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Press release from PR Newswire

Valeant Pharmaceuticals Reports 2012 Fourth Quarter Financial Results

Thursday, February 28, 2013

Valeant Pharmaceuticals Reports 2012 Fourth Quarter Financial Results06:00 EST Thursday, February 28, 2013MONTREAL, Feb. 28, 2013 /PRNewswire/ -- Fourth Quarter 20122012 Fourth Quarter Total Revenue $986 million; an increase of 43% over the prior year Organic growth (same store sales) was approximately 7% Pro forma organic growth was approximately 9%2012 Fourth Quarter GAAP EPS Loss of $0.29; Cash EPS $1.22, an increase of 30% over the prior year; Excluding Medicis interest expense Cash EPS $1.34, an increase of 43% over the prior year2012 Fourth Quarter GAAP Operating Cash Flow $68 million; Adjusted Operating Cash Flow $423 million  Full Year 2012Total 2012 revenue was $3.55 billion; an increase of 44% over the prior year Organic growth (same store sales) was approximately 8% Pro forma organic growth was approximately 10%Total 2012 GAAP EPS Loss of $0.38; Cash EPS $4.51, an increase of 54% over the prior year Total 2012 GAAP Operating Cash Flow $657 million; Adjusted Operating Cash Flow $1.3 billionValeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2012. "We are pleased with our financial results for the fourth quarter and the full year," said J. Michael Pearson, chairman and chief executive officer. "The continued overall robust organic growth of our business, coupled with our strong cash flow generation, puts us in a solid position for another outstanding year in 2013."RevenueValeant's business continued to perform well in the fourth quarter of 2012 with all businesses achieving results at or above expectations. Same store organic growth was approximately 7% and pro forma organic growth was approximately 9% for the fourth quarter of 2012. (See Table 6) Total revenue was $986 million in the fourth quarter of 2012, as compared to $688 million in the fourth quarter of 2011, an increase of 43%.  Product sales were $947 million in the fourth quarter of 2012, as compared to $654 million in the year-ago quarter, an increase of 45%.  For the full year, total revenue was $3.55 billion in 2012, as compared to $2.46 billion in 2011, an increase of 44%. Product sales were $3.31 billion in 2012, as compared to $2.26 billion in 2011, an increase of 47%. These growth rates were realized even in the face of approximately $161 million of negative impact from generic competition and over $100 million of negative impact from currency translation in 2012. Valeant's U.S. Dermatology business continued its strong product sales growth performance in the fourth quarter.  Key contributors to organic growth included Zovirax®, Retin-A Micro®, Acanya®, Carac® and CeraVe®.Our U.S. Neurology and Other portfolio delivered positive product sales growth in the quarter, reflecting the diminishing  year over year negative impact from generic competitors of Wellbutrin XL®, Ultram® ER and Cardizem® CD.  Wellbutrin XL® scripts leveled off and product sales increased, as compared to the fourth quarter of 2011. We expect that U.S. Neurology and Other will continue to report positive organic growth in 2013. The Canadian and Australian segment delivered negative organic product sales growth this quarter, as expected, due to the rapid genericization of Cesamet® in Canada that began in March 2012. Excluding Cesamet, the Canadian and Australian segment delivered 5% organic growth (same store sales). Finally, our Emerging Markets segment provided pro forma organic product sales growth of 15%, driven by strong growth in all of the regions in which we operate.   Financial PerformanceThe Company reported a net loss of $89 million for the fourth quarter of 2012, or a loss of $0.29 per diluted share.  On a Cash EPS basis, adjusted income was $380 million, or $1.22 per diluted share, an increase of 30% over the fourth quarter of 2011.  On December 11, 2012, Valeant completed the acquisition of Medicis Corporation, whose operations had no material impact on the results for the fourth quarter of 2012.  Excluding the interest expense related to the acquisition of Medicis, Cash EPS for the fourth quarter of 2012 was $1.34, an increase of 43% over the fourth quarter of 2011. On a Cash EPS basis for the full year 2012, adjusted income was $1.41 billion, or $4.51 per diluted share, an increase of 54% over the full year 2011. Excluding the interest expense related to the acquisition of Medicis, Cash EPS for 2012 was $4.63, an increase of 58% over 2011. GAAP cash flow from operations was $68 million in the fourth quarter of 2012, and adjusted cash flow from operations was $423 million.  GAAP cash flow from operations for the full year 2012 was $657 million, and adjusted cash flow from operations was $1.29 billion, an increase of 40% year over year. The Company's cost of goods sold (COGS) was $275 million in the fourth quarter of 2012.  After backing out the fair value adjustment to inventory, amortization expense and other items related to acquisitions, COGS represented 25% of product sales, comparable with the fourth quarter of 2011. On a sequential basis, COGS for the fourth quarter of 2012 increased 2% primarily due to a one-time write-off of obsolete inventory in Brazil. COGS for the full year 2012 represented 24% of product sales as compared to 27% in 2011. Selling, General and Administrative expenses were $204.7 million in the fourth quarter of 2012, which includes a $2.7 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant and $3.7 million loss on the disposal of fixed assets.  Excluding these items, SG&A was approximately 20% of revenue. Research and Development expenses were $20.2 million in the fourth quarter of 2012, or approximately 2% of revenue. 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), February 28, 2013 to discuss its fourth quarter financial results for 2012. The dial-in number to participate on this call is (877) 295-5743 confirmation code 94189232. International callers should dial (973) 200-3961, confirmation code 94189232. A replay will be available approximately two hours following the conclusion of the conference call through March 7, 2013 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 94189232. 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 ValeantValeant 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 our performance for 2013 and expected organic growth.  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 and the Canadian Securities Administrators, 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.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. Financial Tables follow. Valeant Pharmaceuticals International, Inc. Table 1 Condensed Consolidated Statement of IncomeFor the Three and Twelve Months Ended December 31, 2012 and 2011Three Months EndedTwelve Months EndedDecember 31,December 31,(In thousands, except per share data)2012201120122011Product sales$  946,669$ 654,171$ 3,309,895$ 2,255,050Alliance and royalty23,49325,600171,841172,473Service and other (a)16,1318,68264,89035,927Total revenues986,293688,4533,546,6262,463,450Cost of goods sold (exclusive of amortization of intangible assets shown separately below)275,138181,983921,533683,750Cost of services10,6292,62847,26912,311Cost of alliances8943669,71430,771Selling, general and administrative ("SG&A")204,697148,508756,083572,472Research and development20,16516,77779,05265,687Contingent consideration fair value adjustments(28,464)(20,028)(5,266)(10,986)Acquired in-process research and development40,033105,200189,901109,200Legal settlements-9,44156,77911,841Restructuring, acquisition-related and other costs261,80156,718422,991130,631Amortization of intangible assets299,485192,798928,885557,8141,084,378694,0613,466,9412,163,491Operating income (loss)(98,085)(5,608)79,685299,959Interest expense, net(160,228)(94,055)(475,610)(330,442)Loss on extinguishment of debt(17,625)(3,519)(20,080)(36,844)Gain (loss) on investments, net32(11)2,05622,776Other income (expense), net including translation and exchange 1,26326,48719,72126,551Income (loss) before (recovery) provision for income taxes(274,643)(76,706)(394,228)(18,000)Recovery of income taxes (185,501)(132,561)(278,203)(177,559)Net income (loss)$  (89,142)$   55,855$  (116,025)$    159,559Earnings per share:Basic:Net income (loss)$      (0.29)$       0.18$        (0.38)$          0.52Shares used in per share computation305,131308,706305,446304,655Diluted:Net income (loss)$      (0.29)$       0.18$        (0.38)$          0.49Shares used in per share computation305,131317,390305,446326,119 (a) Service and Other revenue includes contract manufacturing revenue of $9.5 million and $39.6 million for the three and twelve months ended December 31, 2012, respectively.   Valeant Pharmaceuticals International, Inc. Table 2 Reconciliation of GAAP EPS to Cash EPS For the Three and Twelve Months Ended December 31, 2012 and 2011Three Months EndedTwelve Months EndedDecember 31,December 31,(In thousands, except per share data)2012201120122011Net income (loss)$ (89,142)$   55,855$  (116,025)$ 159,559Non-GAAP adjustments(a):Inventory step-up (b)29,42110,31778,82259,256Alliance product assets & pp&e step-up/down(c)(336)21450,43419,692Stock-based compensation step-up (d)2,72012,93627,34463,492Contingent consideration fair value adjustment(e)(28,464)(20,028)(5,266)(10,986)Acquired in-process research and development (IPR&D)(f)40,033105,200189,901109,200Legal settlements(g)-9,44156,77911,841Restructuring, acquisition-related and other costs(h)261,80156,718422,991130,631Amortization and other non-gaap charges(i)311,834198,080965,388569,977617,009372,8781,786,393953,103Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest(j)22,1888,06936,40227,103Loss on extinguishment of debt17,6253,51920,08036,844(Gain) loss on disposal of fixed assets and assets held for sale/impairment, net (k)(l)3,7013,1994,7033,199(Gain) loss on investments, net---(1,769)Tax(m)(191,801)(145,861)(319,603)(222,959)Total adjustments468,722241,8041,527,975795,521Adjusted income$ 379,580$ 297,659$ 1,411,950$ 955,080GAAP earnings per share - diluted$     (0.29)$       0.18$        (0.38)$       0.49Cash earnings per share - diluted$       1.22$       0.94$          4.51$       2.93Cash earnings per share excluding one-time items - diluted$       1.22$       0.87$          4.14$       2.64Shares used in diluted per share calculation - Cash earnings per share311,739317,390313,123326,119  (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) 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 (g) Table 2b.(l) See footnote (f) Table 2a and footnote (g) Table 2b.(m) 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 December 31, 2012 and 2011Non-GAAP Adjustments(a) forThree Months EndedDecember 31,(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)(41,838) (b)(c)(d) (18,297) (b)(c) Cost of services--Cost of alliances--Selling, general and administrative ("SG&A")(6,017) (c)(e)(f) (13,383) (c)(e) Research and development--Contingent consideration fair value adjustments28,464 (g) 20,028 (g) Acquired in-process research and development(40,033) (h) (105,200) (h) Legal settlements-(9,441) (i) Restructuring, acquisition-related and other costs(261,801) (j) (56,718) (k) Amortization of intangible assets(299,485)(192,798)(620,710)(375,809)Operating income620,710376,077Interest expense, net22,188 (l) 8,069 (l) (Gain) loss on extinguishment of debt17,6253,519Gain (loss) on investments, net--Other income (expense), net including translation and exchange --Income before (recovery of) provision for income taxes660,523387,665Provision for income taxes191,801 (m) 145,861 (m) Total Adjustments to Net income $ 468,722$ 241,804Earnings per share:Diluted:Total Adjustments to Net income$       1.50$       0.76Shares used in per share computation311,739317,390 (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 December 31, 2012 is $29.4 million primarily relating to the acquisitions of Afexa on October 17, 2011, Pedinol Pharmacal, Inc. on April 11, 2012, BC Pharma B.V. on July 1, 2012 and Medicis Pharmaceutical Corporation on December 11, 2012.  For the three months ended December 31, 2011 the impact of inventory fair value step-up is $10.3 million primarily relating to the acquisition of Sanitas on August 19, 2011, Afexa on October 17, 2011 and Ortho Dermatologics on December 12, 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 integration related tech transfers, $10.1 million.(e) For the three months ended December 31, 2012 SG&A includes $2.7 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the merger of Legacy Valeant into Legacy Biovail.  For the three months ended December 31, 2011 SG&A primarily includes $12.9 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the merger of Legacy Valeant into Legacy Biovail.(f) SG&A includes loss on disposals of fixed assets.(g) Net expenses from the changes in fair value of contingent consideration for the three months ended December 31, 2012 and 2011 of $28.5 million and $20.0 million, respectively.(h) Total Acquired IPR&D for the three months ended December 31, 2012 of $40.0 million relates primarily to an impairment of $24.7 million related to Xerese ® life-cycle management project, $5.0 million related to upfront payment to acquire North America rights to Emervel ® and $5.0 million related to the IDP-108 program.  Total Acquired IPR&D for the three months ended December 31, 2011 of $105.2 million relates to the impairment of acquired IPR&D assets relating to A002, A004 and A006 programs acquired as part of Aton acquisition, IDP-109 and IDP-115.(i) For the three months ended December 31, 2011 Legal settlement costs of $9.4 million primarily due to the litigation and disputes related to revenue-sharing arrangements with, or other payment obligations to, third parties.(j) Restructuring, acquisition-related and other costs of $261.8 million represent costs related to the acquisitions of Medicis, internal Valeant restructuring and integration initiatives, iNova, Dermik, OraPharma, Sanitas, Visudyne and Swiss Herbal. These include $52.6 million related to acquisition costs, $98.2 million related to employee severance costs, $77.3 million of stock base compensation, $30.5 million related to integration consulting, duplicative labor, transition services, and other, and $3.2 million related to facility closure costs.(k) Restructuring, acquisition-related and other costs of $56.7 million represent costs related to the merger of Legacy Valeant into Legacy Biovail and include $5.9 million related to facility closure costs, $12.9 million related to contract cancellation fees, consulting, legal and other costs, $15.0 million related to severance, $20.1 million related to acquisition costs, and $2.8 million related to manufacturing integration.(l) Non cash interest expense associated with amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest totals for the three months ended December 31, 2012 and December 31, 2011 $22.2 million and $8.1 million, respectively.(m) Total tax effect of non-GAAP pre-tax adjustments, resolution of uncertain tax positions and change in valuation allowance associated with deferred tax asset.   Valeant Pharmaceuticals International, Inc. Table 2b Reconciliation of GAAP EPS to Cash EPS For the Twelve Months Ended December 31, 2012 and 2011Non-GAAP Adjustments(a) forTwelve Months EndedDecember 31,(In thousands, except per share data)20122011Product sales$             -$           -Alliance and royalty-1,072Service and other--Total revenues-1,072Cost of goods sold (exclusive of amortization of intangible assets shown separately below)(112,273) (b)(c)(d) (74,189) (b)(c) Cost of services--Cost of alliances(50,958) (e) (18,835) (e) Selling, general and administrative ("SG&A")(34,575) (c)(f)(g) (63,706) (c)(f) Research and development--Contingent consideration fair value adjustments5,266 (h) 10,986 (h) Acquired in-process research and development(189,901) (i) (109,200) (i) Legal settlements(56,779) (j) (11,841) (j) Restructuring, acquisition-related and other costs(422,991) (k) (130,631) (l) Amortization of intangible assets(928,885)(557,814)(1,791,096)(955,230)Operating income1,791,096956,302Interest expense, net36,402 (m) 27,103 (m) (Gain) loss on extinguishment of debt20,08036,844Gain (loss) on investments, net-(1,769)Other income (expense), net including translation and exchange --Income before (recovery of) provision for income taxes1,847,5781,018,480Provision for income taxes319,603 (n) 222,959 (n) Total Adjustments to Net income $ 1,527,975$  795,521Earnings per share:Diluted:Total Adjustments to Net income$          4.88$        2.44Shares used in per share computation313,123326,119   (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 twelve months ended December 31, 2012 is $78.8 million primarily relating to the acquisitions of Afexa on October 17, 2011, Ortho Dermatologics on December 12, 2011, Dermik on December 16, 2011, iNova on December 21, 2011, Pedinol Pharmacal, Inc. on April 11, 2012 and Medicis Pharmaceutical Corporation on December 11, 2012.  For the twelve months ended December 31, 2011 the impact of inventory fair value step-up is $59.3 million primarily relating to the merger of Legacy Valeant into Legacy Biovail, the acquisition of PharmaSwiss SA on March 10, 2011 and the acquisition of Sanitas on August 19th, 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 integration related tech transfers, $28.9 million.(e) Cost of Alliances represents the divestiture of 5FU and IDP-111 resulting from the acquisition of Dermik, $50.9 million for the twelve months ended December 31, 2012 and the divestiture of Cloderm resulting from the Legacy Valeant into Legacy Biovail merger, $18.8 million for the twelve months ended December 31, 2011. (f)  For the twelve months ended December 31, 2012 SG&A primarily includes $29.5 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the merger of Legacy Valeant into Legacy Biovail, acceleration of certain equity instruments and the expense associated with certain award modifications.  For the twelve months ended December 31, 2011 SG&A primarily includes $63.5 million of Stock-based compensation which reflects the amortization of the fair value step-up increment resulting from the merger of Legacy Valeant into Legacy Biovail.(g) SG&A includes loss on assets held for sale/impairment and loss on disposals of fixed assets.(h) Net expenses from the changes in fair value of contingent consideration for the twelve months ended December 31, 2012 and 2011 of $5.3 million and $11.0 million, respectively.(i)  Total Acquired IPR&D for the twelve months ended December 31, 2012 of $189.9 million relates primarily to the write-off of the IPR&D asset related to the IDP-107 dermatology program, $133.4 million, an impairment of $24.7 million related to Xerese ® life-cycle management project, a $12.0 million payment to terminate a research and development commitment with a third party, $5.0 million related to upfront payment to acquire North America rights to Emervel ®, $5.0 million related to the IDP-108 program and $4.3 million related to the termination of the MC5 program acquired from Ortho Dermatologics.  Total Acquired IPR&D for the twelve months ended December 31, 2011 of $109.2 million relates to the impairment of acquired IPR&D assets relating to A002, A004 and A006 programs acquired as part of Aton acquisition, IDP-109 and IDP-115, $105.2 million, and the acquisition of the Canadian rights to Lodalis TM, $4.0 million.(j) For the twelve months ended December 31, 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 ®.  For the twelve months ended December 31, 2011 Legal settlement costs of $11.8 million primarily due to the litigation and disputes related to revenue-sharing arrangements with, or other payment obligations to, third parties.(k) Restructuring, acquisition-related and other costs of $423.0 million represent costs related to the acquisitions of Medicis, internal Valeant restructuring and integration initiatives, iNova, Dermik, OraPharma, Sanitas, Pedinol, Ortho Dermatologics, University Medical, Afexa, Swiss Herbal and Eyetech.   These include $78.6 million related to acquisition costs, $144.5 million related to employee severance costs, $77.3 million stock base compensation, $73.6 million related to integration consulting, duplicative labor, transition services, and other, $30.8 million related to facility closure costs, $14.0 million related to other, and $4.2 million related to non-personnel manufacturing integration costs.(l) Restructuring, acquisition-related and other costs of $130.6 million represent costs related to the merger of Legacy Valeant into Legacy Biovail and the acquisitions of Sanitas, Dermik, Afexa, Ortho Dermatologics, PharmaSwiss SA and Inova.  These costs include $23.9 million related to facility closure costs, $37.2 million related to contract cancellation fees, consulting, legal and other costs, $29.3 million related to severance, $33.0 million related to acquisition costs, and $7.2 million related to manufacturing integration.(m) Non cash interest expense associated with amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest totals for the twelve months ended December 31, 2012 and December 31, 2011 $36.4 million and $27.1 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 3Statement of Revenue - by SegmentFor the Three and Twelve Months Ended December 31, 2012 and 2011(In thousands) Three Months Ended December 31,Revenue (a)(b)2012GAAP2011GAAP%   Change2012 currency impact2012 excluding currency impact non-GAAP%   Change  U.S. Dermatology $      335,886$     175,96591%$              -$     335,88691%  U.S. Neurology & Other201,921201,0300%-201,9210%Canada/Australia 142,127101,35240%(4,034)138,09336%Emerging Markets306,360210,10646%6,884313,24449%Total Revenue$      986,293$     688,45343%$      2,850$     989,14444% Twelve Months Ended December 31,Revenue (a)(b)2012GAAP2011GAAP%   Change2012 currency impact2012 excluding currency impact non-GAAP%   ChangeU.S. Dermatology $   1,158,600$     575,798101%$              -$  1,158,600101%U.S. Neurology & Other793,503821,789-3%-793,503-3%Canada/Australia544,128340,24060%2,745546,87361%Emerging Markets1,050,395725,62345%99,0201,149,41558%Total Revenue$   3,546,626$  2,463,45044%$  101,765$  3,648,39148%(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.   Valeant Pharmaceuticals International, Inc.Table 4Reconciliation of GAAP Cost of Goods Sold to Non-GAAP Cost of Goods Sold - by SegmentFor the Three and Twelve Months Ended December 31, 2012 and 2011(In thousands) Three Months Ended 4.1Cost of goods sold (a)December 31,2012as reportedGAAP% of product sales2012 fair valuestep-upadjustmentto inventoryand Othernon-GAAP (b)2012 excluding fair value step-up adjustment to inventory and Othernon-GAAP% of productsalesU.S. Dermatology $    63,47819%$       29,540$       33,93810%U.S. Neurology & Other 37,43419%1,75535,67918%Canada/Australia (d)34,41226%1,04533,36726%Emerging Markets139,81448%9,498130,31645%Corporate/other---$  275,13829%$       41,838$     233,30025% Twelve Months Ended December 31,2012as reportedGAAP% of product sales2012 fair valuestep-upadjustmentto inventory and Othernon-GAAP (c)2012 excluding fair value step-up adjustment to inventory and Othernon-GAAP% of productsalesU.S. Dermatology $  152,21214%$       47,705$     104,50710%U.S. Neurology & Other 139,58019%7,675131,90518%Canada/Australia(d)163,78933%34,701129,08826%Emerging Markets465,95245%22,192443,76043%Corporate/other---$  921,53328%$     112,273$     809,26024%  (a) See footnote (a) to Table 2a.(b) U.S. Dermatology includes $28.2 million of fair value step-up adjustment to inventory and $1.3 million of integration related tech transfer costs. U.S. Neurology and Other includes $1.8 million of integration related tech transfer costs.  Canada/Australia includes $0.4 million of fair value step up adjustment to inventory, -$0.1 million PP&E step-down, $0.8M of integration related tech transfer costs. Emerging Markets includes $0.8 million of fair value step up adjustment to inventory, $6.2M of integration related tech transfer costs, $2.3 million BMS fair value inventory adjustment and $0.1 million of PP&E step up.(c) U.S. Dermatology includes $43.0 million of fair value step-up adjustment to inventory, $4.7 million of integration related tech transfer costs. U.S. Neurology and Other includes $5.1 million of integration related tech transfer costs and $2.6 million of amortization. Canada/Australia includes $32.9 million of fair value step up adjustment to inventory, -$0.7 million PP&E step-down, $2.5M of integration related tech transfer costs. Emerging Markets includes $3.0 million of fair value step up adjustment to inventory, $16.4M of integration related tech transfer costs, $2.3 million BMS inventory fair value adjustment and $0.4 million of PP&E step up.(d) Cost of Goods Sold excludes contract manufacturing costs currently reported in Cost of Services.    Valeant Pharmaceuticals International, Inc.Table 5Consolidated Balance Sheet and Other Data(In thousands)As ofAs ofDecember 31,December 31,5.1Cash20122011Cash and cash equivalents $      916,091$    164,111Marketable securities 4,4106,338Total cash and marketable securities$      920,501$    170,449DebtNew Revolving Credit Facility$                   -$    220,000Term loan A Facility2,083,4622,185,520New Term Loan B Facility1,275,167-Incremental Term Loan B Facility973,988-Senior notes 6,448,3174,228,480Convertible notes233,79317,011Other898-11,015,6256,651,011Less: Current portion(480,182)(111,250)$ 10,535,443$ 6,539,7615.2Summary of Cash Flow StatementThree Months EndedDecember 31,20122011Cash flow provided by (used in):Net cash provided by (used in) operating activities (GAAP)$        67,920$    189,780Restructuring and acquisition-related costs(c)261,80156,718Payment of accrued legal settlements-9,441Payment of Accreted Interest on Convertible Debt-1,390Tax Benefit from Stock Options Exercised (a)6,699(7,125)Working Capital change related to Business Development Activities18,39121,434Non-Cash adjustments to Income Taxes Payable--Changes in working capital related to restructuring and acquisition-related costs(c)68,580(18,510)Adjusted cash flow from operations (Non-GAAP)(b)$      423,391$    253,128Proceeds from sale of intangible assets--Adjusted cash flow from operations (Non-GAAP)(b)$      423,391$    253,128 (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 $330,381 are broken down as follows:Project TypeAmount PaidMedicis286,944(d)Intellectual Property Migration9,198Manufacturing Integration (Various Deals)6,944Europe4,742US Restructuring4,103Other3,895OraPharma2,925Swiss Herbal2,160Ophthalmology (QLT and Eyetech)2,106Systems Integration (various deals US/Canada)1,828Dermik1,635University Medical1,416iNova1,282J & J Consumer Products1,203Total$          330,381Expense TypeAmount PaidStock Based Compensation119,931Severance Payments105,367Acquisition Related Costs Paid to 3rd Parties76,750Integration related consulting, duplicative labor, transition services, and other24,628Facility Closure Costs, Other Manufacturing integration, and Other3,704Total$          330,381(d)(d) Includes Medicis advisory and legal fees of $47 million and payment of Medicis stock appreciation rights and other accrued compensation of $58 million that was accrued by Medicis prior to close and paid post close.   Valeant Pharmaceuticals International, Inc.Table 6Organic Growth - by SegmentFor the Three and Twelve Months Ended December 31, 2012(In thousands) For the Three Months Ended December 31, 2012  Organic growth (a)(b) (b)  (b)  (1)QTD2012  (2)Acqimpact  (3)QTDSame store  (4)QTD2011  (5)Pro FormaAdj  (6)Pro Forma2011  (7)CurrencyimpactSamestore  (8)Currencyimpact Acq  (9)Divestitures / Discontinuations  Pro Forma(1)+(7)+(8)+(9) / (6) Same store(3)+(7) / (4)-(9)U.S. Dermatology 329.9156.6173.3153.2138.1291.3--4.615%17%U.S. Neurology & Other    (c)199.40.5198.9194.00.5194.5--0.03%3%Canada/Australia      (d) (e)132.940.892.1101.137.1138.2(2.7)(1.0)0.0-6%-12%Emerging Markets - Central/Eastern Europe171.815.4156.5140.914.5155.42.50.8(0.1)13%13%Emerging Markets - Latin America95.124.770.365.816.982.70.62.50.720%9%Emerging Markets - Southeast Asia/Africa21.620.21.40.318.718.90.10.3-16%-   Emerging Markets288.660.4228.2206.950.1257.03.23.50.615%12%Total product sales950.8258.3692.5655.3225.8881.00.52.65.29%7% For the Twelve Months Ended December 31, 2012  Organic growth (a)(b) (b)  (b)  (1)YTD2012  (2)Acqimpact  (3)YTDSame store  (4)YTD2011  (5)Pro FormaAdj  (6)Pro Forma2011  (7)CurrencyimpactSamestore  (8)Currencyimpact Acq  (9)Divestitures /Discontinuations  Pro Forma(1)+(7)+(8)+(9) / (6) Same store(3)+(7) / (4)-(9)U.S. Dermatology 1,061.2492.3568.9445.3416.8862.0--13.425%32%U.S. Neurology & Other    (c)729.52.6726.9759.61.6761.2--1.2-4%-4%Canada/Australia      (d) (e)504.9172.2332.8338.1164.0502.12.00.21.21%-1%Emerging Markets - Central/Eastern Europe613.9164.1449.9460.3163.2623.543.916.912.510%10%Emerging Markets - Latin America320.168.7251.3254.853.7308.621.211.010.718%12%Emerging Markets - Southeast Asia/Africa 92.290.12.00.380.780.90.15.2-20%-   Emerging Markets1,026.1322.9703.2715.4297.61,013.065.233.223.213%11%Total product sales3,321.7989.92,331.82,258.3879.93,138.367.233.339.010%8% (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) Includes Valeant's attributable portion of revenue from joint ventures (JV) -  $1.6M Q4'12 and $3.5M Q4'12 YTD.(d) Includes Valeant's attributable portion of revenue from joint ventures (JV) -  $1.1M Q4'11 and $2.5M Q4'12 and $3.3M Q4'11 YTD and $8.2M Q4'12 YTD.(e) Includes Cesamet revenue of $17.6M Q4'11 and $1.6M Q4'12 and $64.4M Q4'11 YTD and $29.4M Q4'12 YTD.  Excluding Cesamet, the Canadian/Australian segment delivered Q4 5% organic growth (same store) and 6% (pro forma).  Excluding Cesamet, the Canadian/Australian segment delivered 2012 12% organic growth (same store) and 9% (pro forma).Contact Information:Laurie W. Little 949-461-6002 laurie.little@valeant.com (Logo: http://photos.prnewswire.com/prnh/20101025/LA87217LOGO) SOURCE Valeant Pharmaceuticals International, Inc.