##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q/A
 Amendment No. 1
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 1-11397
      Valeant Pharmaceuticals
    International
 (Exact name of registrant as
    specified in its charter)
  Delaware

33-0628076(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)One Enterprise,

92656Aliso Viejo, California

(Zip Code)(Address of principal executive
    offices)   (949) 461-6000
 (Registrants telephone
    number, including area code)
  o þ
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  INDEX
  PageNumberExplanatory Note


2PART I  FINANCIAL INFORMATIONItem 1.


Financial Statements


4Consolidated Condensed Balance Sheets as of June 30, 2007
    and December 31, 2006 (as restated)


4Consolidated Condensed Statements of Operations for the three
    months and six months ended June 30, 2007 and 2006 (as
    restated)


5Consolidated Condensed Statements of Comprehensive Income (Loss)
    for the three months and six months ended June 30, 2007 and
    2006 (as restated)


6Consolidated Condensed Statements of Cash Flows for the six
    months ended June 30, 2007 and 2006 (as restated)


7Notes to Consolidated Condensed Financial Statements (as
    restated)


8Item 2.


Managements Discussion and Analysis of Financial Condition
    and Results of Operations (as restated)


40Item 3.


Quantitative and Qualitative Disclosures About Market Risk


57Item 4.


Controls and Procedures


57PART II  OTHER INFORMATIONItem 1.


Legal Proceedings


59Item 1A.


Risk Factors


59Item 4.


Submission of Matters to a Vote of Security Holders


59Item 6.


Exhibits


60SIGNATURES


61  1




---



##### 



Explanatory
    Note  Form 10-Q
  Form 8-K Form 10-K Form 10-K
    Form 10-K Form 10-Q/A, Form 10-Q
  Form 10-K Form 10-Q.
  Identification
    of Material Weakness
  Form 10-K Form 10-Q/A,
  Form 10-Q/A
  Form 10-Q/A Form 10-Q/A
 2




---



##### 



Form 10-Q/A
          Form 10-Q/A Form 10-K Form 10-Q/A
 3




---



##### 



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  VALEANT
    PHARMACEUTICALS INTERNATIONALCONSOLIDATED CONDENSED BALANCE SHEETS
    As of June 30, 2007 and December 31, 2006
    (In thousands, except par value data)
  June 30,


December 31,2007


2006(Restated)(1)


(Restated)(1)(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents

$
376,768


$
325,376Marketable securities


9,882



10,370Accounts receivable, net


210,762



227,151Inventories, net


121,687



130,747Assets held for sale and assets of discontinued operations


69,236



124,821Prepaid expenses and other current assets


16,882



16,398Current deferred tax assets, net


6,109



8,550Income taxes


5,817



2,526Total current assets


817,143



845,939Property, plant and equipment, net


101,843



94,121Deferred tax assets, net


64,074



21,218Goodwill


75,346



75,346Intangible assets, net


423,388



414,915Other assets


48,538



53,927Assets of discontinued operations






226Total non-current assets


713,189



659,753$
1,530,332


$
1,505,692LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Trade payables

$
52,510


$
60,621Accrued liabilities


131,425



146,705Notes payable and current portion of long-term debt


2,249



9,237Income taxes


5,382



39,646Liabilities held for sale and liabilities of discontinued
    operations


11,250



Total current liabilities


202,816



256,209Long-term debt, less current portion


776,475



778,196Deferred tax liabilities, net


1,917



3,705Liabilities for uncertain tax positions


56,176



Other liabilities


29,942



24,506Liabilities of discontinued operations






12,686Total non-current liabilities


864,510



819,093Total liabilities


1,067,326



1,075,302Commitments and contingenciesStockholders Equity:Common stock, $0.01 par value; 200,000 shares
    authorized; 93,732 (June 30, 2007) and 94,416
    (December 31, 2006) shares outstanding (after
    deducting shares in treasury of 2,694 as of June 30, 2007
    and 1,094 as of December 31, 2006)


937



944Additional capital


1,253,562



1,263,318Accumulated deficit


(827,137
)


(851,812
)Accumulated other comprehensive income


35,644



17,940Total stockholders equity


463,006



430,390$
1,530,332


$
1,505,692     (1)
    
    See Note 2, Restatement of Consolidated Financial
    Statements.   4




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
    CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
    For the three months and six months ended June 30, 2007 and
    2006
    (Unaudited, in thousands, except per share data)  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(Restated)(1)


(Restated)(1)


(Restated)(1)


(Restated)(1)Revenues:Product sales

$
201,587


$
197,185


$
369,520


$
364,639Alliance revenue (including ribavirin royalties)


18,955



21,635



55,425



39,726Total revenues


220,542



218,820



424,945



404,365Costs and expenses:Cost of goods sold (excluding amortization)


57,614



62,065



104,515



116,478Selling expenses


67,645



60,728



126,085



120,619General and administrative expenses


28,743



29,318



54,858



57,705Research and development costs


22,737



25,978



43,727



53,671Gain on litigation settlements














(34,000
)Restructuring charges and asset impairment


6,337



53,083



13,575



79,549Amortization expense


18,666



15,864



36,147



31,737Total costs and expenses


201,742



247,036



378,907



425,759Income (loss) from operations


18,800



(28,216
)


46,038



(21,394
)Other income, net including translation and exchange


1,682



756



2,818



1,694Interest income


4,769



2,715



9,280



5,372Interest expense


(10,882
)


(10,861
)


(21,834
)


(21,298
)Income (loss) from continuing operations before income taxes and
    minority interest


14,369



(35,606
)


36,302



(35,626
)Provision for income taxes


(7,511
)


5,343



899



12,738Income (loss) from continuing operations


21,880



(40,949
)


35,403



(48,364
)Income (loss) from discontinued operations


(4,966
)


(1,176
)


(9,166
)


93Net income (loss)

$
16,914


$
(42,125
)

$
26,237


$
(48,271
)Basic income (loss) per share:Income (loss) from continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)Loss from discontinued operations


(0.05
)


(0.01
)


(0.09
)


Net income (loss) per share

$
0.18


$
(0.45
)

$
0.28


$
(0.52
)Diluted income (loss) per share:Income (loss) from continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)Loss from discontinued operations


(0.05
)


(0.01
)


(0.10
)


Net income (loss) per share

$
0.18


$
(0.45
)

$
0.27


$
(0.52
)Shares used in per share computations  Basic


95,049



92,945



94,911



92,912Shares used in per share computation  Diluted


96,154



92,945



96,090



92,912Dividends paid per share of common stock

$



$
0.08


$



$
0.16Dividends declared per share of common stock

$



$
0.08


$



$
0.16     (1)
    
    See Note 2, Restatement of Consolidated Financial
    Statements.   5




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
    CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
    (LOSS)
    For the three months and six months ended June 30, 2007 and
    2006
    (Unaudited, in thousands)  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(Restated)(1)


(Restated)(1)


(Restated)(1)


(Restated)(1)Net income (loss)

$
16,914


$
(42,125
)

$
26,237


$
(48,271
)Other comprehensive income (loss):Foreign currency translation adjustments


11,932



7,918



12,050



10,287Unrealized gain (loss) on marketable equitysecurities and other


7,410



(1,415
)


7,637



(972
)Pension liability adjustment


(2,426
)






(1,983
)


Comprehensive income (loss)

$
33,830


$
(35,622
)

$
43,941


$
(38,956
)     (1)
    
    See Note 2, Restatement of Consolidated Financial
    Statements.   6




---



##### 



VALEANT
    PHARMACEUTICALS
    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
    For the six months ended June 30, 2007 and 2006
    (Unaudited, in thousands)  Six Months EndedJune 30,2007


2006(Restated)(1)


(Restated)(1)Cash flows from operating activities:Net income (loss)

$
26,237


$
(48,271
)Income (loss) from discontinued operations


(9,166
)


93Income (loss) from continuing operations


35,403



(48,364
)Adjustments to reconcile income (loss) from continuing
    operations to net cash provided by operating activities in
    continuing operations:Depreciation and amortization


43,826



43,724Provision for losses on accounts receivable and inventory


5,385



7,671Stock compensation expense


7,365



10,613Translation and exchange gains, net


(2,818
)


(1,694
)Impairment charges and other non-cash items


4,483



67,806Deferred income taxes


13,397



(3,749
)Change in assets and liabilities, net of effects of acquisitions:Accounts receivable


17,664



(6,973
)Inventories


(7,309
)


(6,536
)Prepaid expenses and other assets


(2,202
)


(301
)Trade payables and accrued liabilities


(17,185
)


(11,077
)Income taxes


(37,488
)


(11,314
)Other liabilities


1,551



1,719Cash flow from operating activities in continuing operations


62,072



41,525Cash flow from operating activities in discontinued operations


(7,434
)


7,686Net cash provided by operating activities


54,638



49,211Cash flows from investing activities:Capital expenditures


(15,332
)


(19,395
)Proceeds from sale of assets


37,282



8,037Proceeds from sale of businesses


29,486



Proceeds from investments


15,122



8,165Purchase of investments


(17,100
)


(8,900
)Acquisition of businesses, license rights and product lines


(35,287
)


(2,932
)Cash flow from investing activities in continuing operations


14,171



(15,025
)Cash flow from investing activities in discontinued operations


(266
)


(446
)Net cash provided by (used in) investing activities


13,905



(15,471
)Cash flows from financing activities:Payments on long-term debt and notes payable


(8,970
)


(6,122
)Proceeds from capitalized lease financing, long-term debt and
    notes payable


1,252



133Stock option exercises and employee stock purchases


10,251



2,395Purchase of treasury stock


(27,507
)


Dividends paid






(14,354
)Cash flow from financing activities in continuing operations


(24,974
)


(17,948
)Cash flow from financing activities in discontinued operations


73



430Net cash used in financing activities


(24,901
)


(17,518
)Effect of exchange rate changes on cash and cash equivalents


7,547



3,455Net increase in cash and cash equivalents


51,189



19,677Cash and cash equivalents at beginning of period


325,579



224,341Cash and cash equivalents at end of period


376,768



244,018Cash and cash equivalents classified as part of discontinued
    operations






(19
)Cash and cash equivalents of continuing operations

$
376,768


$
243,999     (1)
    
    See Note 2, Restatement of Consolidated Financial
    Statements.   7




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL



NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

June 30, 2007

(Unaudited)



In the consolidated condensed financial statements included
    herein, we, us, our,
    Valeant, and the Company refer to
    Valeant Pharmaceuticals International and its subsidiaries. The
    condensed consolidated financial statements have been prepared
    by us, without audit, pursuant to the rules and regulations of
    the Securities and Exchange Commission (SEC).
    Certain information and footnote disclosures normally included
    in financial statements prepared on the basis of accounting
    principles generally accepted in the United States of America
    have been condensed or omitted pursuant to such rules and
    regulations. The results of operations presented herein are not
    necessarily indicative of the results to be expected for a full
    year. Although we believe that all adjustments (consisting only
    of normal, recurring adjustments) necessary for a fair
    presentation of the interim periods presented are included and
    that the disclosures are adequate to make the information
    presented not misleading, these consolidated condensed financial
    statements should be read in conjunction with the consolidated
    financial statements and notes thereto included in our annual
    report on
    Form 10-K
    for the year ended December 31, 2007. 1.
    Organization
    and Summary of Significant Accounting Policies  Organization: F. Hoffman-LaRoche
  Principles of Consolidation:
  Marketable Securities:
  Derivative Financial Instruments:
  Comprehensive Income: Reporting Comprehensive
    Income.
  Per Share Information:
  Stock-Based Compensation Expense:
 8




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Discontinued Operations: Accounting for the Impairment or Disposal of Long-lived
    Assets
  Assets Held for Sale:
  Use of Estimates:
  Treasury Stock.
  Recent
    Accounting Pronouncements:
  FIN 48.
    SFAS No. 157.
 9




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    SFAS 159. (
  EITF 06-3. No. 06-3, (EITF 06-3). EITF 06-3 EITF 06-3 EITF 06-3
  2.
    Restatement
    of Consolidated Financial Statements  Form 10-K Form 10-K
          Employers Accounting for Pensions Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans
 10




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Six Months


Six Months











TotalEnded


Ended











AdditionalJune 30,


June 30,


Year Ended December 31,


Prior


IncomeIncome (Expense)

2007


2006


2006


2005


Periods


(Expense)(In thousands)Returns reserve and credit memos in Latin America

$
(1,136
)

$
(503
)

$
(1,554
)

$
(371
)

$
(2,155
)

$
(5,216
)Reversal of revenue in Italy


36







(290
)










(254
)Cost of goods bookkeeping in the UK and France


3,540



















3,540European pension accounting


(396
)


758



1,401



(256
)


(626
)


123Total impact before taxes


2,044



255



(443
)


(627
)


(2,781
)


(1,807
)Tax effect on above


(825
)


(36
)


204



139



988



506Other deferred tax items










(764
)


(61
)






(825
)Total impact of restatement

$
1,219


$
219


$
(1,003
)

$
(549
)

$
(1,793
)

$
(2,126
)  11




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Product salesAs previously reported

$
212,052


$
208,757


$
388,944


$
390,157Adjustments for error correction


(1,112
)


(263
)


(1,101
)


(504
)210,940



208,494



387,843



389,653Adjustments for restatement for discontinued operations


(9,353
)


(11,309
)


(18,323
)


(25,014
)As restated

$
201,587


$
197,185


$
369,520


$
364,639Cost of goods soldAs previously reported

$
62,116


$
65,759


$
114,214


$
124,360Adjustments for error correction


(1,614
)






(3,541
)


60,502



65,759



110,673



124,360Adjustments for restatement for discontinued operations


(2,888
)


(3,694
)


(6,158
)


(7,882
)As restated

$
57,614


$
62,065


$
104,515


$
116,478Selling expensesAs previously reported

$
74,684


$
66,270


$
139,118


$
130,545Adjustments for error correction














74,684



66,270



139,118



130,545Adjustments for restatement for discontinued operations


(7,039
)


(5,542
)


(13,033
)


(9,926
)As restated

$
67,645


$
60,728


$
126,085


$
120,619General and administrative expensesAs previously reported

$
28,963


$
30,668


$
55,150


$
59,114Adjustments for error correction


323



(816
)


396



(759
)29,286



29,852



55,546



58,355Adjustments for restatement for discontinued operations


(543
)


(534
)


(688
)


(650
)As restated

$
28,743


$
29,318


$
54,858


$
57,705Research and development expensesAs previously reported

$
24,617


$
26,867


$
47,727


$
56,421Adjustments for error correction














24,617



26,867



47,727



56,421Adjustments for restatement for discontinued operations


(1,880
)


(889
)


(4,000
)


(2,750
)As restated

$
22,737


$
25,978


$
43,727


$
53,671Amortization expenseAs previously reported

$
20,316


$
17,514


$
39,447


$
35,037Adjustments for error correction














20,316



17,514



39,447



35,037Adjustments for restatement for discontinued operations


(1,650
)


(1,650
)


(3,300
)


(3,300
)As restated

$
18,666


$
15,864


$
36,147


$
31,737  12




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Income (loss) from operations, before interest, taxes and other
    itemsAs previously reported

$
13,974


$
(29,769
)

$
35,138


$
(21,143
)Adjustments for error correction


179



553



2,044



25514,153



(29,216
)


37,182



(20,888
)Adjustments for restatement for discontinued operations


4,647



1,000



8,856



(506
)As restated

$
18,800


$
(28,216
)

$
46,038


$
(21,394
)Income (loss) from continuing operations before income taxes and
    minority interestAs previously reported

$
9,543


$
(37,159
)

$
25,402


$
(35,375
)Adjustments for error correction


179



553



2,044



2559,722



(36,606
)


27,446



(35,120
)Adjustments for restatement for discontinued operations


4,647



1,000



8,856



(506
)As restated

$
14,369


$
(35,606
)

$
36,302


$
(35,626
)Provision for income taxesAs previously reported

$
(7,289
)

$
5,163


$
3


$
12,706Adjustments for error correction


(285
)


159



825



36(7,574
)


5,322



828



12,742Adjustments for restatement for discontinued operations


63



21



71



(4
)As restated

$
(7,511
)

$
5,343


$
899


$
12,738Income (loss) from continuing operationsAs previously reported

$
16,832


$
(42,322
)

$
25,399


$
(48,081
)Adjustments for error correction


464



394



1,219



21917,296



(41,928
)


26,618



(47,862
)Adjustments for restatement for discontinued operations


4,584



979



8,785



(502
)As restated

$
21,880


$
(40,949
)

$
35,403


$
(48,364
)Income (loss) from discontinued operationsAs previously reported

$
(382
)

$
(197
)

$
(381
)

$
(409
)Adjustments for error correction














(382
)


(197
)


(381
)


(409
)Adjustments for restatement for discontinued operations


(4,584
)


(979
)


(8,785
)


502As restated

$
(4,966
)

$
(1,176
)

$
(9,166
)

$
93Net income (loss)As previously reported

$
16,450


$
(42,519
)

$
25,018


$
(48,490
)Adjustments for error correction


464



394



1,219



21916,914



(42,125
)


26,237



(48,271
)Adjustments for restatement for discontinued operations














As restated

$
16,914


$
(42,125
)

$
26,237


$
(48,271
)  13




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Basic income (loss) per share  as previously reportedFrom continuing operations

$
0.18


$
(0.45
)

$
0.27


$
(0.52
)From discontinued operations


(0.01
)


(0.01
)


(0.01
)


Net income (loss)

$
0.17


$
(0.46
)

$
0.26


$
(0.52
)Basic income per share  adjustments for error
    correctionFrom continuing operations

$



$
0.01


$
0.01


$
From discontinued operations


0.01







0.01



Net income

$
0.01


$
0.01


$
0.02


$
Basic income (loss) per share  as restated for
    adjustments for error correctionFrom continuing operations

$
0.18


$
(0.44
)

$
0.28


$
(0.52
)From discontinued operations






(0.01
)






Net income (loss)

$
0.18


$
(0.45
)

$
0.28


$
(0.52
)Basic income per share  adjustments for restatement
    for discontinued operationsFrom continuing operations

$
0.05


$



$
0.09


$
From discontinued operations


(0.05
)






(0.09
)


Net income

$



$



$



$
Basic income (loss) per share  as restatedFrom continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)From discontinued operations


(0.05
)


(0.01
)


(0.09
)


Net income (loss)

$
0.18


$
(0.45
)

$
0.28


$
(0.52
)Diluted income (loss) per share  as previously
    reportedFrom continuing operations

$
0.18


$
(0.45
)

$
0.26


$
(0.52
)From discontinued operations


(0.01
)


(0.01
)






Net income (loss)

$
0.17


$
(0.46
)

$
0.26


$
(0.52
)Diluted income per share  adjustments for error
    correctionFrom continuing operations

$
0.01


$
0.01


$
0.01


$
From discontinued operations














Net income

$
0.01


$
0.01


$
0.01


$
Diluted income (loss) per share  as restated for
    adjustments for error correctionFrom continuing operations

$
0.19


$
(0.44
)

$
0.27


$
(0.52
)From discontinued operations


(0.01
)


(0.01
)






Net income (loss)

$
0.18


$
(0.45
)

$
0.27


$
(0.52
)Diluted income per share  adjustments for restatement
    for discontinued operationsFrom continuing operations

$
0.04


$



$
0.10


$
From discontinued operations


(0.04
)






(0.10
)


Net income

$



$



$



$
Diluted income (loss) per share  as restatedFrom continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)From discontinued operations


(0.05
)


(0.01
)


(0.10
)


Net income (loss)

$
0.18


$
(0.45
)

$
0.27


$
(0.52
)  14




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    June 30,


December 31,2007


2006Cash and cash equivalentsAs previously reported

$
377,411


$
326,002Adjustments for error correction and balance sheet
    reclassification


(643
)


(626
)376,768



325,376Adjustments for restatement for discontinued operations






As restated

$
376,768


$
325,376Marketable securitiesAs previously reported

$
9,239


$
9,743Adjustments for error correction and balance sheet
    reclassification


643



6279,882



10,370Adjustments for restatement for discontinued operations






As restated

$
9,882


$
10,370Accounts receivable, netAs previously reported

$
212,115


$
227,452Adjustments for error correction and balance sheet
    reclassification


(1,353
)


(301
)210,762



227,151Adjustments for restatement for discontinued operations






As restated

$
210,762


$
227,151Inventories, netAs previously reported

$
126,249


$
142,679Adjustments for error correction and balance sheet
    reclassification


3,604



129,853



142,679Adjustments for restatement for discontinued operations


(8,166
)


11,932As restated

$
121,687


$
130,747Assets held for sale and assets of discontinued operationsAs previously reported

$



$
48,515Adjustments for error correction and balance sheet
    reclassification










48,515Adjustments for restatement for discontinued operations


69,236



76,306As restated

$
69,236


$
124,821 15




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  June 30,


December 31,2007


2006Current deferred tax assets, netAs previously reported

$
6,283


$
8,071Adjustments for error correction and balance sheet
    reclassification


(174
)


4796,109



8,550Adjustments for restatement for discontinued operations






As restated

$
6,109


$
8,550Property, plant and equipment, netAs previously reported

$
101,997


$
94,279Adjustments for error correction and balance sheet
    reclassification






101,997



94,279Adjustments for restatement for discontinued operations


(154
)


(158
)As restated

$
101,843


$
94,121Deferred tax assets, netAs previously reported

$
63,886


$
21,514Adjustments for error correction and balance sheet
    reclassification


188



(296
)64,074



21,218Adjustments for restatement for discontinued operations






As restated

$
64,074


$
21,218GoodwillAs previously reported

$
80,162



80,162Adjustments for error correction and balance sheet
    reclassification






80,162



80,162Adjustments for restatement for discontinued operations


(4,816
)


(4,816
)As restated

$
75,346


$
75,346Intangible assets, netAs previously reported

$
479,488


$
474,315Adjustments for error correction and balance sheet
    reclassification






479,488



474,315Adjustments for restatement for discontinued operations


(56,100
)


(59,400
)As restated

$
423,388


$
414,915Other assetsAs previously reported

$
51,475


$
53,555Adjustments for error correction and balance sheet
    reclassification


(2,937
)


37248,538



53,927Adjustments for restatement for discontinued operations






As restated

$
48,538


$
53,927 16




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  June 30,


December 31,2007


2006Accrued liabilitiesAs previously reported

$
127,191


$
142,532Adjustments for error correction and balance sheet
    reclassification


4,234



4,173131,425



146,705Adjustments for restatement for discontinued operations






As restated

$
131,425


$
146,705Income taxesAs previously reported

$
5,311


$
39,818Adjustments for error correction and balance sheet
    reclassification


71



(172
)5,382



39,646Adjustments for restatement for discontinued operations






As restated

$
5,382


$
39,646Liabilities held for sale and liabilities of discontinued
    operationsAs previously reported

$



$
Adjustments for error correction and balance sheet
    reclassification


11,250



11,250



Adjustments for restatement for discontinued operations






As restated

$
11,250


$
Deferred tax liabilities, netAs previously reported

$
1,447


$
3,255Adjustments for error correction and balance sheet
    reclassification


470



4501,917



3,705Adjustments for restatement for discontinued operations






As restated

$
1,917


$
3,705Other liabilitiesAs previously reported

$
24,417


$
18,182Adjustments for error correction and balance sheet
    reclassification


5,525



6,32429,942



24,506Adjustments for restatement for discontinued operations






As restated

$
29,942


$
24,506Liabilities of discontinued operationsAs previously reported

$
16,956


$
18,343Adjustments for error correction and balance sheet
    reclassification


(16,956
)


(5,657
)



12,686Adjustments for restatement for discontinued operations






As restated

$



$
12,686 17




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  June 30,


December 31,2007


2006Accumulated deficitAs previously reported

$
(825,010
)

$
(848,467
)Adjustments for error correction and balance sheet
    reclassification


(2,127
)


(3,345
)(827,137
)


(851,812
)Adjustments for restatement for discontinued operations






As restated

$
(827,137
)

$
(851,812
)Accumulated other comprehensive incomeAs previously reported

$
38,783


$
19,458Adjustments for error correction and balance sheet
    reclassification


(3,139
)


(1,518
)35,644



17,940Adjustments for restatement for discontinued operations






As restated

$
35,644


$
17,940  18




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Six Months Ended June 30, 2007Adjustments for





Adjustments forError Correction


As Restated for


Restatement forAs Previously


and Balance Sheet


Adjustments for


DiscontinuedReported


Reclassification


Error Correction


Operations


As RestatedCash flows from operating activities:Net income

$
25,018


$
1,219


$
26,237


$



$
26,237Loss from discontinued operations


(381
)






(381
)


(8,785
)


(9,166
)Income from continuing operations


25,399



1,219



26,618



8,785



35,403Adjustments to reconcile income from continuing operations to
    net cash provided by operating activities in continuing
    operations:Depreciation and amortization


47,339







47,339



(3,513
)


43,826Provision for losses on accounts receivable and inventory


5,385







5,385







5,385Stock compensation expense


7,494







7,494



(129
)


7,365Translation and exchange gains, net


(2,818
)






(2,818
)






(2,818
)Impairment charges and other non-cash items


4,483







4,483







4,483Deferred income taxes


12,826



571



13,397







13,397Change in assets and liabilities, net of effects of acquisitions:Accounts receivable


15,950



1,050



17,000



664



17,664Inventories


(4
)


(3,539
)


(3,543
)


(3,766
)


(7,309
)Prepaid expenses and other assets


(2,287
)


85



(2,202
)






(2,202
)Trade payables and accrued liabilities


(20,737
)


61



(20,676
)


3,491



(17,185
)Income taxes


(37,730
)


242



(37,488
)






(37,488
)Other liabilities


1,190



361



1,551







1,551Cash flow from operating activities in continuing operations


56,490



50



56,540



5,532



62,072Cash flow from operating activities in discontinued operations


(1,852
)


(50
)


(1,902
)


(5,532
)


(7,434
)Net cash provided by operating activities


54,638







54,638







54,638Cash flows from investing activities:Capital expenditures


(15,598
)






(15,598
)


266



(15,332
)Proceeds from sale of assets


37,282







37,282







37,282Proceeds from sale of businesses


29,486







29,486







29,486Proceeds from investments


15,122







15,122







15,122Purchase of investments


(17,100
)






(17,100
)






(17,100
)Acquisition of businesses, license rights and product lines


(35,287
)






(35,287
)






(35,287
)Cash flow from investing activities in continuing operations


13,905







13,905



266



14,171Cash flow from investing activities in discontinued operations














(266
)


(266
)Net cash provided by investing activities


13,905







13,905







13,905 19




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2007Adjustments for





Adjustments forError Correction


As Restated for


Restatement forAs Previously


and Balance Sheet


Adjustments for


DiscontinuedReported


Reclassification


Error Correction


Operations


As RestatedCash flows from financing activities:Payments on long-term debt and notes payable


(9,163
)






(9,163
)


193



(8,970
)Proceeds from capitalized lease financing, long-term debt and
    notes payable


1,518







1,518



(266
)


1,252Stock option exercises and employee stock purchases


10,251







10,251







10,251Proceeds from sales of stock (purchase of treasury stock)


(27,507
)






(27,507
)






(27,507
)Dividends paid


















Cash flow from financing activities in continuing operations


(24,901
)






(24,901
)


(73
)


(24,974
)Cash flow from financing activities in discontinued operations














73



73Net cash used in financing activities


(24,901
)






(24,901
)






(24,901
)Effect of exchange rate changes on cash and cash equivalents


7,564



(17
)


7,547







7,547Net increase in cash and cash equivalents


51,206



(17
)


51,189







51,189Cash and cash equivalents at beginning of period


326,205



(626
)


325,579







325,579Cash and cash equivalents at end of period


377,411



(643
)


376,768







376,768Cash and cash equivalents classified as part of discontinued
    operations


















Cash and cash equivalents of continuing operations

$
377,411


$
(643
)

$
376,768


$



$
376,768  20




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2006Adjustments for





Adjustments forError Correction


As Restated for


Restatement forAs Previously


and Balance Sheet


Adjustments for


DiscontinuedReported


Reclassification


Error Correction


Operations


As RestatedCash flows from operating activities:Net loss

$
(48,490
)

$
219


$
(48,271
)

$



$
(48,271
)Income (loss) from discontinued operations


(409
)






(409
)


502



93Loss from continuing operations


(48,081
)


219



(47,862
)


(502
)


(48,364
)Adjustments to reconcile loss from continuing operations to net
    cash provided by operating activities in continuing operations:Depreciation and amortization


47,071







47,071



(3,347
)


43,724Provision for losses on accounts receivable and inventory


7,671







7,671







7,671Stock compensation expense


10,697







10,697



(84
)


10,613Translation and exchange gains, net


(1,694
)






(1,694
)






(1,694
)Impairment charges and other non-cash items


67,806







67,806







67,806Deferred income taxes


(3,787
)


38



(3,749
)






(3,749
)Change in assets and liabilities, net of effects of acquisitions:Accounts receivable


(11,428
)


5



(11,423
)


4,450



(6,973
)Inventories


(12,435
)






(12,435
)


5,899



(6,536
)Prepaid expenses and other assets


376



(677
)


(301
)






(301
)Trade payables and accrued liabilities


3,015



630



3,645



(14,722
)


(11,077
)Income taxes


(11,314
)






(11,314
)






(11,314
)Other liabilities


1,732



(13
)


1,719







1,719Cash flow from operating activities in continuing operations


49,629



202



49,831



(8,306
)


41,525Cash flow from operating activities in discontinued operations


(418
)


(202
)


(620
)


8,306



7,686Net cash provided by operating activities


49,211







49,211







49,211Cash flows from investing activities:Capital expenditures


(19,840
)






(19,840
)


445



(19,395
)Proceeds from sale of assets


8,037







8,037







8,037Proceeds from sale of businesses


















Proceeds from investments


8,165







8,165







8,165Purchase of investments


(8,900
)






(8,900
)






(8,900
)Acquisition of businesses, license rights and product lines


(2,932
)






(2,932
)






(2,932
)Cash flow from investing activities in continuing operations


(15,470
)






(15,470
)


445



(15,025
)Cash flow from investing activities in discontinued operations


(1
)






(1
)


(445
)


(446
)Net cash used in investing activities


(15,471
)






(15,471
)






(15,471
) 21




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  Six Months Ended June 30, 2006Adjustments for





Adjustments forError Correction


As Restated for


Restatement forAs Previously


and Balance Sheet


Adjustments for


DiscontinuedReported


Reclassification


Error Correction


Operations


As RestatedCash flows from financing activities:Payments on long-term debt and notes payable


(6,137
)






(6,137
)


15



(6,122
)Proceeds from capitalized lease financing, long-term debt and
    notes payable


578







578



(445
)


133Stock option exercises and employee stock purchases


2,395







2,395







2,395Proceeds from sales of stock (purchase of treasury stock)


















Dividends paid


(14,354
)






(14,354
)






(14,354
)Cash flow from financing activities in continuing operations


(17,518
)






(17,518
)


(430
)


(17,948
)Cash flow from financing activities in discontinued operations














430



430Net cash used in financing activities


(17,518
)






(17,518
)






(17,518
)Effect of exchange rate changes on cash and cash equivalents


3,501



(46
)


3,455







3,455Net increase in cash and cash equivalents


19,723



(46
)


19,677







19,677Cash and cash equivalents at beginning of period


224,903



(562
)


224,341







224,341Cash and cash equivalents at end of period


244,626



(608
)


244,018







244,018Cash and cash equivalents classified as part of discontinued
    operations


(19
)






(19
)






(19
)Cash and cash equivalents of continuing operations

$
244,607


$
(608
)

$
243,999


$



$
243,999   3.
    Restructuring       22




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  24-month
        Restructuring
    Charge Details (in thousands)
  Three Months


Six MonthsEnded


Ended


Year EndedJune 30,


June 30,


December 31,2006


2006


2006Employee Severances

$
5,369


$
12,013


$
16,997Contract cancellation and other cash costs


992



992



1,662Subtotal: Cash Charges


6,361



13,005



18,659Abandoned software and other capital assets


3,032



22,854



22,178Impairment of manufacturing and research facilities


43,690



43,690



97,344Subtotal: Non-cash charges


46,722



66,544



119,522Total:

$
53,083


$
79,549


$
138,181   23




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
  Three Months


Six Months


CumulativeEnded


Ended


TotalJune 30,


June 30,


Incurred2007


2007Employee Severances (approximately 490 employees)

$
1,350


$
5,130


$
22,127Contract cancellation and other cash costs


1,034



3,115



4,777Subtotal: Cash Charges


2,384



8,245



26,904Abandoned software and other capital assets










22,178Write-off of accumulated foreign currency translation adjustments


2,891



2,891



2,891Impairment of manufacturing and research facilities


1,062



2,439



99,783Subtotal: Non-cash charges


3,953



5,330



124,852Total:

$
6,337


$
13,575


$
151,756   Reconciliation
    of Cash Restructuring Payments with Restructuring
    Accrual
    Three Months


Three MonthsEnded


EndedMarch 31,


June 30,2007


2007Opening accrual

$
5,216


$
5,931Charges to earnings


5,861



2,384Transition and capital expenditure payment obligations


163



6,650Cash paid


(5,309
)


(4,988
)Closing accrual

$
5,931


$
9,977   4.
    Acquisitions  paid-up
    5.
    Discontinued
    Operations  Accounting for the
    Impairment or Disposal of Long-lived Assets
 24




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
      Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(In thousands)Infergen:Product sales

$
9,353


$
11,309


$
18,323


$
25,014Costs and expenses:Cost of goods sold (excluding amortization)


2,888



3,694



6,158



7,882Selling expenses


7,039



5,542



13,033



9,926General and administrative expenses


543



534



688



650Research and development costs


1,880



889



4,000



2,750Amortization expense


1,650



1,650



3,300



3,300Total costs and expenses


14,000



12,309



27,179



24,508Income (loss) from discontinued operations, Infergen


(4,647
)


(1,000
)


(8,856
)


506Other discontinued operations:Other loss






(83
)






(326
)Consolidated discontinued operations:Income (loss) from discontinued operations


(4,647
)


(1,083
)


(8,856
)


180Provision for income taxes


63



21



71



(4
)Income (loss) from discontinued operations


(4,584
)


(1,062
)


(8,785
)


176Disposal of discontinued operations, net


(382
)


(114
)


(381
)


(83
)Income (loss) from discontinued operations, net

$
(4,966
)

$
(1,176
)

$
(9,166
)

$
93  25




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    June 30,


December 31,2007


2006(Restated)


(Restated)ASSETSCash

$



$
203Accounts receivable, net






21Inventories, net


8,166



11,932Prepaid expenses and other current assets






2Property, plant and equipment, net


154



158Goodwill


4,816



4,816Intangible assets, net


56,100



59,400Assets of discontinued operations

$
69,236


$
76,532LIABILITIESAccrued liabilities


11,250



12,686Liabilities of discontinued operations

$
11,250


$
12,686    26




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
   6.
    Earnings
    Per Share    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006(Restated)


(Restated)


(Restated)


(Restated)Income:Numerator for basic and diluted earnings per shareIncome (loss) from continuing operations

$
21,880


$
(40,949
)

$
35,403


$
(48,364
)Income (loss) from discontinued operations


(4,966
)


(1,176
)


(9,166
)


93Net income (loss)

$
16,914


$
(42,125
)

$
26,237


$
(48,271
)Shares:Denominator for basic earnings per share:Weighted shares outstanding


94,868



92,818



94,722



92,794Vested stock equivalents (not issued)


181



127



189



118Denominator for basic earnings per share


95,049



92,945



94,911



92,912Denominator for diluted earnings per share:Employee stock options


1,068







1,159



Other dilutive securities


37







20



Dilutive potential common shares


1,105







1,179



Denominator for diluted earnings per share:


96,154



92,945



96,090



92,912Basic income (loss) per share:Income (loss) from continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)Loss from discontinued operations


(0.05
)


(0.01
)


(0.09
)


Net income (loss) per share

$
0.18


$
(0.45
)

$
0.28


$
(0.52
)Diluted income (loss) per share:Income (loss) from continuing operations

$
0.23


$
(0.44
)

$
0.37


$
(0.52
)Loss from discontinued operations


(0.05
)


(0.01
)


(0.10
)


Net income (loss) per share

$
0.18


$
(0.45
)

$
0.27


$
(0.52
)      27




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
   7.
    Detail of
    Certain Accounts    June 30,


December 31,2007


2006(Restated)


(Restated)Accounts receivable, net:Trade accounts receivable

$
173,702


$
180,466Royalties receivable


20,806



22,212Other receivables


23,957



31,487218,465



234,165Allowance for doubtful accounts


(7,703
)


(7,014
)$
210,762


$
227,151Inventories, net:Raw materials and supplies

$
23,496


$
37,045Work-in-process


21,435



21,477Finished goods


90,688



86,522135,619



145,044Allowance for inventory obsolescence


(13,932
)


(14,297
)$
121,687


$
130,747Property, plant and equipment, net:Property, plant and equipment, at cost

$
198,133


$
183,597Accumulated depreciation and amortization


(96,290
)


(89,476
)$
101,843


$
94,121   Intangible assets:
  Weighted


June 30, 2007


December 31, 2006Average


Gross


Accumulated


Net


Gross


Accumulated


NetLives (Years)


Amount


Amortization


Amount


Amount


Amortization


AmountProduct rightsNeurology


13


$
307,089


$
(115,568
)

$
191,521


$
291,388


$
(99,090
)

$
192,298Infectious diseases


11



6,480



(3,600
)


2,880



20,500



(11,771
)


8,729Dematology


19



112,062



(48,976
)


63,086



87,105



(44,029
)


43,076Other products


11



332,432



(177,871
)


154,561



310,633



(157,331
)


153,302Total product rights


14



758,063



(346,015
)


412,048



709,626



(312,221
)


397,405License agreement


5



67,376



(56,036
)


11,340



67,376



(49,866
)


17,510Total intangible assets





$
825,439


$
(402,051
)

$
423,388


$
777,002


$
(362,087
)

$
414,915  28




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Scheduled Future Amortization ExpenseRemainingSix Months of2007


2008


2009


2010


2011


ThereafterProduct rightsNeurology

$
14,413


$
28,808


$
28,662


$
28,495


$
21,978


$
65,647Infectious diseases


180



360



360



360



360



1,260Dermatology


5,091



10,181



10,088



9,976



9,894



17,806Other products


10,146



19,859



19,252



17,735



18,224



72,913Total product rights


29,830



59,208



58,362



56,566



50,456



157,626License agreement


5,168



6,172















Total

$
34,998


$
65,380


$
58,362


$
56,566


$
50,456


$
157,626     8.
    Income
    Taxes    Three MonthsEndedJune 30, 2007Taxes payable on earnings in tax jurisdictions outside the
    U.S.

$
11,334Release of reserves for U.S. liabilities recorded in conjunction
    with settlement of the 1997  2001 IRS examination


(21,521
)Interest and penalties on U.S. liabilities, state taxes and other


2,676$
(7,511
)    29




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
     non-U.S. subsidiaries
        9.
    Common
    Stock and Share Compensation   30




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
     WeightedAverageNumber of


ExerciseShares


PriceShares under option , December 31, 2005


14,632


$
17.80Granted


2,014


$
18.54Exercised


(1,592
)

$
19.38Canceled


(1,703
)

$
21.81Shares under option , December 31, 2006


13,351


$
18.28Granted


89


$
17.13Exercised


(853
)

$
17.67Canceled


(934
)

$
21.68Shares under option , June 30, 2007


11,653


$
18.49Exercisable at December 31, 2005


7,197


$
17.82Exercisable at December 31, 2006


8,374


$
18.00Exercisable at June 30, 2007


7,620


$
18.12Awards available for grant at December 31, 2006


4,376Awards available for grant at June 30, 2007


5,168     Outstanding


ExercisableWeighted





Weighted


WeightedAverage





Average


AverageNumber


Exercise


Number


Exercise


RemainingRange of Exercise Prices

of Shares


Price


of Shares


Price


Life (Years)$ 8.10 to $17.72


4,515


$
13.53



3,193


$
11.87



6.22$18.01 to $19.10


3,898


$
18.62



1,906


$
18.56



6.48$19.60 to $46.25


3,240


$
25.26



2,521


$
25.70



5.1311,653







7,620   SFAS No. 123(R) Assumptions and Fair
    Value:
  2007


2006Average life of option (years)


5.73



4.10-5.80Stock price volatility


35%-36
%


37%-39
%Expected dividend per share

$
0.00


$
0.00-$0.31Risk-free interest rate


4.52%-4.76
%


4.54%-4.80
%Weighted-average fair value of options

$
7.28


$
7.83    31




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    2003 Employee Stock Purchase Plan:
  Restricted Stock Units:
    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2006


2007


2006Employee stock options

$
3,128


$
4,504


$
6,562


$
9,320Employee stock purchase plan


53



149



79



269Restricted stock units


267



386



724



1,023Total stock-based compensation expense

$
3,448


$
5,039


$
7,365


$
10,612     Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2006


2007


2006Cost of goods sold


163



365



353



800Selling expenses


884



820



1,813



1,628General and administrative expenses


2,220



3,069



4,713



6,601Research and development costs


181



785



486



1,583Total stock compensation expense

$
3,448


$
5,039


$
7,365


$
10,612  32




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Remainder of 2007

$
5,5232008


5,8722009


2,2842010 and thereafter


710$
14,389   Dividends:
  10.
    Commitments
    and Contingencies      Securities
    Class Actions:
  Derivative Actions Related to Ribapharm
    Bonuses: and/or
  Paul Gerstley v. Norman
    Barker, Jr. et al.
     33




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    SEC Investigation:
  Derivative Actions Related to Stock
    Option and/or
  and/or
  Patent Oppositions:
  Argentina Antitrust Matter:
 34




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
    Permax Product Liability Cases:
  Kali Litigation: No. 76-843 ® No. 04-3238 No. 76-843
    Trademark Litigation:
  Former ICN Yugoslavia Employees:
  Xcel Pharmaceuticals:
 35




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
   Other:
  11.
    Business
    Segments    Six Months EndedThree Months Ended June 30,


June 30,2007


2006


2007


2006(Restated)


(Restated)


(Restated)


(Restated)RevenuesSpecialty pharmaceuticalsNorth America

$
68,610


$
60,995


$
131,209


$
123,146International


55,829



64,209



91,104



109,157EMEA


77,148



71,981



147,207



132,336Total specialty pharmaceuticals


201,587



197,185



369,520



364,639Alliance revenues (including ribavirin royalties)


18,955



21,635



55,425



39,726Consolidated revenues

$
220,542


$
218,820


$
424,945


$
404,365Operating Income (Loss)Specialty pharmaceuticalsNorth America

$
26,464


$
14,158


$
43,795


$
33,884International


8,341



22,673



8,614



31,603EMEA


15,902



13,232



34,611



17,25250,707



50,063



87,020



82,739Corporate expenses(1)(2)


(19,948
)


(15,401
)


(35,908
)


(38,360
)Total specialty pharmaceuticals


30,759



34,662



51,112



44,379Restructuring charges and asset impairment(3)


(6,337
)


(53,083
)


(13,575
)


(79,549
)Gain on litigation settlement














34,000Research and development


(5,622
)


(9,795
)


8,501



(20,224
)Consolidated segment operating income (loss )


18,800



(28,216
)


46,038



(21,394
)Interest income


4,769



2,715



9,280



5,372Interest expense


(10,882
)


(10,861
)


(21,834
)


(21,298
)Other, net


1,682



756



2,818



1,694Income (loss) from continuing operations before
    provision for income taxes

$
14,369


$
(35,606
)

$
36,302


$
(35,626
)     (1)
    
    Stock-based compensation expense has been considered a corporate
    cost as management excludes this item in assessing the financial
    performance of individual business segments and considers it a
    function of valuation factors that pertain to overall corporate
    stock performance. 36




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    The corporate expense total above includes certain corporate
    marketing expenses in 2007 for our products in development. In
    the three months and the six months ended June 30, 2006,
    $4,700,000 of similar costs were allocated out of the corporate
    segment and reassigned to the research and development division,
    due to the ownership of certain intellectual property by a
    foreign subsidiary within this division. This foreign subsidiary
    no longer owns this intellectual property and the corresponding
    costs in 2007 are recognized as corporate expenses.(3)
    
    Restructuring charges are not included in the applicable
    segments as management excludes these items in assessing the
    financial performance of these segments, primarily due to their
    non-operational nature.    June 30,


December 31,Total Assets

2007


2006(Restated)


(Restated)North America

$
351,944


$
381,198International


211,118



203,292EMEA


457,274



514,600Corporate


370,524



207,802Research and Development Division


70,236



122,268Discontinued operations


69,236



76,532Total

$
1,530,332


$
1,505,692     June 30,


December 31,Long-Term Assets

2007


2006(Restated)


(Restated)North America

$
287,563


$
288,889International


78,704



58,607EMEA


202,616



201,420Corporate


115,474



75,506Research and Development Division


28,832



35,105Total

$
713,189


$
659,527    37




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
     Three Months Ended


Six Months EndedJune 30,


June 30,Therapeutic Area/Product

2007


2006


2007


2006(Restated)


(Restated)


(Restated)


(Restated)NeurologyMestinon®(P)

$
14,014


$
12,322


$
24,552


$
22,135Diastat
AcuDialtm(P)


12,386



11,709



23,458



23,731Cesamet®(P)


6,859



4,042



12,770



7,345Librax®


4,455



5,005



8,122



7,924Migranal®(P)


3,745



2,701



6,781



5,816Dalmane®/Dalmadorm®(P)


2,759



2,542



5,095



5,006Tasmar®(P)


2,371



1,666



4,353



2,851Melleril(P)


1,811



1,358



3,349



2,758Zelapar®(P)


1,381







1,576



Other Neurology


16,392



15,524



31,984



30,211Total Neurology


66,173



56,869



122,040



107,777DermatologyEfudix/Efudex®(P)


17,515



14,975



29,992



30,551Kinerase®(P)


8,133



9,022



16,511



15,881Oxsoralen-Ultra®(P)


4,053



3,592



7,936



7,100Dermatixtm(P)


3,558



2,975



6,329



4,808Other Dermatology


9,366



12,157



17,379



20,531Total Dermatology


42,625



42,721



78,147



78,871Infectious DiseaseVirazole®(P)


3,045



3,772



8,564



9,565Other Infectious Disease


5,222



4,887



10,377



9,616Total Infectious Disease


8,267



8,659



18,941



19,181Other therapeutic classesBedoyectatm(P)


12,237



12,435



16,798



22,945Solcoseryl(P)


8,448



4,597



13,795



7,974Bisocard(P)


5,575



3,912



10,269



7,477Nyal(P)


3,991



4,803



5,754



6,557MVI (multi-vitamin infusion)(P)


2,688



3,478



5,170



5,726Espaven(P)


2,208



2,968



4,070



4,255Protamin(P)


1,350



1,772



3,420



3,324Other products


48,025



54,971



91,116



100,552Total other therapeutic classes


84,522



88,936



150,392



158,810Total product sales

$
201,587


$
197,185


$
369,520


$
364,639Total promoted product sales

$
118,127


$
104,641


$
210,542


$
195,805     (P)
    
    Promoted Products represent products promoted in at least one
    major territory with estimated global annual sales greater than
    $5 million. 38




---



##### 



VALEANT
    PHARMACEUTICALS INTERNATIONAL
  NOTES TO
    CONSOLIDATED CONDENSED FINANCIAL
    STATEMENTS  (Continued)
     12.
    Alliance
    Revenue    For the Three Months


For the Six MonthsEnded


EndedJune 30,


June 30,2007


2006


2007


2006Ribavirin royalty

$
18,955


$
21,635


$
36,175


$
39,726Licensing payment










19,200



Other










50



Total alliance revenue

$
18,955


$
21,635


$
55,425


$
39,726       13.
    Subsequent
    events  24-month
  24-month follow-up
 39




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-Q
  Form 8-K Form 10-K Form 10-K
          Employers Accounting for Pensions Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans
    Six Months


Six Months











TotalEnded


Ended











AdditionalJune 30,


June 30,


Year Ended December 31,





IncomeIncome (Expense)

2007


2006


2006


2005


Prior Periods


(Expense)(In thousands)Returns reserve and credit memos in Latin America

$
(1,136
)

$
(503
)

$
(1,554
)

$
(371
)

$
(2,155
)

$
(5,216
)Reversal of revenue in Italy


36







(290
)










(254
)Cost of goods bookkeeping in the UK and France


3,540



















3,540European pension accounting


(396
)


758



1,401



(256
)


(626
)


123Total impact before taxes


2,044



255



(443
)


(627
)


(2,781
)


(1,807
)Tax effect on above


(825
)


(36
)


204



139



988



506Other deferred tax items










(764
)


(61
)






(825
)Total impact of restatement

$
1,219


$
219


$
(1,003
)

$
(549
)

$
(1,793
)

$
(2,126
)  40




---



##### 



Overview
      Company
    Strategy and Restructuring
    Targeted Growth Opportunities.
  Product Acquisitions.
  Efficient Manufacturing and Supply Chain
    Organization.
  Clinical Development Activities.
 41




---



##### 



Results
    of Operations
        Three Months Ended June 30,


Increase/


Percent2007


2006


(Decrease)


Change(Restated)


(Restated)RevenuesSpecialty pharmaceuticalsNorth America

$
68,610


$
60,995


$
7,615



12
%International


55,829



64,209



(8,380
)


(13
)%EMEA


77,148



71,981



5,167



7
%Total specialty pharmaceuticals


201,587



197,185



4,402



2
%Alliance revenues (including ribavirin royalties)


18,955



21,635



(2,680
)


(12
)%Total revenues


220,542



218,820



1,722



1
%Costs and ExpensesCost of goods sold (excluding amortization)


57,614



62,065



(4,451
)


(7
)%Selling expenses


67,645



60,728



6,917



11
%General and administrative expenses


28,743



29,318



(575
)


(2
)%Research and development costs


22,737



25,978



(3,241
)


(12
)%Gain on litigation settlements










Restructuring charges and asset impairment


6,337



53,083



(46,746
)


NMAmortization expense


18,666



15,864



2,802



18
%Operating income (loss)

$
18,800


$
(28,216
)

$
47,016Gross profit on product sales (excluding amortization)

$
143,973


$
135,120


$
8,853



7
%Gross margin


71
%


69
%   42




---



##### 



Six Months EndedJune 30,


Increase/


Percent2007


2006


(Decrease)


Change(Restated)


(Restated)RevenuesSpecialty pharmaceuticalsNorth America

$
131,209


$
123,146


$
8,063



7
%International


91,104



109,157



(18,053
)


(17
)%EMEA


147,207



132,336



14,871



11
%Total specialty pharmaceuticals


369,520



364,639



4,881



1
%Alliance revenues (including ribavirin royalties)


55,425



39,726



15,699



40
%Total revenues


424,945



404,365



20,580



5
%Costs and ExpensesCost of goods sold (excluding amortization)


104,515



116,478



(11,963
)


(10
)%Selling expenses


126,085



120,619



5,466



5
%General and administrative expenses


54,858



57,705



(2,847
)


(5
)%Research and development costs


43,727



53,671



(9,944
)


(19
)%Gain on litigation settlements






(34,000
)


34,000



NMRestructuring charges and asset impairment


13,575



79,549



(65,974
)


NMAmortization expense


36,147



31,737



4,410



14
%Operating income (loss)

$
46,038


$
(21,394
)

$
67,432Gross profit on product sales (excluding amortization)

$
265,005


$
248,161


$
16,844



7
%Gross margin


72
%


68
%          43




---



##### 



Alliance Revenue (including Ribavirin
    royalties):
  year-to-date
        Gross Profit Margin (excluding
    amortization): paid-up
  Selling Expenses:
  General and Administrative Expenses:
 44




---



##### 



Research and Development:
  Gain on Litigation Settlement:
  Restructuring
    Charges:
  24-month
       45




---



##### 



Restructuring
    Charge Details (in thousands)
  Three Months


Six Months


YearEnded


Ended


EndedJune 30,


June 30,


December 31,2006


2006


2006Employee Severances

$
5,369


$
12,013


$
16,997Contract cancellation and other cash costs


992



992



1,662Subtotal: Cash Charges


6,361



13,005



18,659Abandoned software and other capital assets


3,032



22,854



22,178Impairment of manufacturing and research facilities


43,690



43,690



97,344Subtotal: Non-cash charges


46,722



66,544



119,522Total:

$
53,083


$
79,549


$
138,181   Three Months


Six Months


CumulativeEnded


Ended


TotalJune 30,


June 30,


Incurred2007


2007Employee Severances (approximately 490 employees)

$
1,350


$
5,130


$
22,127Contract cancellation and other cash costs


1,034



3,115



4,777Subtotal: Cash Charges


2,384



8,245



26,904Abandoned software and other capital assets










22,178Write-off of accumulated foreign currency translation adjustments


2,891



2,891



2,891Impairment of manufacturing and research facilities


1,062



2,439



99,783Subtotal: Non-cash charges


3,953



5,330



124,852Total:

$
6,337


$
13,575


$
151,756   Reconciliation
    of Cash Restructuring Payments with Restructuring
    Accrual
    Three Months


Three MonthsEnded


EndedMarch 31,


June 30,2007


2007Opening accrual

$
5,216


$
5,931Charges to earnings


5,861



2,384Transition and capital expenditure payment obligations


163



6,650Cash paid


(5,309
)


(4,988
)Closing accrual

$
5,931


$
9,977   Amortization:
 46




---



##### 



Other Income (expense), Net, Including Translation and
    Exchange:
  Interest Expense, net:
  Income Taxes:
  Loss from Discontinued Operations, Net of
    Taxes:
  Liquidity
    and Capital Resources
       47




---



##### 



24-month
  Form 10-K
 48




---



##### 



Off-Balance
    Sheet Arrangements
  Form 10-K.
  Products
    in Development
  Late
    Stage Development of New Chemical Entities
  Retigabine: End-of-Phase
        Taribavirin:
    38-40 percent
 49




---



##### 



Pradefovir: once-a-day
  24-month follow-up
  Other
    Development Activities
  Infergen (Reported in Discontinued
    Operations):
  follow-up. end-of-treatment end-of-treatment
  follow-up
   50




---



##### 



Cesamet: start-up
  Foreign
    Operations
    Critical
    Accounting Estimates
      Revenue
    Recognition
       51




---



##### 



Sales
    Incentives
    Income
    Taxes
   52




---



##### 



Impairment
    of Property, Plant and Equipment
    Valuation
    of Intangible Assets
        Stock-based
    Compensation Expense
     53




---



##### 



2007

2006Average life of option (years )

5.73

4.10 - 5.80Stock price volatility

35% - 36%

37% - 39%Expected dividend per share

$0.00

$0.00 - $0.31Risk-free interest rate

4.52% - 4.76%

4.54% - 4.80%Weighted-average fair value of options

$7.28

$7.83         Contingencies
  Accounting for Contingencies
    Other
    Financial Information
   54




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##### 



Forward-Looking
    Statements
  Form 10-Q/A Form 10-Q/A, Form 10-Q/A).
    
    The future growth of our business depends on the development and
    approval of new products by us and our licensees, including
    taribavirin and retigabine. The process of developing new drugs
    has an inherent risk of failure. For example, product candidates
    may turn out to be ineffective or unsafe in clinical testing;
    their patent protection may become compromised; other therapies
    may prove safer or more effective; or the prevalence of the
    disease for which they are being developed may decrease. Our
    inability to develop our products due to these or other factors
    could have a material adverse effect on future revenues.
    We can protect our products from generic substitution by third
    parties only to the extent that our technologies are covered by
    valid and enforceable patents, are effectively maintained as
    trade secrets or are protected by data exclusivity. However, our
    pending or future patent applications may not issue as patents.
    Any patent issued may be challenged, invalidated, held
    unenforceable or circumvented. Furthermore, our patents may not
    be sufficiently broad to prevent third parties competing
    products. The expiration of patent protection for ribavirin has
    resulted in significant competition from generic substitutes and
    declining royalty revenues and may negatively impact future
    financial results.
    Trade secret protection is less effective than patent protection
    because competitors may discover our technology or develop
    parallel technology.
    The scope of protection afforded by a patent can be highly
    uncertain. A pending claim or a result unfavorable to us in a
    patent dispute may preclude development or commercialization of
    products or impact sales of existing products, result in
    cessation of royalty payments to us
    and/or
    result in payment of monetary damages.
    Obtaining drug approval in the United States and other countries
    is costly and time consuming. Uncertainties and delays inherent
    in the process can preclude or delay development and
    commercialization of our products.
    Our relationships with wholesale distributors, including those
    in Mexico, can affect sales results and, if there is a change in
    any of these relationships, our results may not meet our
    expectations.
    The successful commercialization of product candidates and the
    conduct of clinical trials are subject to many risks, including
    the ability to complete enrollment of the requisite number of
    patients in clinical trials and to conclude clinical trials
    within expected timeframes, adverse events that would require
    clinical trials to be prematurely terminated, clinical results
    that indicate continuing clinical and commercial pursuit of
    clinical 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.
    Our current business plan includes targeted expansion through
    acquisitions of compatible businesses and product lines and the
    formation of strategic alliances, joint ventures and other
    business combinations, in addition to the development of new
    products. If we are unable to successfully execute on our
    expansion plans 55




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##### 



to find attractive acquisition candidates at appropriate prices,
    and to integrate successfully any acquired companies or
    products, the expected growth of our business may be negatively
    affected.  
    We and our competitors are always striving to develop products
    that are more effective, safer, more easily tolerated or less
    costly. If our competitors succeed in developing better
    alternatives to our current products before we do, we will lose
    sales and revenues to their alternative products. If vaccines
    are introduced to prevent the diseases treated by our products,
    our potential sales and revenues will decrease.
    The pharmaceutical industry is subject to substantial government
    regulation, including the approval of new pharmaceutical
    products, labeling, advertising and, in most countries, pricing,
    as well as inspection and approval of manufacturing facilities.
    The costs of complying with these regulations are high, and
    failure to comply could result in fines or interruption in our
    business.
    We collect and pay a substantial portion of our sales and
    expenditures in currencies other than the U.S. dollar. As a
    result, fluctuations in foreign currency exchange rates affect
    our operating results. Additionally, future exchange rate
    movements, inflation or other related factors may have a
    material adverse effect on our sales, gross profit or operating
    expenses.
    A significant part of our revenue is derived from products
    manufactured by third parties. We rely on their quality level,
    compliance with the FDA regulations or similar regulatory
    requirements enforced by regulatory agencies in other countries
    and continuity of supply. Any failure by them in these areas
    could disrupt our product supply and negatively impact our
    revenues.  
    Our flexibility in maximizing commercialization opportunities
    for our compounds may be limited by our obligations to
    Schering-Plough. In November 2000, we entered into an agreement
    that provides Schering-Plough with an option to acquire the
    rights to up to three of our products intended to treat
    hepatitis C that Schering-Plough designates prior to our
    entering Phase 2 clinical trials and a right for first/last
    refusal to license various compounds we may develop and elect to
    license to others. Taribavirin was not subject to the option of
    Schering-Plough, but it would be subject to their right of
    first/last refusal if we elected to license it to a third party.
    The interest of potential collaborators in obtaining rights to
    our compounds or the terms of any agreement we ultimately enter
    into for these rights may be hindered by our agreement with
    Schering-Plough.  
    To purchase our products, many patients rely on reimbursement by
    third party payors such as insurance companies, HMOs and
    government agencies. These third party payors are increasingly
    attempting to contain costs by limiting both coverage and the
    level of reimbursement of new drug products. The reimbursement
    levels established by third party payors in the future may not
    be sufficient for us to realize an appropriate return on our
    investment in product development and our continued manufacture
    and sale of existing drugs.
    All drugs have potential harmful side effects and can expose
    drug manufacturers and distributors to liability. In the event
    one or more of our products is found to have harmed an
    individual or individuals, we may be responsible for paying all
    or substantially all damages awarded. A successful product
    liability claim against us could have a material negative impact
    on our financial position and results of operations.
    Our debt agreements permit us to incur additional debt, subject
    to certain restrictions, but there is no guaranty that we will
    actually be able to borrow any money should the need for it
    arise.
    We are involved in several legal proceedings, including those
    described in Note 10 to notes to consolidated condensed
    financial statements, any of which could result in substantial
    cost and divert managements attention and resources.
    Our stockholder rights plan, provisions of our certificate of
    incorporation and provisions of the Delaware General Corporation
    Law could provide our Board of Directors with the ability to
    deter hostile takeovers or delay, deter or prevent a change in
    control of our company, including transactions in which
    stockholders might otherwise receive a premium for their shares
    over then current market prices.
    We are authorized to issue, without stockholder approval,
    approximately 10,000,000 shares of preferred stock,
    200,000,000 shares of common stock and securities
    convertible into either shares of common stock or preferred
    stock. If we issue additional equity securities, the price of
    our securities may be materially and 56




---



##### 



adversely affected. The Board of Directors can also use
    issuances of preferred or common stock to deter a hostile
    takeover or change in control of our company.  
    We are subject to a consent order with the Securities and
    Exchange Commission, which permanently enjoins us from violating
    securities laws and regulations. The consent order also
    precludes protection for forward-looking statements under the
    safe harbor provisions of the Private Securities Litigation
    Reform Act of 1995 with respect to forward-looking statements we
    made prior to November 28, 2005. The existence of the
    permanent injunction under the consent order, and the lack of
    protection under the safe harbor with respect to forward-looking
    statements made prior to November 28, 2005 may limit
    our ability to defend against future allegations.  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk      Notional/


Assets (Liabilities)Contract


Carrying


FairDescription

Amount


Value


ValueForward contracts

$
68,939


$
208


$
208Interest rate swaps


150,000



(6,006
)


(6,006
)Outstanding fixed-rate debt


780,000



(780,000
)


(741,438
)       Item 4.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
   57




---



##### 



Remediation
    Plan
    
    We have engaged professional actuarial and accounting
    consultants to review our calculation of assets and liabilities
    under and accounting for our foreign pension plans. We are also
    working to develop modified controls with regard to our
    accounting for pension obligations.
    We have designed and commenced implementation of enhancements to
    our accounting for product returns and credit memos in foreign
    markets.
    We have reviewed the qualifications and performance of our
    accounting staff in key roles in our foreign locations and
    identified some critical roles in certain foreign markets where
    accounting staff will be retrained or new accounting staff will
    be recruited. We have assigned qualified accounting staff from
    Corporate and our North American offices to review accounting
    procedures in certain foreign countries and have begun to
    enhance our accounting staff in various foreign locales.
    We have modified our revenue recognition procedures in Italy and
    other locations in order to ensure that, when required by
    specific circumstances, we recognize revenue on a cash basis.
    We have implemented revised review procedures over tax
    accounting.  Form 8-K
   58




---



##### 



Changes
    in Internal Control over Financial Reporting
   PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
  Item 4.
    Submission
    of Matters to a Vote of Security Holders        Votes Cast


Votes Cast


Votes


VotesMatter

For


Against


Withheld


AbstainElection of Norma Ann Provencio


83,821,014







4,103,730Election of Timothy C. Tyson


76,418,928







11,505,815Election of Elaine Ullian


74,359,310







13,565,433Ratification of Appointment of PricewaterhouseCoopers LLP


77,800,833



10,081,356







42,553  59




---



##### 



Item 6.
    Exhibits  (a)
    Exhibits  Exhibit3
.1

Restated Certificate of Incorporation, as amended to date,
    previously filed as Exhibit 3.1 to the Registrants Form
    10-Q for the quarter ended September 30, 2003, which is
    incorporated herein by reference.3
.2

Certificate of Designation, Preferences and Rights of Series A
    Participating Preferred Stock previously filed as Exhibit 3.1 to
    the Registrants Current Report on Form 8-K, dated October
    6, 2004, which is incorporated herein by reference.3
.3

Amended and Restated Bylaws of the Registrant previously filed
    as Exhibit 3.1 to the Registrants Current Report on Form
    8-K, dated November 6, 2006, which is incorporated herein by
    reference.10
.1*

Form of Restricted Stock Unit Award Grant Notice for Directors10
.2*

Form of Restricted Stock Unit Award Agreement for Directors15
.1

Review Report of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to Rule
    13a-14(a) under the Exchange Act and Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to Rule
    13a-14(a) under the Exchange Act and Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer of Periodic Financial Reports pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350.     *
    
    Filed with our quarterly report on
    Form 10-Q
    for the period ended June 30, 2007, filed on August 7,
    2007. 60




---



##### 



SIGNATURES  Form 10-Q/A
  Valeant Pharmaceuticals
    International
  /s/  J.
    Michael Pearson   Chairman and Chief Executive Officer
    Peter
    J. Blott
   Executive Vice President and Chief Financial Officer
 (Principal Financial and Accounting Officer)
   61




---



##### 



EXHIBIT INDEX
  Exhibit3
.1

Restated Certificate of Incorporation, as amended to date,
    previously filed as Exhibit 3.1 to the Registrants Form
    10-Q for the quarter ended September 30, 2003, which is
    incorporated herein by reference.3
.2

Certificate of Designation, Preferences and Rights of Series A
    Participating Preferred Stock previously filed as Exhibit 3.1 to
    the Registrants Current Report on Form 8-K, dated October
    6, 2004, which is incorporated herein by reference.3
.3

Amended and Restated Bylaws of the Registrant previously filed
    as Exhibit 3.1 to the Registrants Current Report on Form
    8-K, dated November 6, 2006, which is incorporated herein by
    reference.10
.1*

Form of Restricted Stock Unit Award Grant Notice for Directors10
.2*

Form of Restricted Stock Unit Award Agreement for Directors15
.1

Review Report of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to Rule
    13a-14(a) under the Exchange Act and Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to Rule
    13a-14(a) under the Exchange Act and Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer of Periodic Financial Reports pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350.     *
    
    Filed with our quarterly report on
    Form 10-Q
    for the period ended June 30, 2007, filed on August 7,
    2007. 62