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Press release from CNW Group

Valeant Pharmaceuticals Reports 2012 Second Quarter Financial Results

Thursday, August 02, 2012

Valeant Pharmaceuticals Reports 2012 Second Quarter Financial Results07:08 EDT Thursday, August 02, 2012MONTREAL, Aug. 2, 2012 /CNW/ -2012 Second Quarter Total Revenue $820 million, including $45 million related to Potiga™ launch milestoneOrganic growth (same store sales) was approximately 6%Pro forma organic growth was approximately 10%2012 Second Quarter GAAP EPS Loss of $0.07; Cash EPS $1.01Excluding impact from Potiga milestone, Cash EPS was $0.872012 Second Quarter GAAP Cash Flow from Operations was $255 million; Adjusted Cash Flow from Operations was $307 million 2012 Guidance increased to $4.55 - $4.75 Cash EPS$4.18 - $4.38 excluding one-time items Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces second quarter financial results for 2012. "The second quarter continued our track record of delivering solid results," said J. Michael Pearson, chairman and chief executive officer. "With our diversified operations, we were able to mitigate headwinds caused by foreign exchange and the continued genericization impact of Cardizem® CD and Ultram® ER, and still report solid top and bottom line results. We are also pleased with our significant increase in cash flow from operations, both from a GAAP and non-GAAP basis. We look forward to a strong second half of the year." Business PerformanceValeant's business continued to perform well in the second quarter of 2012 and - with the exception of the U.S. Neurology and Other segment - each business delivered positive revenue growth, both in terms of total revenue and organic growth. Total revenue was $820.1 million in the second quarter of 2012, as compared to $609.4 million in the second quarter of 2011, an increase of 35%. Product sales were $748.7 million in the second quarter of 2012, as compared to $530.0 million in the year-ago quarter, an increase of 41%. Overall, Valeant's business continued to deliver strong organic growth. Same store organic growth was approximately 6% and pro forma organic growth was approximately 10% for the second quarter of 2012. (See Table 5) Particularly positive was Valeant's U.S. Dermatology business, which continued its exceptional growth performance in the second quarter. Key contributors to organic growth included Zovirax®, Acanya®, Atralin® and CeraVe®.We are also pleased with our Emerging Markets segment, which delivered double digit organic growth. We continue to see strong performance in Poland against a tough market environment and exceptional growth from our Russian/CIS operations as we gained critical mass in this market. We remain excited about our new operations in South East Asia/South Africa, where our business demonstrated outstanding growth.The Canadian and Australian segment delivered slower organic growth this quarter due to the genericization of Cesamet® that occurred in March 2012 and wholesaler buying patterns in Australia.Finally, the U.S. Neurology and Other portfolio continued to decline. Wellbutrin XL®, Diastat®, Ultram® ER and Cardizem® CD all declined as expected, with generic competitors for certain strengths for the latter two products being introduced in September 2011 and November 2011, respectively. Excluding these products, the remaining U.S. Neurology and Other segment increased 3%, as compared to the second quarter of 2011.Included in total revenue for the second quarter of 2012 was $45.0 million of alliance and royalty revenue related to the milestone payment for the U.S. launch of ezogabine (Potiga™) from GlaxoSmithKline (GSK), while the second quarter of 2011 included $40.0 million of alliance and royalty revenue related to the milestone payment from GSK for the European launch of retigabine (Trobalt™).Financial PerformanceThe Company reported a net loss of $21.6 million for the second quarter of 2012, or $0.07 per diluted share. On a Cash EPS basis, adjusted income was $314.5 million, or $1.01 per diluted share. Excluding the Potiga milestone, adjusted income was $269.5 million, or $0.87 per diluted share.GAAP cash flow from operations was $254.6 million in the second quarter of 2012, and adjusted cash flow from operations was $307.5 million in the second quarter of 2012. Both figures include the milestone payment of $45.0 million. The Company's cost of goods sold (COGS) was $197.3 million in the second quarter of 2012. After backing out a fair value adjustment to inventory, amortization expense and other items related to acquisitions of approximately $14.0 million, COGS represented 24% of product sales. Selling, General and Administrative expenses were $185.4 million in the second quarter of 2012, which includes a $5.1 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. Excluding the step-up in stock based compensation, SG&A was approximately 22% of revenue. Research and Development expenses were $17.7 million in the second quarter of 2011, or approximately 2% of revenue. 2012 GuidanceThe Company is updating its previous Cash EPS guidance and is increasing Cash EPS to $4.55 to $4.75 (or $4.18 to $4.38 excluding one-time items) in 2012, up from prior guidance of $4.45 to $4.70, and maintaining prior guidance of total revenue in the range of $3.4 to $3.6 billion and adjusted cash flow from operations of greater than $1.4 billion. Conference Call and Webcast InformationThe Company will host a conference call and a live Internet webcast along with a slide presentation today at 8:00 a.m. ET (5:00 a.m. PT), August 2, 2012 to discuss its second quarter financial results for 2012. The dial-in number to participate on this call is (877) 876-8393, confirmation code 10552994. International callers should dial (973) 200-3961, confirmation code 10552994. A replay will be available approximately two hours following the conclusion of the conference call through August 8, 2012 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 10552994. The live webcast of the conference call may be accessed through the investor relations section of the Company's corporate website at www.valeant.com. About Valeant Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of dermatology, neurology and branded generics. More information about Valeant can be found at www.valeant.com. Forward-looking StatementsThis press release may contain forward-looking statements, including, but not limited to, statements regarding future results and performance, financial guidance, expected revenue and adjusted cash flow from operations and anticipated Cash EPS for 2012. Forward-looking statements may generally be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target", or "continue" and variations or similar expressions. 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 discussed in the Company's most recent annual or quarterly report and detailed from time to time in Valeant's other filings with the Securities and Exchange Commission ("SEC") and the Canadian Securities Administrators ("CSA"), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes.Note on GuidanceThe guidance contained in this press release is only effective as of the date given, August 2, 2012, and will not be updated or confirmed until the Company publicly announces updated or affirmed guidance.Non-GAAP Information To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. 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 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. Contact Information:Laurie W. Little 949-461-6002 laurie.little@valeant.com Financial Tables follow.Valeant Pharmaceuticals International, Inc.Table 1 Condensed Consolidated Statement of IncomeFor the Three and Six Months Ended June 30, 2012 and 2011Three Months EndedSix Months EndedJune 30,June 30,(In thousands, except per share data)2012201120122011Product sales$ 748,742$ 530,035$ 1,506,334$ 1,030,456Alliance and royalty56,86965,988136,100124,402Service and other(a)14,47913,36433,75919,555Total revenues820,090609,3871,676,1931,174,413Cost of goods sold (exclusive of amortization of intangible assets shown separately below)197,284169,912426,725339,199Cost of services12,4833,39526,0586,605Cost of alliances--68,82030,735Selling, general and administrative ("SG&A")185,440149,657362,726289,163Research and development17,71117,76439,71731,434Contingent consideration fair value adjustments7,7291,75217,5682,138Acquired in-process research and development4,5682,0004,5684,000Legal settlements53,6242,00056,7792,400Restructuring, acquisition-related and other costs43,87129,495113,71348,541Amortization of intangible assets210,570114,946411,213226,989733,280490,9211,527,887981,204Operating income86,810118,466148,306193,209Interest expense, net(99,594)(81,987)(200,496)(149,935)Loss on extinguishment of debt-(14,748)(133)(23,010)Gain (loss) on investments, net(35)21,1582,02422,927Other income (expense), net including translation and exchange (4,238)84720,0613,654Income (loss) before (recovery) provision for income taxes(17,057)43,736(30,238)46,845(Recovery of) provision for income taxes4,550(12,624)4,290(15,997)Net income (loss)$ (21,607)$ 56,360$ (34,528)$ 62,842Earnings per share:Basic:Net income (loss)$ (0.07)$ 0.19$ (0.11)$ 0.21Shares used in per share computation304,816303,426306,296303,587Diluted:Net income (loss)$ (0.07)$ 0.17$ (0.11)$ 0.19Shares used in per share computation304,816331,369306,296332,130(a) Service and Other revenue includes contract manufacturing revenue of $9.0 million and $19.8 million for the three and six months ended June 30, 2012, respectively. For the three months ended March 31, 2012, Service and Other revenue was restated by $10.8 million of contract manufacturing revenue previously reported in product sales.Valeant Pharmaceuticals International, Inc.Table 2 Reconciliation of GAAP EPS to Cash EPS For the Three and Six Months Ended June 30, 2012 and 2011Three Months EndedSix Months EndedJune 30,June 30,(In thousands, except per share data)2012201120122011Net income (loss)$ (21,607)$ 56,360$ (34,528)$ 62,842Non-GAAP adjustments(a):Inventory step-up (b)10,36116,26243,39246,171Alliance product assets & pp&e step-up/down(c)31327551,03419,340Stock-based compensation step-up (d)5,13516,07015,56339,407Contingent consideration fair value adjustment(e)7,7291,75217,5682,138Acquired in-process research and development (IPR&D)(f)4,5682,0004,5684,000Legal settlements(g)53,6242,00056,7792,400Restructuring, acquisition-related and other costs(h)43,87129,495113,71348,541Amortization and other non-gaap charges(i)215,791117,239420,994231,576341,392185,093723,611393,573Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest(j)(395)2,7525,3556,348Loss on extinguishment of debt-14,74813323,010(Gain) loss on assets held for sale/impairment, net (k)1,002-1,002-(Gain) loss on investments, net---(1,769)Tax(l)(5,850)(18,724)(20,709)(38,497)Total adjustments336,149183,869709,392382,665Adjusted income$ 314,542$ 240,229$ 674,864$ 445,507GAAP earnings per share - diluted$ (0.07)$ 0.17$ (0.11)$ 0.19Cash earnings per share - diluted$ 1.01$ 0.73$ 2.15$ 1.34Cash earnings per share excluding one-time items - diluted$ 0.87$ 0.54$ 1.78$ 1.10Shares used in diluted per share calculation - Cash earnings per share312,631331,369314,514332,130(a) See footnote (a) to Table 2a.(b) See footnote (b) to Table 2a and Table 2b.(c) See footnote (c) to Table 2a and footnotes (c) (e) to Table 2b.(d) See footnote (e) to Table 2a and footnote (f) to Table 2b.(e) See footnote (g) to Table 2a and footnote (h) to Table 2b.(f) See footnote (h) to Table 2a and footnote (i) to Table 2b.(g) See footnote (i) to Table 2a and footnote (j) to Table 2b.(h) See footnotes (j) (k) to Table 2a and footnotes (k) (l) to Table 2b.(i) See footnote (d) to Table 2a and Table 2b.(j) See footnote (l) to Table 2a and footnote (m) to Table 2b.(k) See footnote (f) to Table 2a and footnote (g) Table 2b.(l) See footnote (m) to Table 2a and footnote (n) Table 2b.Valeant Pharmaceuticals International, Inc.Table 2a Reconciliation of GAAP EPS to Cash EPS For the Three Months Ended June 30, 2012 and 2011Non-GAAP Adjustments(a)forThree Months EndedJune 30,(In thousands, except per share data)20122011Product sales$ -$ -Alliance and royalty-268Service and other--Total revenues-268Cost of goods sold (exclusive of amortization of intangible assets shown separately below)(13,984)(b)(c)(d) (18,535)(b)(c) Cost of services--Cost of alliances--Selling, general and administrative ("SG&A")(8,048)(c)(e)(f) (16,097)(c)(e) Research and development--Contingent consideration fair value adjustments(7,729)(g) (1,752)(g) Acquired in-process research and development(4,568)(h) (2,000)(h) Legal settlements(53,624)(i) (2,000)Restructuring, acquisition-related and other costs(43,871)(j) (29,495)(k) Amortization of intangible assets(210,570)(114,946)(342,394)(184,825)Operating income342,394185,093Interest expense, net(395)(l) 2,752(l) (Gain) loss on extinguishment of debt-14,748Gain (loss) on investments, net--Other income (expense), net including translation and exchange --Income before (recovery of) provision for income taxes341,999202,593Provision for income taxes5,850(m) 18,724(m) Total Adjustments to Net income $ 336,149$ 183,869Earnings per share:Diluted:Net income$ 1.08$ 0.56Shares used in per share computation312,631331,369(a) To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. 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 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. (b) ASC 805, accounting for business combinations requires an inventory fair value step-up whose total impact for the three months ended June 30, 2012 is $10.4 million primarily relating to the acquisitions of iNova on December 21, 2011 and Afexa on October 17, 2011. For the three months ended June 30, 2011 the impact of inventory fair value step-up is $16.3 million primarily relating to the acquisition of PharmaSwiss SA on March 10, 2011.(c) PP&E step-up/down represents the step-up/down to fair market value from Legacy Valeant's original cost resulting from the merger of Legacy Valeant into Legacy Biovail and subsequent acquisitions.(d) Costs associated with Tech transfers of $3.0 million.(e) For the three months ended June 30, 2012 SG&A primarily includes $7.2 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the Legacy Valeant into Legacy Biovail merger and expense associated with certain award modifications. For the three months ended June 30, 2011 SG&A primarily includes $16.1 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the Legacy Valeant into Legacy Biovail merger.(f) SG&A includes loss on assets held for sale/impairment.(g) Net expenses from the changes in fair value of contingent consideration for the three months ended June 30, 2012 and 2011 of $7.7 million and $1.8 million, respectively.(h) Total Acquired IPR&D for the three months ended June 30, 2012 of $4.6 million primarily relates to the termination of an IPR&D program acquired from Ortho Dermatologics and for the three months ended June 30, 2011 of $2.0 million relates to the acquisition of the Canadian rights to Cholestagel ®.(i) For the three months ended June 30, 2012 legal settlement costs of $53.6 million primarily relate to the litigation settlement and associated legal fees with respect to a class action antitrust complaint regarding Wellbutrin XL ®.(j) Restructuring, acquisition-related and other costs of $43.9 million represent costs related to the acquisitions of PharmaSwiss SA, Sanitas, Afexa, Ortho Dermatologics, Dermik, iNova, Probiotica, Eyetech, OraPharma, University Medical, Gerot Lannach and Pedinol. These include $13.9 million related to acquisition costs, $12.2 million related to employee severance costs, $8.4 million related to integration related consulting, duplicative labor, transition services, and other, $5.1 million related to facility closure costs, $2.0 million related to other, and $2.3 million related to non-personnel manufacturing integration costs.(k) Restructuring, acquisition-related and other costs of $29.5 million represent costs related to the merger of Legacy Valeant into Legacy Biovail and include $13.0 million related to facility closure costs, $6.9 million related to contract cancellation fees, consulting, legal and other costs, $4.4 million related to severance, $3.3 million related to manufacturing integration, and $1.9 million related to acquisition costs.(l) For the three months ended June 30, 2012 non cash interest expense associated with amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest is offset by an adjustment to deferred financing costs. For the three months ended June 30, 2011 non cash interest expense totaling $2.8 million associated with amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest.(m) Total tax effect of non-GAAP pre-tax adjustments, resolution of uncertain tax positions and change in valuation allowance associated with deferred tax asset.Valeant Pharmaceuticals International, Inc.Table 2b Reconciliation of GAAP EPS to Cash EPS For the Six Months Ended June 30, 2012 and 2011Six Months EndedJune 30,(In thousands, except per share data)20122011Product sales$ -$ -Alliance and royalty-536Service and other--Total revenues-536Cost of goods sold (exclusive of amortization of intangible assets shown separately below)(50,405)(b)(c)(d) (50,861)(b)(c) Cost of services--Cost of alliances(50,958)(e) (18,835)(e) Selling, general and administrative ("SG&A")(19,409)(c)(f)(g) (39,273)(c)(f) Research and development--Contingent consideration fair value adjustments(17,568)(h) (2,138)(h) Acquired in-process research and development(4,568)(i) (4,000)(i) Legal settlements(56,779)(j) (2,400)Restructuring, acquisition-related and other costs(113,713)(k) (48,541)(l) Amortization of intangible assets(411,213)(226,989)(724,613)(393,037)Operating income724,613393,573Interest expense, net5,355(m) 6,348(m) (Gain) loss on extinguishment of debt13323,010Gain (loss) on investments, net-(1,769)Other income (expense), net including translation and exchange --Income before (recovery of) provision for income taxes730,101421,162Provision for income taxes20,709(n) 38,497(n) Total Adjustments to Net income $ 709,392$ 382,665Earnings per share:Diluted:Net income$ 2.26$ 1.15Shares used in per share computation314,514332,130(a) See footnote (a) to Table 2a.(b) ASC 805, accounting for business combinations requires an inventory fair value step-up whose total impact for the six months ended June 30, 2012 is $43.4 million primarily relating to the acquisitions of iNova on December 21, 2011, Dermik on December 16, 2011 and Afexa on October 17, 2011. For the six months ended June 30, 2011 the impact of inventory fair value step-up is $46.2 million primarily relating to the merger of Legacy Valeant into Legacy Biovail and the acquisition of PharmaSwiss SA on March 10, 2011.(c) PP&E step-up/down represents the step-up/down to fair market value from Legacy Valeant's original cost resulting from the merger of Legacy Valeant into Legacy Biovail and subsequent acquisitions.(d) Costs associated with Tech transfers of $4.5 million.(e) Cost of Alliances represents the divestiture of 5FU and IDP-111 resulting from the acquisition of Dermik, $50.9 million for the six months ended June 30, 2012 and the divestiture of Cloderm resulting from the Legacy Valeant into Legacy Biovail merger, $18.8 million for the six months ended June 30, 2011. (f) For the six months ended June 30, 2012 SG&A primarily includes $17.7 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the Legacy Valeant into Legacy Biovail merger, acceleration of certain equity instruments and the expense associated with certain award modifications. For the six months ended June 30, 2011 SG&A primarily includes $39.4 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the Legacy Valeant into Legacy Biovail merger.(g) SG&A includes loss on assets held for sale/impairment.(h) Net expenses from the changes in fair value of contingent consideration for the six months ended June 30, 2012 and 2011 of $17.6 million and $2.1 million, respectively.(i) Total Acquired IPR&D for the six months ended June 30, 2012 of $4.6 million primarily relates to the termination of an IPR&D program acquired from Ortho Dermatologics and for the six months ended June 30, 2011 of $4.0 million relates to the acquisition of the Canadian rights to Cholestagel ®.(j) For the six months ended June 30, 2012 legal settlement costs of $56.8 million primarily relate to the litigation settlement and associated legal fees with respect to a class action antitrust complaint regarding Wellbutrin XL ®.(k) Restructuring, acquisition-related and other costs of $113.7 million represent costs related to the acquisitions of PharmaSwiss SA, Sanitas, Afexa, Ortho Dermatologics, Dermik, iNova, Probiotica, Eyetech, OraPharma, University Medical, Gerot Lannach and Pedinol. These include $21.4 million related to acquisition costs, $31.9 million related to employee severance costs, $21.4 million related to integration related consulting, duplicative labor, transition services, and other, $23.7 million related to facility closure costs, $11.2 million related to other, and $4.1 million related to non-personnel manufacturing integration costs.(l) Restructuring, acquisition-related and other costs of $48.5 million represent costs related to the merger of Legacy Valeant and Legacy Biovail and include $17.1 million related to facility closure costs, $15.4 million related to contract cancellation fees, consulting, legal and other costs, $9.3 million related to severance, $3.3 million related to manufacturing integration, and $3.4 million related to acquisition costs.(m) Non cash interest expense associated with amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest totals for the six months ended June 30, 2012 and June 30, 2011 $5.4 million and $6.3 million, respectively.(n) Total tax effect of non-GAAP pre-tax adjustments, resolution of uncertain tax positions and change in valuation allowance associated with deferred tax asset.Valeant Pharmaceuticals International, Inc.Table 3Reconciliation of GAAP Cost of Goods Sold to Non-GAAP Cost of Goods Sold - by SegmentFor the Three and Six Months Ended June 30, 2012 and 2011(In thousands)Three Months Ended 3.1Cost of goods sold (a)June 30,2012as reportedGAAP%of productsales2012fair value step-up adjustment to inventory and Other non-GAAP (b)2012 excluding fair value step-up adjustment to inventory and Othernon-GAAP% of product salesU.S. Dermatology $ 28,03613%$ 4,217$ 23,81911%U.S. Neurology & Other 32,06819%1,93930,12918%Canada/Australia (d)30,86726%6,07124,79621%Emerging Markets106,54443%1,831104,71342%Corporate/other(231)(74)(157)$ 197,28426%$ 13,984$ 183,30024%Six Months Ended June 30,2012as reportedGAAP% of product sales2012fair value step-up adjustment to inventory and Other non-GAAP (c)2012 excluding fair value step-up adjustment to inventory and Othernon-GAAP% of product salesU.S. Dermatology $ 59,93214%$ 13,571$ 46,36111%U.S. Neurology & Other 68,46619%5,56562,90118%Canada/Australia(d)78,97633%29,22949,74721%Emerging Markets219,35145%2,040217,31144%Corporate/other---$ 426,72528%$ 50,405$ 376,32025%(a) See footnote (a) to Table 2a.(b) U.S. Dermatology includes $3.6 million of fair value step-up adjustment to inventory and $0.6 million of tech transfer costs, U.S. Neurology and Other includes $1.3 million of tech transfer costs and $0.5 million of amortization. Canada/Australia includes $6.1 million of fair value step up adjustment to inventory, -$0.2 million PP&E step-down and $0.2 million of tech transfer costs. Emerging Markets includes $0.7 million of fair value step up adjustment to inventory, $0.1 million of PP&E step up and $0.9 million of tech transfer costs. Corporate includes a year to date reclass of stock base compensation step up to SG&A.(c) U.S. Dermatology includes $12.9 million of fair value step-up adjustment to inventory and $0.6 million of tech transfer costs, U.S. Neurology and Other includes $3.0 million of tech transfer costs and $2.6 million of amortization. Canada/Australia includes $29.7 million of fair value step up adjustment to inventory, -$0.7 million PP&E step-down and $0.2 million of tech transfer costs. Emerging Markets includes $0.8 million of fair value step up adjustment to inventory, $0.6 million of PP&E step up and $0.7 million of tech transfer costs.(d) Cost of Goods Sold excludes contract manufacturing costs currently reported in Cost of Services. Cost of Goods sold excluding fair value step-up adjustment to inventory and other non-gaap prior to the restatement of contract manufacturing costs to Cost of Services for the three months ended March 31, 2012 was $202,393.Valeant Pharmaceuticals International, Inc.Table 4Consolidated Balance Sheet and Other Data(In thousands)As ofAs ofJune 30,December 31,4.1Cash20122011Cash and cash equivalents $ 395,266$ 164,111Marketable securities -6,338Total cash and marketable securities$ 395,266$ 170,449DebtRevolving credit facility$ -$ 220,000Term loan A facility2,134,4662,185,520Term loan B facility1,170,651-Senior notes 4,229,7794,228,480Convertible notes16,27917,011Other--7,551,1756,651,011Less: Current portion(195,154)(111,250)$ 7,356,021$ 6,539,7614.2Summary of Cash Flow StatementThree Months EndedJune 30,20122011Cash flow provided by (used in):Net cash provided by (used in) operating activities (GAAP)$ 254,602$ 190,656Restructuring and acquisition-related costs(c)43,87129,495Payment of accrued legal settlements1,7522,000Payment of Accreted Interest on Convertible Debt-2,712Tax Benefit from Stock Options Exercised (a)2,8827,566Working Capital change related to Business Development Activities-(20,200)Non-Cash adjustments to Income Taxes Payable-13,730Changes in working capital related to restructuring and acquisition-related costs(c)4,379(2,419)Adjusted cash flow from operations (Non-GAAP)(b)$ 307,486$ 223,540Proceeds from sale of intangible assets-36,000Adjusted cash flow from operations (Non-GAAP)(b)$ 307,486$ 259,540(a) Includes stock option tax benefit which will reduce taxes in future periods.(b) See footnote (a) to Table 2a.(c) Total Restructuring and Acquisition-related costs cash payments of $48,250 are broken down as follows:Project TypeAmount PaidManufacturing Integration (Various Deals)10,601Europe (PharmaSwiss, Sanitas, Gerot Lannach)5,981iNova5,255Dermik5,076Pele Nova4,483Ortho3,318Eyetech2,865OraPharma2,110Afexa1,902Pedinol1,815Intellectual Property Migration1,099Other (Atlantis, Probiotica, University Medical, Swiss Herbal)3,746Total$ 48,250Expense TypeAmount PaidAcquisition Related Costs Paid to 3rd Parties16,122Severance Payments13,477Integration related consulting, duplicative labor, transition services, and other costs11,513Facility Closure Costs2,123Non-Personnel Manufacturing Integration Costs1,904Other costs3,111Total$ 48,250Valeant Pharmaceuticals International, Inc.Table 5Organic Growth - by SegmentFor the Three Months Ended June 30, 2012(In thousands)For the Three Months Ended June 30,Organic growth (a) (a) (b) (b) (1)QTD2012 (2)Acqimpact (3)QTDSame store (4)QTD2011 (5)Pro FormaAdj (6)Pro Forma2011 (7)CurrencyimpactSame store (8)Currencyimpact Acq (9)Divestitures / Discontinuations Pro Forma(1)+(7)+(8)+(9)/ (6) Same store(3)+(7) / (4)-(9)U.S. Dermatology 210.6107.9102.879.686.0165.6--2.229%33%U.S. Neurology & Other171.70.7171.0190.40.6191.0--0.5-10%-10%Canada/Australia117.435.482.082.538.2120.73.81.5-2%4%Emerging Markets - Central/Eastern Europe150.948.4102.5112.848.8161.618.99.34.714%12%Emerging Markets - Latin America73.416.556.964.714.579.39.73.84.315%10%Emerging Markets - Southeast Asia/Africa24.624.60.1-19.719.7-2.8-40%-Emerging Markets249.089.5159.5177.683.0260.528.616.09.116%12%Total product sales748.7233.4515.3530.0207.7737.832.417.511.810%6%Add: JV Revenue (c)1.8-1.80.6-0.60.1--201%201%Total750.6233.4517.1530.7207.7738.432.517.511.810%6%Less: Neuro171.70.7171.0190.40.6191.0---Total product sales less Neuro577.0232.7344.3339.7207.1546.832.417.511.817%15%(a) Note: Currency effect for constant currency sales is determined by comparing 2012 reported amounts adjusted to exclude currency impact, calculated using 2011 monthly average exchange rates, to the actual 2011 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. (b) See footnote (a) to Table 2a.(c) Represents Valeant's attributable portion of revenue from joint ventures (JV) not included in Consolidated Valeant revenues.(Logo: http://photos.prnewswire.com/prnh/20101025/LA87217LOGO)SOURCE: Valeant Pharmaceuticals International, Inc.For further information: http://www.valeant.comhttp://photos.prnewswire.com/prnh/20101025/LA87217LOGOPRN Photo Desk, photodesk@prnewswire.com