		(6,281	)		5,848	(e)		(433	)
Minority interest		89			—			89
Loss from continuing operations		(37,837	)		36,515			(1,322	)
Loss from discontinued operations, net		(17,027	)		10,080	(f)		(6,947	)
Net loss	$	(54,864	)	$	46,595		$	(8,269	)
Basic earnings per common share
Loss from continuing operations	$	(0.45	)				$	(0.02	)
Discontinued operations, net		(0.21	)					(0.08	)
Net loss	$	(0.66	)				$	(0.10	)
Shares used in per share computation		83,663						83,663
Diluted earnings per common share
Loss from continuing operations	$	(0.45	)				$	(0.02	)
Discontinued operations, net		(0.21	)					(0.08	)
Net loss	$	(0.66	)				$	(0.10	)
Shares used in per share computation		83,663						83,663

(a)	Sales force reduction costs.
(b)	In-process research and development charge related to the acquisition of Amarin.
(c)	Restructuring charges were primarily related to our manufacturing rationalization plan and include impairment charges on manufacturing sites and severance charges.
(d)	Loss on early extinguishment of debt.
(e)	Tax effect for non-GAAP adjustments.
(f)	Environmental reserve, net of tax.

See non-GAAP financial measure disclosure on Table 2.

Table 4

Valeant Pharmaceuticals International
GAAP reconciliation of basic and diluted earnings per share
For the three and six months ended June 30, 2005 and 2004

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except per share data)	2005			2004			2005			2004
Income (loss) from continuing operations	$	1,441		$	(27,325	)	$	(136,315	)	$	(37,837	)
Non-GAAP pre-tax adjustments:
Acquired IPR&D		—			384			126,399			11,770
Sales force reduction costs		—			4,510			—			4,510
Product impairment charges		1,532			—			1,532			—
Restructuring charges		(1,324	)		20,185			371			20,185
Loss on early extinguishment of debt		—			5,898			—			5,898
Tax effect on the above charges and tax settlements		5,914			(1,635	)		19,875			(5,848	)
Adjusted income (loss) from continuing operations before the above charges	$	7,563		$	2,017		$	11,862		$	(1,322	)
Adjusted basic EPS from continuing operations	$	0.08		$	0.02		$	0.13		$	(0.02	)
Adjusted diluted EPS from continuing operations	$	0.08		$	0.02		$	0.13		$	(0.02	)
Shares used in basic per share calculation		92,568			83,880			90,712			83,663
Shares used in diluted per share calculation		95,591			86,435			94,213			83,663

Reconciliation of consolidated operating income to non-GAAP adjusted
earnings before interest, taxes, depreciation and amortization
(“EBITDA”)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2005			2004			% Change			2005			2004			% Change
Consolidated operating income (loss) (GAAP)	$	21,209		$	(9,617	)		—		$	(91,552	)	$	(13,380	)		—
Depreciation and amortization		24,460			20,212			21	%		45,498			41,869			9	%
EBITDA (non-GAAP) (a)		45,669			10,595			331	%		(46,054	)		28,489			—
Non-GAAP adjustments (b)		(1,324	)		25,079						126,770			36,465
Adjusted EBITDA (non-GAAP) (a)	$	44,345		$	35,674			24	%	$	80,716		$	64,954			24	%

(a)

We believe that EBITDA is a meaningful non-GAAP financial measure as an earnings-derived indicator that approximates cashflow. We calculate EBITDA by adding depreciation and amortization back to consolidated operating income. Adjusted EBITDA excludes the additional costs set forth in note (b) below. Adjusted EBITDA, as defined and presented by us, may not be comparable to similar measures reported by other companies.

(b)

See tables 2, 2.1, 3 and 3.1 for explanation of non-GAAP adjustments.

See non-GAAP financial measure disclosure in Table 2.

Table 5

Valeant Pharmaceuticals International
Supplemental Sales Information
For the three and six months ended June 30, 2005 and 2004
(in thousands)

	Three Months Ended				%			Six Months Ended				%
	June 30,				Increase/			June 30,				Increase/
	2005		2004		(Decrease)			2005		2004		(Decrease)
Dermatology
Efudix/Efudex®(G)(T)	$	12,231	$	6,852		79	%	$	31,507	$	18,774		68	%
Kinerase®(G)(T)		5,821		4,161		40	%		10,256		8,098		27	%
Oxsoralen-Ultra®(G)(T)		4,126		5,224		(21	%)		7,094		6,612		7	%
Dermatix®(G)		2,566		1,927		33	%		4,462		3,304		35	%
Other Dermatology		10,162		(a)		—			20,341		(a)		—
Infectious Disease
Virazole®(G)(T)		4,039		3,674		10	%		8,234		8,491		(3	%)
Other Infectious Disease		4,245		(a)		—			10,098		(a)		—
Neurology
Mestinon®(G)(T)		10,434		10,274		2	%		20,294		19,260		5	%
Diastat(T) *		14,291		—		—			19,468		—		—
TASMAR®(G)**		1,533		584		163	%		2,472		584		323	%
Other Neurology		28,196		(a)		—			49,609		(a)		—
Other Therapeutic Classes
Bedoyecta®(T)		10,976		5,579		97	%		20,220		11,102		82	%
Solcoseryl(T)		3,911		5,159		(24	%)		8,105		9,212		(12	%)
Nyal(T)		5,366		4,270		26	%		7,840		6,514		20	%
Vision Care(T)		2,911		2,779		5	%		6,746		5,685		19	%
Other Pharmaceutical Products		60,020		97,151		(38	%)		115,885		182,323		(36	%)
Total Product Sales	$	180,828	$	147,634		22	%	$	342,631	$	279,959		22	%
Total Top Ten Product Sales(T)	$	74,106	$	47,972		54	%	$	139,764	$	93,748		49	%
Total Global Brand Product Sales(G)	$	40,750	$	32,696		25	%	$	84,319	$	65,123		29	%

(a)	In 2004, the Company tracked other products, but not by therapeutic classes; therefore, our ability to provide additional data by therapeutic classes is not practicable at this time.
*	Diastat was acquired in March 2005; total sales of products acquired in the Xcel transaction were $24.3 million and $31.6 million for the three and six months ended June 30, 2005, respectively.
**	Tasmar was acquired in April 2004.

Table 6

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Revenue and Operating Income — Regional
For the three and six months ended June 30, 2005 and 2004
(in thousands)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
Revenues	2005			2004			% Change			2005			2004			% Change
Pharmaceuticals
North America		60,398			35,258			71	%	$	109,341		$	62,887			74	%
Latin America		41,397			36,491			13	%		73,457			65,644			12	%
Europe		61,753			60,080			3	%		127,628			123,199			4	%
AAA		17,280			15,805			9	%		32,205			28,229			14	%
Total pharmaceuticals		180,828			147,634			22	%		342,631			279,959			22	%
Ribavirin royalty revenues		24,206			22,734			6	%		43,541			48,111			-9	%
Consolidated revenues	$	205,034		$	170,368			20	%	$	386,172		$	328,070			18	%
Cost of goods sold	$	52,940		$	45,938			15	%	$	101,661		$	92,650			10	%
Gross profit margin on pharmaceutical sales		71	%		69	%					70	%		67	%
Operating Income (Loss)
Pharmaceuticals
North America	$	16,552		$	10,903			52	%	$	33,246		$	17,787			87	%
Latin America		13,032			12,891			1	%		22,850			18,704			22	%
Europe		9,137			2,913			214	%		20,871			11,527			81	%
AAA		2,129			1,619			32	%		2,919			1,496			95	%
		40,850			28,326			44	%		79,886			49,514			61	%
Corporate expenses		(14,344	)		(12,059	)		19	%		(28,711	)		(24,652	)		16	%
Total specialty pharmaceuticals		26,506			16,267			63	%		51,175			24,862			106	%
Restructuring charges		1,324			(20,185	)		—			(371	)		(20,185	)		—
R&D		(6,621	)		(5,315	)		25	%		(15,957	)		(6,287	)		154	%
Acquired IPR&D		—			(384	)		—			(126,399	)		(11,770	)		—
Total consolidated operating income (loss)	$	21,209		$	(9,617	)				$	(91,552	)	$	(13,380	)

	Three Months Ended										Six Months Ended
Gross Profit	June 30, 2005		%			June 30, 2004		%			June 30, 2005		%			June 30, 2004		%
Pharmaceuticals
North America	$	47,069		78	%	$	29,301		83	%	$	87,565		80	%	$	52,823		84	%
Latin America		30,963		75	%		27,986		77	%		54,555		74	%		48,228		73	%
Europe		40,690		66	%		36,455		61	%		82,152		64	%		73,202		59	%
AAA		9,166		53	%		7,954		50	%		16,698		52	%		13,056		46	%
Total pharmaceuticals	$	127,888		71	%	$	101,696		69	%	$	240,970		70	%	$	187,309		67	%

Table 7

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

	June 30,		December 31,
	2005		2004
Balance Sheet Data
Cash and cash equivalents	$	326,155	$	222,590
Marketable securities		31,093		238,918
Total cash and marketable securities	$	357,248	$	461,508
Accounts receivable, net	$	171,763	$	171,860
Inventory, net		122,673		112,250
Long-term debt		793,047		793,139
Total equity		495,501		476,223

	Six Months Ended
	June 30,			June 30,
	2005			2004
Other Data
Cash flow provided by (used in) continuing operations
Operating activities	$	22,405		$	24,980
Investing activities		(83,998	)		(74,337	)
Financing activities		174,125			(104,623	)
Effect of exchange rate changes on cash and cash equivalents		(8,967	)		(287	)
Net increase (decrease) in cash and cash equivalents		103,565			(154,267	)
Net increase (decrease) in marketable securities		(207,825	)		13,476
Net decrease in cash and marketable securities	$	(104,260	)	$	(140,791	)

Table 8

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Consolidated
Product sales	$	180,828		$	147,634		$	342,631		$	279,959
Currency effect		(8,030	)					(15,334	)
Product sales, excluding currency impact	$	172,798					$	327,297
Operating income (loss)	$	21,209		$	(9,617	)	$	(91,552	)	$	(13,380	)
Currency effect		(2,432	)					(4,445	)
Operating income, excluding currency impact	$	18,777					$	(95,997	)
Geographic Product Sales
North America pharmaceuticals	$	60,398		$	35,258		$	109,341		$	62,887
Currency effect		(586	)					(1,032	)
North America pharmaceuticals, excluding currency impact	$	59,812					$	108,309
Latin America pharmaceuticals	$	41,397		$	36,491		$	73,457		$	65,644
Currency effect		(2,139	)					(1,948	)
Latin America pharmaceuticals, excluding currency impact	$	39,258					$	71,509
Europe pharmaceuticals	$	61,753		$	60,080		$	127,628		$	123,199
Currency effect		(4,592	)					(10,974	)
Europe pharmaceuticals, excluding currency impact	$	57,161					$	116,654
AAA pharmaceuticals	$	17,280		$	15,805		$	32,205		$	28,229
Currency effect		(713	)					(1,380	)
AAA pharmaceuticals, excluding currency impact	$	16,567					$	30,825

Note: Currency effect is determined by comparing adjusted 2005 reported amounts, calculated using 2004 monthly average exchange rates, to the actual 2004 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.