Valeant Pharmaceuticals International 8-K Valeant Pharmaceuticals Reports Fourth Quarter and Full Year 2005 Results

Exhibit 99.1

International Headquarters
3300 Hyland Avenue Costa Mesa, CA 92626
714,545,0100 FAX 714,556,0131
www.valeant.com

Investor Contact:	Media Contact:
Jeff Misakian, Valeant Pharmaceuticals	Dan Springer, Valeant Pharmaceuticals
714-545-0100 ext. 3309	714-545-0100 ext. 3381

VALEANT PHARMACEUTICALS REPORTS
FOURTH QUARTER AND FULL YEAR 2005 RESULTS

— Product Sales Advance 17 Percent in the Fourth Quarter, 21 Percent in the Year —
— 2005 Operating Metrics Achieved —

     COSTA MESA, Calif., February 28, 2006 – Valeant Pharmaceuticals International (NYSE: VRX) today announced fourth quarter and full year results for 2005 showing strong revenue growth and continued improvement in key operating metrics.

Fourth Quarter 2005 vs. Fourth Quarter 2004 Highlights:

• Revenues increased 23 percent to $231.6 million compared to $188.0 million.

• Product sales increased 17 percent to $205.4 million compared to $175.0 million.

• Ribavirin royalties increased 101 percent to $26.2 million compared to $13.0 million.

• Net loss was $44.8 million, or $0.48 per diluted share, compared to a net loss of $99.0 million, or $1.18 per diluted share.

• Adjusting for certain non-GAAP items, adjusted income from continuing operations was $16.1 million, or $0.17 per diluted share, compared to $4.9 million, or $0.06 per diluted share.

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

     Timothy C. Tyson, Valeant’s president and chief executive officer, said, “Strategic acquisitions and the strength of key promoted brands have enabled us to turn in another year of solid, double-digit revenue growth. Our promoted brands, excluding products acquired, led us to again exceed the average growth for the industry. Because of this strong top-line growth and our continued focus on operating efficiencies, we achieved every one of our metric targets for the year.”

Full Year 2005 vs. 2004:

• Revenues increased 21 percent to $822.7 million compared to $682.5 million.

• Product sales increased 21 percent to $731.0 million compared to $606.1 million.

• Ribavirin royalties increased 20 percent to $91.6 million compared to $76.4 million.

• Net loss was $188.3 million, or $2.05 per diluted share, compared to a net loss of $169.8 million, or $2.02 per diluted share.

• Adjusting for non-GAAP items, adjusted income from continuing operations was $34.8 million, or $0.37 per diluted share, compared to $6.0 million, or $0.07 per diluted share.

Revenues:

     The advance in product sales in the 2005 fourth quarter and full year was led by the growth of products from the acquisition of Xcel Pharmaceuticals earlier in the year and growth in other key promoted brands. Acquisitions have been a core component of the company’s growth strategy as evidenced by the success of our Xcel acquisition and the company’s recent purchase of Infergen^®. Overall, promoted brands grew 33 percent in the 2005 fourth quarter and 44 percent for the full year, primarily from sales of Diastat^®, Migranal^®, Efudex^®, Bedoyecta™, Kinerase^® and Cesamet™.

     Sales of products acquired from Xcel totaled $18.9 million in the 2005 fourth quarter, compared to the $18.5 million in sales recorded by Xcel in the same period last year. Sales of products acquired from Xcel since the acquisition date of March 1, 2005 were $73.4 million. On a pro forma basis, assuming Valeant’s ownership for the full year, sales of these products in 2005 would have been $85.0 million, a 32 percent increase over the $64.4 million in sales recorded by Xcel in 2004.

     Foreign currency reduced product sales by $0.7 million in the 2005 fourth quarter and increased product sales by $19.4 million for the 2005 full year. Foreign currency had a favorable impact on the company’s adjusted operating loss of $2.3 million in the 2005 fourth quarter and $7.4 million in the 2005 full year.

     The increase in ribavirin royalties for the 2005 fourth quarter and year was primarily due to sales of ribavirin in Japan.

Regional Sales Performance:

     North America product sales increased 42 percent in the 2005 fourth quarter and 62 percent for the 2005 year, compared to the same periods last year. Increases in both periods were primarily due to the growth of acquired products, particularly Diastat and Migranal, and from the promoted products, Kinerase, Efudex and Cesamet. Excluding acquired products, sales in North America decreased 2 percent in the 2005 fourth quarter and increased 10 percent for the full year compared to the same periods last year. The 2005 fourth quarter decline was primarily due a combination of wholesale purchasing patterns and the discontinuation of unprofitable, non-promoted products.

2

     European product sales increased three percent in the 2005 fourth quarter and year, compared to the same periods last year. Foreign currency translation had a negative impact on European sales in the 2005 fourth quarter, reducing product sales by $4.4 million. For the 2005 full year, Europe benefited from currency translation, which increased product sales by $7.6 million. A number of promoted products performed well in Europe, including Solcoseryl™, Bisocard™, Mestinon^®, Dermatix™ and Tasmar^®.

     Sales in Latin America increased 18 percent in the 2005 fourth quarter and 14 percent for the 2005 year, compared to the same periods last year. Foreign currency translation in Latin America increased product sales by $3.7 million in the 2005 fourth quarter and by $8.9 million in the year. Growth in Latin America was driven primarily by Bedoyecta and a variety of promoted products.

     Sales in the Asia, Africa and Australia (AAA) region increased 11 percent in the 2005 fourth quarter and 15 percent for the 2005 year, primarily due to increased sales of promoted brands and regional products.

Financial Metrics:

     The company’s gross margin on product sales in 2005 improved to 69 percent, compared to 67 percent in 2004. The improvement primarily reflects increased sales in North America, a favorable mix of higher margin products and the company’s manufacturing improvement efforts.

     Adjusted for non-GAAP items, selling expense was 31 percent of product sales in 2005, compared to 32 percent in 2004. General and administrative expenses were 15 percent of sales in 2005, compared to 16 percent a year ago. The improvements reflect increased product sales and an ongoing effort to control expenses, partially offset by investments for business expansion, product launches and investments in the company’s infrastructure to support future growth.

     Research and development costs were 16 percent of sales in 2005 compared to 15 percent in 2004. The increase reflects investment in the company’s late-stage pipeline for the development of Viramidine^®, pradefovir, retigabine and Zelapar™.

Balance Sheet Information:

     Cash and marketable securities at December 31, 2005 totaled $235.1 million, compared to $461.5 million at December 31, 2004. The reduction in cash was primarily due to the acquisitions of Xcel Pharmaceuticals and Infergen.

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Recent developments and Expectations:

     The company expects operating metrics in 2006 to be in the ranges noted in the table below. These metrics are compared against the company’s performance in 2004 and 2005, as well as its previously communicated goals for 2008 as follows:

	2004A*			2005A*			2006E*			2008E*
Gross Margin		67	%		69	%		69-71	%		75-80	%
Cost of Goods Sold		33	%		31	%		29-31	%		20-25	%
Selling Expense		32	%		31	%		30-32	%**		25-30	%
G & A		16	%		15	%		12-14	%		10-12	%
R&D		15	%		16	%		16-18	%		10-12	%
Effective Tax Rate		26	%		35	%		30-32	%		28-30	%

*	Includes non-GAAP adjustments. A reconciliation of GAAP to non-GAAP results is provided in Tables 2-4.
**	Does not include costs for pre-launch activities associated with Viramidine, estimated to be between $10-15 million.

     The company expects that the impact on 2006 results from the implementation of Statement of Financial Accounting Standards 123(R) will be a reduction in pre-tax income of approximately $20 million.

Conference Call and Webcast Information:

     Valeant will host a conference call today at 9:00 a.m. EST (6:00 a.m. PST) to discuss its 2005 fourth quarter and year results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 5902588. International callers should dial (706) 679-0845, confirmation code 5902588. 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, 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 atwww.valeant.com.

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     Viramidine, Efudex, Diastat, Migranal, Kinerase, Infergen, Mestinon, Bedoyecta, Dermatix, Cesamet, Solcoseryl, Bisocard and Tasmar 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 may contain 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. 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 responsibility 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 in-process research and development expenses, special charges and credits, and results of discontinued businesses. 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. 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.

Financial Tables Follow

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5

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Income
For the three and twelve months ended December 31, 2005 and 2004 Table 1

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
(In thousands, except per share data)	2005			2004			% Change			2005			2004			% Change
Product sales	$	205,400		$	175,035			17	%	$	731,035		$	606,093			21	%
Ribavirin royalties		26,152			12,983			101	%		91,646			76,427			20	%
Total revenues		231,552			188,018			23	%		822,681			682,520			21	%
Cost of goods sold		65,871			58,399			13	%		223,226			200,313			11	%
Selling expenses		58,890			50,204			17	%		232,176			196,567			18	%
General and administrative expenses		30,517			24,880			23	%		107,744			98,566			9	%
Research and development costs		31,589			28,067			13	%		113,755			92,496			23	%
Acquired in-process research and development (a)		47,200			—			—			173,599			11,770			1375	%
Restructuring charges (b)		747			(772	)		—			1,253			19,344			(94	%)
Amortization expense		21,871			17,789			23	%		68,832			59,303			16	%
		256,685			178,567			44	%		920,585			678,359			36	%
Income (loss) from operations		(25,133	)		9,451						(97,904	)		4,161
Interest expense, net		(6,663	)		(6,012	)					(27,157	)		(36,833	)
Loss on early extinguishment of debt		—			—						—			(19,892	)
Other income (expense), net including translation and exchange		(729	)		2,334						(6,358	)		141
Income (loss) from continuing operations before provision for income taxes and minority interest		(32,525	)		5,773						(131,419	)		(52,423	)
Provision for income taxes		12,442			95,428						54,187			83,597
Minority interest		(202	)		225						287			233
Loss from continuing operations		(44,765	)		(89,880	)					(185,893	)		(136,253	)
Income (loss) from discontinued operations, net		2			(9,152	)					(2,366	)		(33,544	)
Net loss	$	(44,763	)	$	(99,032	)				$	(188,259	)	$	(169,797	)
Basic earnings per common share
Loss from continuing operations	$	(0.48	)	$	(1.07	)				$	(2.03	)	$	(1.62	)
Discontinued operations, net		—			(0.11	)					(0.02	)		(0.40	)
Net loss	$	(0.48	)	$	(1.18	)				$	(2.05	)	$	(2.02	)
Shares used in per share computation		92,701			84,161						91,696			83,887
Diluted earnings per common share
Loss from continuing operations	$	(0.48	)	$	(1.07	)				$	(2.03	)	$	(1.62	)
Discontinued operations, net		—			(0.11	)					(0.02	)		(0.40	)
Net loss	$	(0.48	)	$	(1.18	)				$	(2.05	)	$	(2.02	)
Shares used in per share computation		92,701			84,161						91,696			83,887

(a)	Expense associated with the write-off of acquired in-process research and development (“IPR&D”) related to the Xcel Pharmaceuticals, Inc. and Infergen acquisitions in 2005 and the Amarin acquisition in 2004.
(b)	Restructuring charges relate to our manufacturing rationalization plan.

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments Table 2

	Three Months Ended
	December 31, 2005
				Non-GAAP
(In thousands, except per share data)	GAAP			Adjustments					Adjusted
Product sales	$	205,400		$	—				$	205,400
Ribavirin royalties		26,152			—					26,152
Total revenues		231,552			—					231,552
Cost of goods sold		65,871			—					65,871
Selling expenses		58,890			(3,041	)	(a	)		55,849
General and administrative expenses		30,517			(158	)	(a	)		30,359
Research and development costs		31,589			—					31,589
Acquired in-process research and development		47,200			(47,200	)	(b	)		—
Restructuring charges		747			(747	)	(c	)		—
Amortization expense		21,871			(5,885	)	(d	)		15,986
		256,685			(57,031	)				199,654
Income (loss) from operations		(25,133	)		57,031					31,898
Interest expense, net		(6,663	)		—					(6,663	)
Other expense, net including translation and exchange		(729	)		—					(729	)
Income (loss) from continuing operations before provision for income taxes and minority interest		(32,525	)		57,031					24,506
Provision for income taxes		12,442			(3,865	)	(e	)		8,577
Minority interest		(202	)		—					(202	)
Income (loss) from continuing operations		(44,765	)		60,896					16,131
Income from discontinued operations, net		2			55		(f	)		57
Net income (loss)	$	(44,763	)	$	60,951				$	16,188
Basic earnings per common share
Income (loss) from continuing operations	$	(0.48	)						$	0.17
Discontinued operations, net		—								0.01
Net income (loss)	$	(0.48	)						$	0.18
Shares used in per share computation		92,701								92,701
Diluted earnings per common share
Income (loss) from continuing operations	$	(0.48	)						$	0.17
Discontinued operations, net		—								—
Net income (loss)	$	(0.48	)						$	0.17	(g)
Shares used in per share computation		92,701								95,338

(a)	Costs associated with the restructuring of the sales force in Iberia.
(b)	Expense associated with the write-off of acquired IPR&D related to the Infergen acquisition.
(c)	Restructuring charges relate to our manufacturing rationalization plan.
(d)	Impairment charges on products primarily sold in Germany $5.1 million, U.K. $0.6 million and Brazil $0.2 million, which have either been discontinued or where sales are projected to decrease due to regulatory or other reasons.
(e)	Tax effect for non-GAAP adjustments, including $8.6 million attributable to tax benefits from U.S. net operating losses not recognized for GAAP purposes and $3.4 million of favorable settlements in foreign locations.
(f)	Net gain on sale of discontinued operations in Hungary.
(g)	Shares used in adjusted diluted earnings per share (“EPS”) includes the effect of diluted shares which are anti-dilutive to GAAP EPS.

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 in-process research and development expenses, special charges and credits, and results of discontinued businesses. 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. 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.

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments Table 2.1

	Three Months Ended
	December 31, 2004
				Non-GAAP
(In thousands, except per share data)	GAAP			Adjustments					Adjusted
Product sales		175,035		$	—				$	175,035
Ribavirin royalties		12,983			—					12,983
Total revenues		188,018			—					188,018
Cost of goods sold		58,399			—					58,399
Selling expenses		50,204			(50	)	(a)			50,154
General and administrative expenses		24,880			2,973		(a),	(b)		27,853
Research and development costs		28,067			—					28,067
Restructuring charges		(772	)		772		(c)			—
Amortization expense		17,789			(4,797	)	(d)			12,992
		178,567			(1,102	)				177,465
Income from operations		9,451			1,102					10,553
Interest expense, net		(6,012	)		—					(6,012	)
Other income, net including translation and exchange		2,334			—					2,334
Income from continuing operations before provision for income taxes and minority interest		5,773			1,102					6,875
Provision for income taxes		95,428			(93,639	)	(e)			1,789
Minority interest		225			—					225
Income (loss) from continuing operations		(89,880	)		94,741					4,861
Loss from discontinued operations, net		(9,152	)		6,362		(f)			(2,790	)
Net Income (loss)	$	(99,032	)	$	101,103				$	2,071
Basic earnings per common share
Income (loss) from continuing operations	$	(1.07	)						$	0.06
Discontinued operations, net		(0.11	)							(0.03	)
Net Income (loss)	$	(1.18	)						$	0.03
Shares used in per share computation		84,161								84,161
Diluted earnings per common share
Income (loss) from continuing operations	$	(1.07	)						$	0.06
Discontinued operations, net		(0.11	)							(0.03	)
Net Income (loss)	$	(1.18	)						$	0.03
Shares used in per share computation		84,161								87,327	(g)

(a)	Sales force reduction costs.
(b)	Legal expenses related to the settlement of a bondholder class action lawsuit.
(c)	Restructuring charges were primarily related to our manufacturing rationalization plan and include impairment charges on manufacturing sites and severance charges.
(d)	Product impairment.
(e)	Tax effect on non-GAAP adjustments. Includes an increase of $95.6 million in the valuation allowance to recognize the uncertainty of realizing the benefits of U.S. net operating losses and research credits.
(f)	Increase in the tax valuation allowance to recognize the uncertainty of realizing the benefits of U.S. net operating losses.
(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.

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments Table 3

	Twelve Months Ended
	December 31, 2005
				Non-GAAP
(In thousands, except per share data)	GAAP			Adjustments					Adjusted
Product sales	$	731,035		$	—				$	731,035
Ribavirin royalties		91,646			—					91,646
Total revenues		822,681			—					822,681
Cost of goods sold		223,226			—					223,226
Selling expenses		232,176			(3,041	)	(a	)		229,135
General and administrative expenses		107,744			(158	)	(a	)		107,586
Research and development costs		113,755			—					113,755
Acquired in-process research and development		173,599			(173,599	)	(b	)		—
Restructuring charges		1,253			(1,253	)	(c	)		—
Amortization expense		68,832			(7,417	)	(d	)		61,415
		920,585			(185,468	)				735,117
Income (loss) from operations		(97,904	)		185,468					87,564
Interest expense, net		(27,157	)		—					(27,157	)
Other expense, net including translation and exchange		(6,358	)		—					(6,358	)
Income (loss) from continuing operations before provision for income taxes and minority interest		(131,419	)		185,468					54,049
Provision for income taxes		54,187			(35,270	)	(e	)		18,917
Minority interest		287			—					287
Income (loss) from continuing operations		(185,893	)		220,738					34,845
Loss from discontinued operations, net		(2,366	)		(1,725	)	(f	)		(4,091	)
Net income (loss)	$	(188,259	)	$	219,013				$	30,754
Basic earnings per common share
Income (loss) from continuing operations	$	(2.03	)						$	0.38
Discontinued operations, net		(0.02	)							(0.04	)
Net income (loss)	$	(2.05	)						$	0.34
Shares used in per share computation		91,696								91,696
Diluted earnings per common share
Income (loss) from continuing operations	$	(2.03	)						$	0.37
Discontinued operations, net		(0.02	)							(0.05	)
Net income (loss)	$	(2.05	)						$	0.32
Shares used in per share computation		91,696								94,844	(g)

(a)	Costs associated with the restructuring of the sales force in Iberia.
(b)	Expense associated with the write-off of acquired IPR&D related to the Xcel Pharmaceuticals and Infergen acquisitions.
(c)	Restructuring charges relate to our manufacturing rationalization plan.
(d)	Impairment charges on products sold primarily in Germany, U.S., U.K., Brazil and Spain.
(e)	Tax effect for non-GAAP adjustments. The tax adjustment includes $24.3 million attributable to tax benefits from U.S. net operating losses not recognized for GAAP purposes, $21.7 million relating to our estimate of expenses associated with issues raised by the Internal Revenue Service, $4.5 million related to the repatriation of foreign earnings related to the American Jobs Creation Act of 2004, $3.4 million of favorable settlements in foreign locations and $10.5 million of foreign valuation allowance releases. $126.4 million of the IPR&D charge, is not deductible for income tax purposes.
(f)	Net gain on sale of discontinued operations in Hungary.
(g)	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.

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments Table 3.1

	Twelve Months Ended
	December 31, 2004
				Non-GAAP
(In thousands, except per share data)	GAAP			Adjustments					Adjusted
Product sales	$	606,093		$	—				$	606,093
Ribavirin royalties		76,427			—					76,427
Total revenues		682,520			—					682,520
Cost of goods sold		200,313			—					200,313
Selling expenses		196,567			(3,611	)	(a	)		192,956
General and administrative expenses		98,566			(1,376	)	(a	),(b)		97,190
Research and development costs		92,496			—					92,496
Acquired in-process research and development		11,770			(11,770	)	(c	)		—
Restructuring charges		19,344			(19,344	)	(d	)		—
Amortization expense		59,303			(4,797	)	(e	)		54,506
		678,359			(40,898	)				637,461
Income from operations		4,161			40,898					45,059
Interest expense, net		(36,833	)		—					(36,833	)
Other income (expense), net including translation and exchange		(19,751	)		19,892		(f	)		141
Income (loss) from continuing operations before provision for income taxes and minority interest		(52,423	)		60,790					8,367
Provision for income taxes		83,597			(81,421	)	(g	)		2,176
Minority interest		233			—					233
Income (loss) from continuing operations		(136,253	)		142,211					5,958
Loss from discontinued operations, net		(33,544	)		16,442		(h	)		(17,102	)
Net loss	$	(169,797	)	$	158,653				$	(11,144	)
Basic earnings per common share
Income (loss) from continuing operations	$	(1.62	)						$	0.07
Discontinued operations, net		(0.40	)							(0.20	)
Net loss	$	(2.02	)						$	(0.13	)
Shares used in per share computation		83,887								83,887
Diluted earnings per common share
Income (loss) from continuing operations	$	(1.62	)						$	0.07
Discontinued operations, net		(0.40	)							(0.20	)
Net loss	$	(2.02	)						$	(0.13	)
Shares used in per share computation		83,887								86,742	(i)

(a)	Sales force reduction costs.
(b)	Legal expenses related to the settlement of the bondholder class action lawsuit.
(c)	In-process research and development charge related to the acquisition of Amarin.
(d)	Restructuring charges were primarily related to our manufacturing rationalization plan and include impairment charges on manufacturing sites and severance charges.
(e)	Product impairment.
(f)	Loss on early extinguishment of debt.
(g)	Tax effect on non-GAAP adjustments. Includes an increase of $95.6 million in the valuation allowance to recognize the uncertainty of realizing the benefits of U.S. net operating losses and research credits, plus a $6.5 million valuation allowance on Spanish and Argentine net operating losses and a $1.8 million Puerto Rico tax settlement.
(h)	Environmental reserve, net of tax.
(i)	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.

Valeant Pharmaceuticals International
GAAP reconciliation of basic and diluted earnings per share
For the three and twelve months ended December 31, 2005 and 2004 Table 4

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except per share data)	2005			2004			2005			2004
Loss from continuing operations	$	(44,765	)	$	(89,880	)	$	(185,893	)	$	(136,253	)
Non-GAAP pre-tax adjustments:
Acquired IPR&D		47,200			—			173,599			11,770
Sales force reduction costs		3,199			(423	)		3,199			4,262
Product impairment charges		5,885			4,797			7,417			4,797
Restructuring charges		747			(772	)		1,253			19,344
Loss on early extinguishment of debt		—			—			—			19,892
Settlement of class action lawsuit		—			(2,500	)		—			725
Tax effect on the above charges and tax settlements		3,865			93,639			35,270			81,421
Adjusted income from continuing operations before the above charges	$	16,131		$	4,861		$	34,845		$	5,958
Adjusted basic EPS from continuing operations	$	0.17		$	0.06		$	0.38		$	0.07
Adjusted diluted EPS from continuing operations	$	0.17		$	0.06		$	0.37		$	0.07
Shares used in basic per share calculation		92,701			84,161			91,696			83,887
Shares used in diluted per share calculation		95,338			87,327			94,844			86,742

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

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
	2005			2004			% Change			2005			2004		% Change
Consolidated operating income (loss) (GAAP)	$	(25,134	)	$	9,451			—		$	(97,905	)	$	4,161		—
Depreciation and amortization		29,030			24,617			18	%		97,351			87,138		12	%
EBITDA (non-GAAP) (a)		3,896			34,068			-89	%		(554	)		91,299		—
Non-GAAP adjustments (b)		51,146			(3,695	)					178,051			36,101
Adjusted EBITDA (non-GAAP) (a)	$	55,042		$	30,373			81	%	$	177,497		$	127,400		39	%

(a)

We believe that EBITDA is a meaningful non-GAAP financial measure as an earnings-derived indicator of the cashflow generation ability of the company. 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.

Valeant Pharmaceuticals International	Table 5
Supplemental Sales Information
For the three and twelve months ended December 31, 2005 and 2004
(In thousands)

	Three Months Ended					%			Twelve Months Ended					%
	December 31,					Increase/			December 31,					Increase/
	2005		2004			(Decrease)			2005		2004			(Decrease)
Dermatology
Efudix/Efudex®(G)(P)	$	14,307	$	11,237			27	%	$	60,179	$	45,453			32	%
Kinerase®(G)(P)		6,090		3,744			63	%		22,267		15,619			43	%
Oxsoralen-Ultra®(G)(P)		1,820		2,768			(34	%)		9,365		10,910			(14	%)
Dermatix™(G)(P)		2,479		1,936			28	%		9,189		7,034			31	%
Eldoquin (P)		1,798		1,842			(2	%)		6,316		6,099			4	%
Other Dermatology		9,625		(a)			—			34,366		(a)			—
Infectious Disease
Virazole®(G)(P)		4,180		3,704			13	%		15,352		13,822			11	%
Other Infectious Disease		6,414		(a)			—			21,465		(a)			—
Neurology
Diastat(P)(b)		10,639		—			—			47,631		—			—
Mestinon®(G)(P)		11,031		11,304			(2	%)		43,531		41,631			5	%
Librax(P)		8,367		5,554			51	%		18,159		16,868			8	%
Migranal(P)(b)		4,300		—			—			12,949		—			—
Dalmane/Dalmadorm(P)		3,716		3,276			13	%		12,285		12,146			1	%
Cesamet(P)		3,117		1,705			83	%		10,009		4,957			102	%
Limbitrol(P)		1,510		1,763			(14	%)		5,858		5,869			(0	%)
TASMAR®(G)(P)(c)		1,919		846			127	%		5,829		3,551			64	%
Other Neurology		17,608		(a)			—			54,658		(a)			—
Other Therapeutic Classes
Bedoyecta™(P)		12,115		13,239			(8	%)		46,884		30,654			53	%
Solcoseryl(P)		5,041		4,009			26	%		18,983		14,397			32	%
Nyal(P)		1,716		2,498			(31	%)		13,747		11,904			15	%
Bisocard(P)		3,544		3,562			(1	%)		12,847		10,613			21	%
Calcitonin(P)		2,492		2,298			8	%		9,645		10,420			(7	%)
Espaven(P)		3,877		2,455			58	%		9,272		7,010			32	%
Aclotin(P)		1,374		1,443			(5	%)		5,643		5,606			1	%
Espacil(P)		1,979		1,437			38	%		5,979		5,028			19	%
Other Pharmaceutical Products		64,342		94,415	(a)		(32	%)		218,627		326,502	(a)		(33	%)
Total Product Sales	$	205,400	$	175,035			17	%	$	731,035	$	606,093			21	%
Total Global Brand Product Sales(G)	$	41,826	$	35,539			18	%	$	165,712	$	138,020			20	%
Total Promoted Product Sales(P)	$	107,411	$	80,620			33	%	$	401,919		279,591			44	%

(a)	In 2004, the Company tracked other products, but not by quarter and therapeutic classes; therefore, our ability to provide additional data by therapeutic classes is not practicable at this time. A total for other pharmaceutical products is not provided as the amount would not be comparable to 2005 periods.
(b)	Diastat and Migranal were acquired in March 2005; total sales of products acquired in the Xcel transaction were $18.9 million and $73.4 million for the three and twelve months ended December 31, 2005, respectively.
(c)	Tasmar was acquired in April 2004.
(G)	Global products represent those products with targeted centralized promotional strategy.
(P)	Promoted products represent promoted products with annualized sales greater than $5 million.

Valeant Pharmaceuticals International	Table 6
Consolidated Condensed Statement of Revenue and Operating Income — Regional
For the three and twelve months ended December 31, 2005 and 2004
(In thousands)

	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
	2005			2004			% Change			2005			2004			% Change
Revenues
North America		61,272			43,299			42	%	$	231,137		$	142,799			62	%
Latin America		56,356			47,568			18	%		173,233			151,726			14	%
Europe		71,046			69,077			3	%		260,372			253,748			3	%
AAA		16,726			15,091			11	%		66,293			57,820			15	%
Total specialty pharmaceuticals		205,400			175,035			17	%		731,035			606,093			21	%
Ribavirin royalty revenues		26,152			12,983			101	%		91,646			76,427			20	%
Consolidated revenues	$	231,552		$	188,018			23	%	$	822,681		$	682,520			21	%
Cost of goods sold	$	65,871		$	58,399			13	%	$	223,226		$	200,313			11	%
Gross profit margin on pharmaceutical sales		68	%		67	%					69	%		67	%
Operating Income (Loss)
North America	$	18,717		$	14,591			28	%	$	68,081		$	44,438			53	%
Latin America		23,454			16,888			39	%		60,796			46,124			32	%
Europe		4,661			5,575			(16	%)		35,389			31,347			13	%
AAA		(781	)		329			—			4,472			3,103			44	%
		46,051			37,383			23	%		168,738			125,012			35	%
Corporate expenses		(9,054	)		(11,817	)		-23	%		(52,720	)		(50,877	)		4	%
Total specialty pharmaceuticals		36,997			25,566			45	%		116,018			74,135			56	%
Restructuring charges		(747	)		772			—			(1,253	)		(19,344	)		(94	%)
R&D		(14,184	)		(16,887	)		(16	%)		(39,071	)		(38,860	)		1	%
Acquired IPR&D		(47,200	)		—			—			(173,599	)		(11,770	)		1375	%
Total consolidated operating income (loss)	$	(25,134	)	$	9,451					$	(97,905	)	$	4,161

	Three Months Ended										Twelve Months Ended
	Dec. 31, 2005		%			Dec. 31, 2004		%			Dec. 31, 2005		%			Dec. 31, 2004		%
Gross Profit
North America	$	48,951		80	%	$	33,289		77	%	$	185,608		80	%	$	115,640		81	%
Latin America		41,686		74	%		36,779		77	%		127,953		74	%		110,764		73	%
Europe		41,780		59	%		39,140		57	%		161,352		62	%		150,830		59	%
AAA		7,112		43	%		7,428		49	%		32,896		50	%		28,546		49	%
Total specialty pharmaceuticals	$	139,529		68	%	$	116,636		67	%	$	507,809		69	%	$	405,780		67	%

Valeant Pharmaceuticals International	Table 7
Consolidated Balance Sheet and Other Data
(In thousands)

	December 31,		December 31,
	2005		2004
Balance Sheet Data
Cash and cash equivalents	$	224,856	$	222,590
Marketable securities		10,210		238,918
Total cash and marketable securities	$	235,066	$	461,508
Accounts receivable, net	$	187,987	$	171,859
Inventory, net		136,034		112,250
Long-term debt		788,439		793,139
Total equity		435,187		476,224

	Twelve Months Ended
	December 31,			December 31,
	2005			2004
Other Data
Cash flow provided by (used in) continuing operations
Operating activities	$	63,798		$	36,018
Investing activities		(223,493	)		135,071
Financing activities		168,970			(368,984	)
Effect of exchange rate changes on cash and cash equivalents		(7,009	)		10,466
Net increase (decrease) in cash and cash equivalents		2,266			(187,429	)
Net increase (decrease) in marketable securities		(228,708	)		(225,044	)
Net decrease in cash and marketable securities	$	(226,442	)	$	(412,473	)

Valeant Pharmaceuticals International	Table 8
Supplemental Non-GAAP Information on Currency Effect
(In thousands)

	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2005			2004		2005			2004
Consolidated
Product sales	$	205,400		$	175,035	$	731,035		$	606,093
Currency effect		702					(19,440	)
Product sales, excluding currency impact	$	206,102				$	711,595
Operating income (loss)	$	(25,133	)	$	9,451	$	(97,904	)	$	4,161
Currency effect		(2,327	)				(7,427	)
Operating income, excluding currency impact	$	(27,460	)			$	(105,331	)
Geographic Product Sales
North America pharmaceuticals	$	61,272		$	43,299	$	231,137		$	142,799
Currency effect		(343	)				(2,008	)
North America pharmaceuticals, excluding currency impact	$	60,929				$	229,129
Latin America pharmaceuticals	$	56,356		$	47,568	$	173,233		$	151,726
Currency effect		(3,688	)				(8,924	)
Latin America pharmaceuticals, excluding currency impact	$	52,668				$	164,309
Europe pharmaceuticals	$	71,046		$	69,077	$	260,372		$	253,748
Currency effect		4,353					(7,609	)
Europe pharmaceuticals, excluding currency impact	$	75,399				$	252,763
AAA pharmaceuticals	$	16,726		$	15,091	$	66,293		$	57,820
Currency effect		380					(899	)
AAA pharmaceuticals, excluding currency impact	$	17,106				$	65,394

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.