##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For 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)
 þ o
 o o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




---



##### 



VALEANT PHARMACEUTICALS INTERNATIONAL
 INDEX
 PageNumberPART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    2Consolidated Condensed Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    2Consolidated Condensed Statements of Operations for the three and nine months ended
September 30, 2009 and 2008
    
    
    3Consolidated Condensed Statements of Comprehensive Income for the three and nine months
ended September 30, 2009 and 2008
    
    
    4Consolidated Condensed Statements of Cash Flows for the nine months ended September 30,
2009 and 2008
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    34Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 4. Controls and Procedures
    
    
    52PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    53Item 1A. Risk Factors
    
    
    53Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    53Item 6. Exhibits
    
    
    54SIGNATURES
    
    
    56EX-2.1EX-10.1EX-10.2EX-15.1EX-15.2EX-31.1EX-31.2EX-32.1
  1




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 VALEANT PHARMACEUTICALS INTERNATIONAL
 CONSOLIDATED CONDENSED BALANCE SHEETS
As of September 30, 2009 and December 31, 2008
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited, in thousands, except par value data)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    261,559
    
    
    $
    199,582Marketable securities
    
    
    124,350
    
    
    
    19,193Accounts receivable, net
    
    
    164,802
    
    
    
    144,509Inventories, net
    
    
    97,253
    
    
    
    72,972Prepaid expenses and other current assets
    
    
    16,420
    
    
    
    17,605Current deferred tax assets, net
    
    
    19,481
    
    
    
    16,179Income taxes receivable
    
    
    2,237
    
    
    
    Total current assets
    
    
    686,102
    
    
    
    470,040Property, plant and equipment, net
    
    
    122,479
    
    
    
    90,228Deferred tax assets, net
    
    
    4,499
    
    
    
    14,850Goodwill
    
    
    152,936
    
    
    
    114,634Intangible assets, net
    
    
    443,359
    
    
    
    467,795Other assets
    
    
    14,745
    
    
    
    28,385Total non-current assets
    
    
    738,018
    
    
    
    715,892$
    1,424,120
    
    
    $
    1,185,932LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Trade payables
    
    $
    40,415
    
    
    $
    41,638Accrued liabilities
    
    
    328,791
    
    
    
    231,450Notes payable and current portion of long-term debt
    
    
    48,072
    
    
    
    666Deferred revenue
    
    
    7,601
    
    
    
    15,415Income taxes payable
    
    
    10,349
    
    
    
    2,497Current deferred tax liabilities, net
    
    
    
    
    
    
    2,446Current liabilities for uncertain tax positions
    
    
    348
    
    
    
    478Total current liabilities
    
    
    435,576
    
    
    
    294,590Long-term debt, less current portion
    
    
    550,885
    
    
    
    398,136Deferred revenue
    
    
    11,030
    
    
    
    11,841Deferred tax liabilities, net
    
    
    18,137
    
    
    
    812Liabilities for uncertain tax positions
    
    
    16,670
    
    
    
    53,425Other liabilities
    
    
    55,235
    
    
    
    175,380Total non-current liabilities
    
    
    651,957
    
    
    
    639,594Total liabilities
    
    
    1,087,533
    
    
    
    934,184Commitments and contingenciesStockholders Equity:Common stock, $0.01 par value; 200,000 shares authorized; 81,070 (September 30, 2009)
and 81,753 (December 31, 2008) shares outstanding (after deducting shares in
treasury of 21,296 as of September 30, 2009 and 18,688 as of December 31, 2008)
    
    
    811
    
    
    
    818Additional capital
    
    
    1,113,834
    
    
    
    1,138,575Accumulated deficit
    
    
    (804,449
    )
    
    
    (905,784
    )Accumulated other comprehensive income
    
    
    26,372
    
    
    
    18,122Total Valeant stockholders equity
    
    
    336,568
    
    
    
    251,731Noncontrolling interest
    
    
    19
    
    
    
    17Total stockholders equity
    
    
    336,587
    
    
    
    251,748$
    1,424,120
    
    
    $
    1,185,932
  2




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2009 and 2008
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited, in thousands, except per share data)Revenues:Product sales
    
    $
    182,529
    
    
    $
    153,181
    
    
    $
    502,227
    
    
    $
    431,142Service revenue
    
    
    5,035
    
    
    
    
    
    
    
    17,379
    
    
    
    Alliances (including ribavirin royalties)
    
    
    32,754
    
    
    
    15,243
    
    
    
    70,333
    
    
    
    42,821Total revenues
    
    
    220,318
    
    
    
    168,424
    
    
    
    589,939
    
    
    
    473,963Costs and expenses:Cost of goods sold (excluding amortization)
    
    
    52,295
    
    
    
    42,698
    
    
    
    134,742
    
    
    
    126,327Cost of services
    
    
    4,047
    
    
    
    
    
    
    
    13,710
    
    
    
    Selling, general and administrative
    
    
    67,230
    
    
    
    71,458
    
    
    
    193,981
    
    
    
    211,669Research and development costs, net
    
    
    11,296
    
    
    
    23,239
    
    
    
    29,176
    
    
    
    75,100Special
charges and credits including acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    1,974
    
    
    
    Restructuring, asset impairments and dispositions
    
    
    307
    
    
    
    3,527
    
    
    
    3,212
    
    
    
    4,294Amortization expense
    
    
    17,616
    
    
    
    11,488
    
    
    
    51,725
    
    
    
    37,616Total costs and expenses
    
    
    152,791
    
    
    
    152,410
    
    
    
    428,520
    
    
    
    455,006Income from operations
    
    
    67,527
    
    
    
    16,014
    
    
    
    161,419
    
    
    
    18,957Other expense, net including translation and exchange
    
    
    (1,350
    )
    
    
    (1,555
    )
    
    
    (784
    )
    
    
    (3,384
    )Gain (loss) on early extinguishment of debt
    
    
    (155
    )
    
    
    (14,882
    )
    
    
    7,221
    
    
    
    (14,882
    )Interest income
    
    
    1,129
    
    
    
    3,066
    
    
    
    3,689
    
    
    
    13,026Interest expense
    
    
    (13,972
    )
    
    
    (10,053
    )
    
    
    (30,536
    )
    
    
    (36,762
    )Income (loss) from continuing operations before income taxes
    
    
    53,179
    
    
    
    (7,410
    )
    
    
    141,009
    
    
    
    (23,045
    )Provision (benefit) for income taxes
    
    
    15,545
    
    
    
    (148
    )
    
    
    39,541
    
    
    
    33,726Income (loss) from continuing operations
    
    
    37,634
    
    
    
    (7,262
    )
    
    
    101,468
    
    
    
    (56,771
    )Income (loss) from discontinued operations, net of tax
    
    
    (354
    )
    
    
    210,154
    
    
    
    (131
    )
    
    
    187,134Net income
    
    
    37,280
    
    
    
    202,892
    
    
    
    101,337
    
    
    
    130,363Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    5Net income attributable to Valeant
    
    $
    37,280
    
    
    $
    202,891
    
    
    $
    101,335
    
    
    $
    130,358Basic income per share attributable to Valeant:Income (loss) from continuing operations attributable to Valeant
    
    $
    0.46
    
    
    $
    (0.08
    )
    
    $
    1.23
    
    
    $
    (0.64
    )Income (loss) from discontinued operations attributable to Valeant
    
    
    
    
    
    
    2.39
    
    
    
    
    
    
    
    2.10Net income per share attributable to Valeant
    
    $
    0.46
    
    
    $
    2.31
    
    
    $
    1.23
    
    
    $
    1.46Diluted income per share attributable to Valeant:Income (loss) from continuing operations attributable to Valeant
    
    $
    0.45
    
    
    $
    (0.08
    )
    
    $
    1.21
    
    
    $
    (0.64
    )Income (loss) from discontinued operations attributable to Valeant
    
    
    (0.01
    )
    
    
    2.39
    
    
    
    
    
    
    
    2.10Net income per share attributable to Valeant
    
    $
    0.44
    
    
    $
    2.31
    
    
    $
    1.21
    
    
    $
    1.46Shares used in per share computation  Basic
    
    
    81,907
    
    
    
    87,988
    
    
    
    82,407
    
    
    
    89,123Shares used in per share computation  Diluted
    
    
    83,869
    
    
    
    87,988
    
    
    
    84,040
    
    
    
    89,123
  3




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
For the three and nine months ended September 30, 2009 and 2008
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited, in thousands)Net income
    
    $
    37,280
    
    
    $
    202,892
    
    
    $
    101,337
    
    
    $
    130,363Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    11,669
    
    
    
    (72,779
    )
    
    
    8,195
    
    
    
    (2,240
    )Unrealized
gain (loss) on marketable equity securities
    
    
    (172
    )
    
    
    
    
    
    
    
    
    
    
    1,084Unrealized gain (loss) on hedges
    
    
    (156
    )
    
    
    421
    
    
    
    (100
    )
    
    
    448Pension liability adjustment
    
    
    169
    
    
    
    2,576
    
    
    
    155
    
    
    
    2,737Comprehensive income
    
    $
    48,790
    
    
    $
    133,110
    
    
    $
    109,587
    
    
    $
    132,392
  4




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2009 and 2008
 Nine Months EndedSeptember 30,2009
    
    
    2008(Unaudited, in thousands)Cash flows from operating activities:Net income
    
    $
    101,337
    
    
    $
    130,363Income (loss) from discontinued operations
    
    
    (131
    )
    
    
    187,134Income (loss) from continuing operations
    
    
    101,468
    
    
    
    (56,771
    )Adjustments
to reconcile income (loss) from continuing operations to net cash provided by operating activities in continuing operations:Depreciation and amortization
    
    
    63,692
    
    
    
    51,798Provision for losses on accounts receivable and inventory
    
    
    1,833
    
    
    
    20,293Stock compensation expense
    
    
    10,854
    
    
    
    1,341Excess tax deduction from stock options exercised
    
    
    (1,200
    )
    
    
    Translation and exchange losses, net
    
    
    625
    
    
    
    3,384Impairment charges and other non-cash items
    
    
    11,152
    
    
    
    (996
    )Payments of accreted interest on long-term debt
    
    
    (35,338
    )
    
    
    Deferred income taxes
    
    
    4,023
    
    
    
    (22,582
    )(Gain) loss on extinguishment of debt
    
    
    (7,221
    )
    
    
    2,842Change in assets and liabilities, net of effects of acquisitions:Accounts receivable
    
    
    (6,481
    )
    
    
    30,723Inventories
    
    
    (10,038
    )
    
    
    (17,620
    )Prepaid expenses and other assets
    
    
    4,296
    
    
    
    8,859Trade payables and accrued liabilities
    
    
    14,714
    
    
    
    (1,935
    )Income taxes
    
    
    6,601
    
    
    
    36,626Other liabilities
    
    
    (25,117
    )
    
    
    2,684Cash flow from operating activities in continuing operations
    
    
    133,863
    
    
    
    58,646Cash flow from operating activities in discontinued operations
    
    
    (2,860
    )
    
    
    9,632Net cash provided by operating activities
    
    
    131,003
    
    
    
    68,278Cash flows from investing activities:Capital expenditures
    
    
    (13,272
    )
    
    
    (9,456
    )Proceeds from sale of assets
    
    
    562
    
    
    
    728Proceeds from sale of businesses
    
    
    3,342
    
    
    
    48,575Proceeds from investments
    
    
    21,341
    
    
    
    151,047Purchase of investments
    
    
    (124,526
    )
    
    
    (139,722
    )Acquisition of businesses, license rights and product lines
    
    
    (118,261
    )
    
    
    (1,306
    )Cash flow from investing activities in continuing operations
    
    
    (230,814
    )
    
    
    49,866Cash flow from investing activities in discontinued operations
    
    
    (4,937
    )
    
    
    462,418Net cash provided by (used in) investing activities
    
    
    (235,751
    )
    
    
    512,284Cash flows from financing activities:Payments on long-term debt and notes payable
    
    
    (150,951
    )
    
    
    (300,712
    )Proceeds from capitalized lease financing, long-term debt and notes payable
    
    
    348,863
    
    
    
    125Stock option exercises and employee stock purchases
    
    
    34,372
    
    
    
    18,589Excess tax deduction from stock options exercised
    
    
    1,200
    
    
    
    Purchase of treasury stock
    
    
    (62,110
    )
    
    
    (91,422
    )Cash flow from financing activities in continuing operations
    
    
    171,374
    
    
    
    (373,420
    )Cash flow from financing activities in discontinued operations
    
    
    
    
    
    
    (43
    )Net cash provided by (used in) financing activities
    
    
    171,374
    
    
    
    (373,463
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (4,649
    )
    
    
    4,799Net increase in cash and cash equivalents
    
    
    61,977
    
    
    
    211,898Cash and cash equivalents at beginning of period
    
    
    199,582
    
    
    
    309,365Cash and cash equivalents at end of period
    
    
    261,559
    
    
    
    521,263Cash and cash equivalents classified as part of discontinued operations
    
    
    
    
    
    
    Cash and cash equivalents of continuing operations
    
    $
    261,559
    
    
    $
    521,263
  5




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(all amounts in thousands, except share and per share amounts, unless otherwise indicated)
  1. Organization and Summary of Significant Accounting Policies
 Organization:
 Principles of Consolidation:
 Marketable Securities:
 Accumulated Other Comprehensive Income
 Discontinued Operations
 Derivative Financial Instruments
 Use of Estimates:
 6




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Recently Adopted Accounting Standards:
  Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51
 Effective Date of FASB
Statement No. 157
 Business Combinations
 Accounting for Collaborative Arrangements
 7




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 Determination of the Useful Life
of Intangible Assets
 Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
  Recognition and
Presentation of Other-Than-Temporary Impairments
 Interim Disclosures
about Fair Value of Financial Instruments
 8




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Subsequent Events
 New Accounting Standards Not Yet Adopted:
 Employers Disclosures
about Postretirement Benefit Plan Assets
 Amendments to FASB Interpretation No. 46(R)
   9




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  2. Restructuring
  2008 Restructuring
     10




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
   Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Severance costs (455 employees, cumulatively)
    
    $
    247
    
    
    $
    2,022Contract cancellation costs, legal and professional fees and other associated costs
    
    
    58
    
    
    
    1,152Subtotal: cash charges
    
    
    305
    
    
    
    3,174Non-cash charges
    
    
    2
    
    
    
    38Restructurings, asset impairments and dispositions
    
    $
    307
    
    
    $
    3,212
    Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2008
    
    
    2008Severance costs (160 employees, cumulatively)
    
    $
    220
    
    
    $
    12,289Contract cancellation costs, legal and professional fees and other associated costs
    
    
    2,478
    
    
    
    11,030Subtotal: cash charges
    
    
    2,698
    
    
    
    23,319Stock compensation
    
    
    
    
    
    
    4,778Impairment of long-lived assets
    
    
    
    
    
    
    8,537Loss on sale of long-lived assets
    
    
    
    
    
    
    2,736Subtotal: restructuring expenses
    
    
    2, 698
    
    
    
    39,370Gain on Invida transaction
    
    
    829
    
    
    
    (35,076
    )Restructurings, asset impairments and dispositions
    
    $
    3,527
    
    
    $
    4,294
  11




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Reconciliation of Cash Restructuring Payments with Restructuring Accrual
  Reconciliation of Cash Payments and Accruals
 Restructuring accrual, December 31, 2008
    
    $
    10,926Charges to earnings
    
    
    3,174Cash paid
    
    
    (7,446
    )Restructuring accrual, September 30, 2009
    
    $
    6,654
  3. Acquisitions and Collaboration Agreement
 Tecnofarma Acquisition
   Cash
    
    $
    1,256Accounts receivable
    
    
    6,106Inventories
    
    
    6,990Other current assets
    
    
    1,114Long-term assets
    
    
    22,761Identifiable intangible assets
    
    
    5,559Goodwill
    
    
    13,300Current liabilities
    
    
    (6,221
    )Current and long-term debt
    
    
    (13,200
    )Other long-term liabilities
    
    
    (5,165
    )Net assets acquired
    
    $
    32,500
 12




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Emo-Farm Acquisition
   Current and long-term assets
    
    $
    14,364Identifiable intangible assets
    
    
    11,227Goodwill
    
    
    8,995Current and long-term liabilities
    
    
    (6,001
    )Net assets acquired
    
    $
    28,585
 Dow Acquisition
      13




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
   Value ofIntangible
    
    
    Weighted-AverageAssets
    
    
    AmortizationAcquired
    
    
    PeriodDeveloped formulations
    
    $
    104,500
    
    
    6.1 yearsOutlicensed technology
    
    
    70,000
    
    
    9.5 yearsCustomer relationships
    
    
    6,600
    
    
    7.0 yearsTotal identifiable intangible assets
    
    $
    181,100
 Asset Purchase in Australia
  Collaboration Agreement with GSK
    14




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Valeant research and development costs
    
    $
    7,456
    
    
    $
    20,880Valeant selling, general and administrative
    
    
    9
    
    
    
    2147,465
    
    
    
    21,094GSK expenses
    
    
    10,019
    
    
    
    23,298Total spending for Collaboration Agreement
    
    $
    17,484
    
    
    $
    44,392Equalization charge
    
    $
    1,277
    
    
    $
    1,102
  Nine Months Ended September 30, 2009Selling,
    
    
    ResearchBalance
    
    
    Alliance
    
    
    General and
    
    
    andCollaboration Accounting Impact
    
    Sheet
    
    
    Revenue
    
    
    Administrative
    
    
    DevelopmentUpfront payment from GSK
    
    $
    125,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Release from upfront payment in 2008
    
    
    (10,909
    )
    
    
    
    
    
    
    
    
    
    
    Incurred cost in 2009
    
    
    
    
    
    
    
    
    
    
    214
    
    
    
    20,880Incurred cost offset in 2009
    
    
    (22,196
    )
    
    
    
    
    
    
    (1,040
    )
    
    
    (21,156
    )Recognize alliance revenue
    
    
    (9,896
    )
    
    
    (9,896
    )
    
    
    
    
    
    
    Release from upfront payment
    
    
    (32,092
    )
    
    
    
    
    
    
    
    
    
    
    Remaining upfront payment from GSK
    
    $
    81,999
    
    
    
    
    
    
    
    
    
    
    
    Total equalization payable to GSK
    
    $
    (1,102
    )
    
    
    
    
    
    
    826
    
    
    
    276Total expense and revenue
    
    
    
    
    
    $
    (9,896
    )
    
    $
    
    
    
    $
    Accrued liabilities
    
    $
    26,012Other liabilities
    
    
    39,018Deferred revenue short-term
    
    
    5,939Deferred revenue long-term
    
    
    11,030Remaining upfront payment from GSK
    
    $
    81,999
  4. Special Charges and Credits Including Acquired In-process Research and Development
  15




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
   5. Discontinued Operations
     16




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008WEEMEA Business:Product sales
    
    $
    
    
    
    $
    40,856
    
    
    $
    
    
    
    $
    136,767Costs and expenses:Cost of goods sold (excluding amortization)
    
    
    
    
    
    
    15,640
    
    
    
    
    
    
    
    56,380Selling, general and administrative
    
    
    
    
    
    
    16,087
    
    
    
    
    
    
    
    66,859Research and development costs, net
    
    
    
    
    
    
    142
    
    
    
    
    
    
    
    365Restructuring, asset impairments and dispositions
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    1,309Amortization expense
    
    
    
    
    
    
    4,322
    
    
    
    
    
    
    
    14,372Total costs and expenses
    
    
    
    
    
    
    36,240
    
    
    
    
    
    
    
    139,285Other income
    
    
    
    
    
    
    1,983
    
    
    
    
    
    
    
    744Income (loss) from discontinued operations before income taxes, WEEMEA
    
    
    
    
    
    
    6,599
    
    
    
    
    
    
    
    (1,774
    )Infergen:Product sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Costs and expenses:Cost of goods sold (excluding amortization)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,007Selling, general and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    624Research and development costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,752Total costs and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,383Loss from discontinued operations, Infergen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,383
    )Other discontinued operations:Other income (expense)
    
    
    (411
    )
    
    
    376
    
    
    
    (771
    )
    
    
    1,168Consolidated discontinued operations:Income (loss) from discontinued operations before income taxes
    
    
    (411
    )
    
    
    6,975
    
    
    
    (771
    )
    
    
    (11,989
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    (3,479
    )
    
    
    
    
    
    
    18,685Income (loss) from discontinued operations
    
    
    (411
    )
    
    
    10,454
    
    
    
    (771
    )
    
    
    (30,674
    )Disposal of discontinued operations, net
    
    
    57
    
    
    
    199,700
    
    
    
    640
    
    
    
    217,808Income (loss) from discontinued operations, net
    
    $
    (354
    )
    
    $
    210,154
    
    
    $
    (131
    )
    
    $
    187,134
 6. Fair Value Measurements
      17




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Assets (Liabilities)
    
    Assets (Liabilities)September 30, 2009
    
    December 31, 2008Level 1
    
    Level 2
    
    Level 3
    
    Level 1
    
    Level 2
    
    Level 3Available-for-sale securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6,646
    
    
    $
    
    
    
    $
    Undesignated hedges
    
    
    
    
    
    
    (1,412
    )
    
    
    
    
    
    
    
    
    
    
    157
    
    
    
    Net investment derivative contracts
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    Cash flow derivative contracts
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   7. Earnings Per Share
  18




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Income:Numerator for basic and diluted earnings per share attributable to
Valeant:Income (loss) from continuing operations attributable to Valeant
    
    $
    37,634
    
    
    $
    (7,263
    )
    
    $
    101,466
    
    
    $
    (56,776
    )Income (loss) from discontinued operations
    
    
    (354
    )
    
    
    210,154
    
    
    
    (131
    )
    
    
    187,134Net income attributable to Valeant
    
    $
    37,280
    
    
    $
    202,891
    
    
    $
    101,335
    
    
    $
    130,358Shares:Denominator for basic earnings per share attributable to Valeant:Weighted shares outstanding
    
    
    81,409
    
    
    
    87,703
    
    
    
    81,912
    
    
    
    88,800Vested stock equivalents (not issued)
    
    
    498
    
    
    
    285
    
    
    
    495
    
    
    
    323Denominator for basic earnings per share attributable to Valeant
    
    
    81,907
    
    
    
    87,988
    
    
    
    82,407
    
    
    
    89,123Denominator for diluted earnings per share attributable to Valeant:Employee stock options
    
    
    908
    
    
    
    
    
    
    
    724
    
    
    
    Other dilutive securities
    
    
    1,054
    
    
    
    
    
    
    
    909
    
    
    
    Dilutive potential common shares
    
    
    1,962
    
    
    
    
    
    
    
    1,633
    
    
    
    Denominator for diluted earnings per share attributable to Valeant
    
    
    83,869
    
    
    
    87,988
    
    
    
    84,040
    
    
    
    89,123Basic income per share attributable to Valeant:Income (loss) from continuing operations attributable to Valeant
    
    $
    0.46
    
    
    $
    (0.08
    )
    
    $
    1.23
    
    
    $
    (0.64
    )Income from discontinued operations
    
    
    
    
    
    
    2.39
    
    
    
    
    
    
    
    2.10Net income per share attributable to Valeant
    
    $
    0.46
    
    
    $
    2.31
    
    
    $
    1.23
    
    
    $
    1.46Diluted income per share attributable to Valeant:Income (loss) from continuing operations attributable to Valeant
    
    $
    0.45
    
    
    $
    (0.08
    )
    
    $
    1.21
    
    
    $
    (0.64
    )Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    2.39
    
    
    
    
    
    
    
    2.10Net income per share attributable to Valeant
    
    $
    0.44
    
    
    $
    2.31
    
    
    $
    1.21
    
    
    $
    1.46
   8. Detail of Certain Accounts
  19




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 September 30,
    
    
    December 31,2009
    
    
    2008Accounts receivable, net:Trade accounts receivable
    
    $
    115,504
    
    
    $
    93,796Royalties receivable
    
    
    23,266
    
    
    
    21,774Other receivables
    
    
    30,856
    
    
    
    33,038169,626
    
    
    
    148,608Allowance for doubtful accounts
    
    
    (4,824
    )
    
    
    (4,099
    )$
    164,802
    
    
    $
    144,509Inventories, net:Raw materials and supplies
    
    $
    24,459
    
    
    $
    16,742Work-in-process
    
    
    12,379
    
    
    
    8,506Finished goods
    
    
    72,200
    
    
    
    61,641109,038
    
    
    
    86,889Allowance for inventory obsolescence
    
    
    (11,785
    )
    
    
    (13,917
    )$
    97,253
    
    
    $
    72,972Property, plant and equipment, net:Property, plant and equipment, at cost
    
    $
    223,731
    
    
    $
    178,156Accumulated depreciation and amortization
    
    
    (101,252
    )
    
    
    (87,928
    )$
    122,479
    
    
    $
    90,228Accrued Liabilities:Dow acquisition payment obligations
    
    $
    115,373
    
    
    $
    41,595Accrued returns, rebates and allowances
    
    
    90,152
    
    
    
    66,005GSK research and development cost offset
    
    
    27,211
    
    
    
    35,581Payroll and related items
    
    
    25,760
    
    
    
    23,381WEEMEA sale-related liabilities
    
    
    14,905
    
    
    
    27,575Interest
    
    
    13,093
    
    
    
    3,562Legal and professional fees
    
    
    6,411
    
    
    
    9,816Accrued royalties payable
    
    
    3,158
    
    
    
    2,509Accrued research and development costs
    
    
    2,919
    
    
    
    10,245Other
    
    
    29,809
    
    
    
    11,181Total accrued liabilities
    
    $
    328,791
    
    
    $
    231,450Other Liabilities:GSK research and development cost offset
    
    $
    39,018
    
    
    $
    52,297Dow conditional purchase consideration
    
    
    
    
    
    
    95,854Other
    
    
    16,217
    
    
    
    27,229Total other liabilities
    
    $
    55,235
    
    
    $
    175,380
 Intangible assets:
 20




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Weighted
    
    
    September 30, 2009
    
    
    December 31, 2008Average
    
    
    Gross
    
    
    Accumulated
    
    
    Net
    
    
    Gross
    
    
    Accumulated
    
    
    NetLives (years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountProduct rightsNeurology
    
    
    13
    
    
    $
    278,780
    
    
    $
    (168,270
    )
    
    $
    110,510
    
    
    $
    276,229
    
    
    $
    (147,745
    )
    
    $
    128,484Dermatology
    
    
    13
    
    
    
    283,493
    
    
    
    (76,994
    )
    
    
    206,499
    
    
    
    275,032
    
    
    
    (54,906
    )
    
    
    220,126Other
    
    
    12
    
    
    
    93,158
    
    
    
    (46,618
    )
    
    
    46,540
    
    
    
    72,956
    
    
    
    (41,970
    )
    
    
    30,986Total product rights
    
    
    13
    
    
    
    655,431
    
    
    
    (291,882
    )
    
    
    363,549
    
    
    
    624,217
    
    
    
    (244,621
    )
    
    
    379,596Outlicensed technology
    
    
    10
    
    
    
    70,000
    
    
    
    (5,796
    )
    
    
    64,204
    
    
    
    74,000
    
    
    
    
    
    
    
    74,000Customer relationships
    
    
    8
    
    
    
    9,588
    
    
    
    (1,504
    )
    
    
    8,084
    
    
    
    8,242
    
    
    
    (30
    )
    
    
    8,212Trade names
    
    Indefinite
    
    
    7,522
    
    
    
    
    
    
    
    7,522
    
    
    
    5,987
    
    
    
    
    
    
    
    5,987License agreement
    
    
    5
    
    
    
    67,376
    
    
    
    (67,376
    )
    
    
    
    
    
    
    67,376
    
    
    
    (67,376
    )
    
    
    Total intangible assets
    
    
    
    
    
    $
    809,917
    
    
    $
    (366,558
    )
    
    $
    443,359
    
    
    $
    779,822
    
    
    $
    (312,027
    )
    
    $
    467,795
  Scheduled Future Amortization Expense2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    TotalProduct rightsNeurology
    
    $
    6,264
    
    
    $
    24,626
    
    
    $
    18,991
    
    
    $
    17,891
    
    
    $
    16,832
    
    
    $
    25,906
    
    
    $
    110,510Dermatology
    
    
    7,387
    
    
    
    29,826
    
    
    
    29,826
    
    
    
    29,826
    
    
    
    28,203
    
    
    
    81,431
    
    
    
    206,499Other
    
    
    1,547
    
    
    
    6,300
    
    
    
    6,653
    
    
    
    6,475
    
    
    
    6,321
    
    
    
    19,244
    
    
    
    46,540Outlicensed technology
    
    
    2,059
    
    
    
    8,234
    
    
    
    8,235
    
    
    
    7,690
    
    
    
    7,690
    
    
    
    30,296
    
    
    
    64,204Customer relationships
    
    
    473
    
    
    
    1,665
    
    
    
    1,429
    
    
    
    1,193
    
    
    
    958
    
    
    
    2,366
    
    
    
    8,084Total
    
    $
    17,730
    
    
    $
    70,651
    
    
    $
    65,134
    
    
    $
    63,075
    
    
    $
    60,004
    
    
    $
    159,243
    
    
    $
    435,837
   Goodwill:
 Branded
    
    
    BrandedSpecialty
    
    
    generics 
    
    
    generics  Latinpharmaceuticals
    
    
    Europe
    
    
    America
    
    
    TotalBalance, December 31, 2008
    
    $
    114,634
    
    
    $
    
    
    
    $
    
    
    
    $
    114,634Additions
    
    
    29,605
    
    
    
    8,995
    
    
    
    13,300
    
    
    
    51,900Reductions (a)
    
    
    (16,737
    )
    
    
    
    
    
    
    
    
    
    
    (16,737
    )Other (b)
    
    
    2,016
    
    
    
    1,375
    
    
    
    (252
    )
    
    
    3,139Balance, September 30, 2009
    
    $
    129,518
    
    
    $
    10,370
    
    
    $
    13,048
    
    
    $
    152,936
 
 (a)
    
    Reversal of a deferred tax liability recorded in the initial allocation of purchase price for
the acquisition of Coria Laboratories, Ltd. (Coria).(b)
    
    Primarily related to the effect of changes in foreign currency exchange rates. 9. Long-term Debt
 Senior Notes
 21




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
    3.0% and 4.0% Convertible Subordinated Notes
    22




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    20083.0% Notes:Discount amortization
    
    $
    762
    
    
    $
    2,422
    
    
    $
    3,983
    
    
    $
    7,130Contractual coupon rate
    
    $
    577
    
    
    $
    1,800
    
    
    $
    2,918
    
    
    $
    5,4004.0% Notes:Discount amortization
    
    $
    1,518
    
    
    $
    1,490
    
    
    $
    4,623
    
    
    $
    4,386Contractual coupon rate
    
    $
    2,250
    
    
    $
    2,400
    
    
    $
    7,016
    
    
    $
    7,200
    September 30,
    
    
    December 31,2009
    
    
    20083.0% Notes
    
    $
    48,866
    
    
    $
    207,360Unamortized discount
    
    
    (1,675
    )
    
    
    (13,548
    )Net carrying value of 3.0% Notes
    
    $
    47,191
    
    
    $
    193,8124.0% Notes
    
    $
    224,960
    
    
    $
    240,000Unamortized discount
    
    
    (29,478
    )
    
    
    (36,179
    )Net carrying value of 4.0% Notes
    
    $
    195,482
    
    
    $
    203,821Equity component for 3.0% Notes
    
    $
    45,318
    
    
    $
    57,190Equity component for 4.0% Notes
    
    $
    58,352
    
    
    $
    62,167
  23




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
    10. Income Taxes
      24




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
   11. Stock and Stock Incentive Programs
 Stock and Securities Repurchase Programs
  Stock-based compensation
  25




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Employee stock options
    
    $
    776
    
    
    $
    638
    
    
    $
    3,414
    
    
    $
    (3,566
    )Restricted stock units
    
    
    1,527
    
    
    
    1,692
    
    
    
    4,881
    
    
    
    3,497Perfomance stock units
    
    
    848
    
    
    
    641
    
    
    
    2,559
    
    
    
    1,220Employee stock purchase plan
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    190Total stock-based compensation
    
    $
    3,151
    
    
    $
    3,028
    
    
    $
    10,854
    
    
    $
    1,341
   Remainder of 2009
    
    $
    3,3782010
    
    
    9,9122011
    
    
    4,0652012
    
    
    1,3452013
    
    
    91$
    18,791
 12. Derivative Financial Instruments
    26




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 As of September 30, 2009Asset Derivatives
    
    Liability DerivativesBalance
    
    
    
    
    
    BalanceNotional
    
    Sheet
    
    Fair
    
    Sheet
    
    FairDescription
    
    Amount
    
    Location
    
    Value
    
    Location
    
    ValueUndesignated hedges
    
    $
    108,541
    
    
    
    
    
    
    $
    
    
    
    Accrued liabilities
    
    $
    (1,412
    )Net investment derivative contracts
    
    
    24,332
    
    
    Other assets
    
    
    204
    
    
    
    
    
    
    
    Cash flow derivative contracts
    
    
    2,132
    
    
    
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    (100
    )
 As of December 31, 2008Asset Derivatives
    
    Liability DerivativesBalance
    
    
    
    
    
    BalanceNotional
    
    Sheet
    
    Fair
    
    Sheet
    
    FairDescription
    
    Amount
    
    Location
    
    Value
    
    Location
    
    ValueUndesignated hedges
    
    $
    3,916
    
    
    Other assets
    
    $
    192
    
    
    Accrued liabilities
    
    $
    (35
    )Net investment derivative contracts
    
    
    18,779
    
    
    Other assets
    
    
    13
    
    
    
    
    
    
    
    
  
    
    Changes in the fair value of undesignated hedges are recorded in earnings in the
period of the change.
    
    Changes in the fair value of a derivative that is designated and qualifies as a
net investment hedge are recorded as translation adjustment in accumulated other
comprehensive income.
    
    Changes in the fair value of a derivative that is designated and qualifies as a
cash flow hedge are recorded in accumulated other comprehensive income and then
recognized in earnings when the hedged items affect earnings.
    
    Changes in the fair value of a derivative that is designated and qualifies as a
fair value hedge are recorded in exchange gain or loss in the period of the change.
    
    Changes in the fair value of the interest rate swap are recorded as interest
expense in the period of the change.
  27




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months Ended September 30, 2009Net
    
    CashInvestment
    
    Flow
    
    Fair
    
    InterestUndesignated
    
    Derivative
    
    Derivative
    
    Value
    
    RateDescription
    
    Hedges
    
    Contracts
    
    Contracts
    
    Hedges
    
    SwapLoss recognized in currency translation
adjustment in other comprehensive income
    
    $
    
    
    
    $
    (2,489
    )
    
    $
    
    
    
    $
    
    
    
    $
    Loss recognized in royalty income
    
    
    
    
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    Loss recognized in exchange gain / loss
    
    
    (510
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Nine Months Ended September 30, 2009Net
    
    CashInvestment
    
    Flow
    
    Fair
    
    InterestUndesignated
    
    Derivative
    
    Derivative
    
    Value
    
    RateDescription
    
    Hedges
    
    Contracts
    
    Contracts
    
    Hedges
    
    SwapLoss recognized in currency translation
adjustment in other comprehensive income
    
    $
    
    
    
    $
    (205
    )
    
    $
    
    
    
    $
    
    
    
    $
    Gain recognized in royalty income
    
    
    
    
    
    
    
    
    
    
    79
    
    
    
    
    
    
    
    Loss recognized in exchange gain / loss
    
    
    (2,486
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Three Months Ended September 30, 2008Net
    
    CashInvestment
    
    Flow
    
    Fair
    
    InterestUndesignated
    
    Derivative
    
    Derivative
    
    Value
    
    RateDescription
    
    Hedges
    
    Contracts
    
    Contracts
    
    Hedges
    
    SwapLoss recognized in currency translation
adjustment in other comprehensive income
    
    $
    
    
    
    $
    (2,041
    )
    
    $
    
    
    
    $
    
    
    
    $
    Gain recognized in royalty income
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    Loss recognized in exchange gain / loss
    
    
    (154
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Nine Months Ended September 30, 2008Net
    
    CashInvestment
    
    Flow
    
    Fair
    
    InterestUndesignated
    
    Derivative
    
    Derivative
    
    Value
    
    RateDescription
    
    Hedges
    
    Contracts
    
    Contracts
    
    Hedges
    
    SwapLoss recognized in currency translation
adjustment in other comprehensive income
    
    $
    
    
    
    $
    (7,021
    )
    
    $
    
    
    
    $
    
    
    
    $
    Gain recognized in interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,459Loss recognized in royalty income
    
    
    
    
    
    
    
    
    
    
    (1,331
    )
    
    
    
    
    
    
    Loss recognized in exchange gain / loss
    
    
    (1,173
    )
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    
  13. Commitments and Contingencies
  SEC Investigation:
 Derivative Actions Related to Stock Options:
 28




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Permax Product Liability Cases:
 Eli Lilly:
 Spear Pharmaceuticals, Inc
 29




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Tolmar Matter:
 Novel ANDA Patent Certification Notice
   14. Business Segments
  30




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
    Three Months Ended September 30,
    
    

Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesSpecialty pharmaceuticals product sales
    
    $
    101,616
    
    
    $
    70,124
    
    
    $
    284,562
    
    
    $
    214,551Specialty pharmaceuticals service and alliance revenue (1)
    
    
    25,629
    
    
    
    
    
    
    
    49,730
    
    
    
    Branded generics  Europe product sales
    
    
    40,234
    
    
    
    40,430
    
    
    
    109,604
    
    
    
    116,883Branded generics  Latin America product sales
    
    
    40,679
    
    
    
    42,627
    
    
    
    108,061
    
    
    
    99,708Alliances (ribavirin royalties only)
    
    
    12,160
    
    
    
    15,243
    
    
    
    37,982
    
    
    
    42,821Consolidated revenues
    
    $
    220,318
    
    
    $
    168,424
    
    
    $
    589,939
    
    
    $
    473,963Operating IncomeSpecialty pharmaceuticals
    
    $
    46,464
    
    
    $
    (5,044
    )
    
    $
    108,803
    
    
    $
    (24,085
    )Branded generics  Europe
    
    
    11,297
    
    
    
    15,689
    
    
    
    26,952
    
    
    
    34,872Branded generics  Latin America
    
    
    11,327
    
    
    
    10,085
    
    
    
    37,307
    
    
    
    12,95469,088
    
    
    
    20,730
    
    
    
    173,062
    
    
    
    23,741Alliances (ribavirin royalties only)
    
    
    12,160
    
    
    
    15,243
    
    
    
    37,982
    
    
    
    42,821Corporate (2)
    
    
    (13,414
    )
    
    
    (16,432
    )
    
    
    (44,439
    )
    
    
    (43,311
    )Subtotal
    
    
    67,834
    
    
    
    19,541
    
    
    
    166,605
    
    
    
    23,251Special charges and credits including acquired in-process research
and development
    
    
    
    
    
    
    
    
    
    
    (1,974
    )
    
    
    Restructuring, asset impairments and dispositions
    
    
    (307
    )
    
    
    (3,527
    )
    
    
    (3,212
    )
    
    
    (4,294
    )Consolidated segment operating income
    
    
    67,527
    
    
    
    16,014
    
    
    
    161,419
    
    
    
    18,957Interest income
    
    
    1,129
    
    
    
    3,066
    
    
    
    3,689
    
    
    
    13,026Interest expense
    
    
    (13,972
    )
    
    
    (10,053
    )
    
    
    (30,536
    )
    
    
    (36,762
    )Gain (loss) on early extinguishment of debt
    
    
    (155
    )
    
    
    (14,882
    )
    
    
    7,221
    
    
    
    (14,882
    )Other expense, net including translation and exchange
    
    
    (1,350
    )
    
    
    (1,555
    )
    
    
    (784
    )
    
    
    (3,384
    )Income (loss) from continuing operations before income taxes
    
    $
    53,179
    
    
    $
    (7,410
    )
    
    $
    141,009
    
    
    $
    (23,045
    )
 
 (1)
    
    Specialty pharmaceuticals service and alliance revenue consists of: 31




---



##### Table of Contents



VALEANT PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
 Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Service revenue
    
    $
    5,035
    
    
    $
    17,3791% clindamycin and 5% benzoyl peroxide gel profit share
    
    
    8,535
    
    
    
    8,535Royalties
    
    
    2,281
    
    
    
    7,920License payments
    
    
    6,000
    
    
    
    6,000GSK Collaboration
    
    
    3,778
    
    
    
    9,896Total specialty pharmaceuticals service and alliance revenue
    
    $
    25,629
    
    
    $
    49,730
 (2)
    
    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.
  September 30,
    
    
    December 31,2009
    
    
    2008Total AssetsSpecialty pharmaceuticals
    
    $
    671,239
    
    
    $
    692,734Branded generics  Europe
    
    
    171,910
    
    
    
    219,234Branded generics  Latin America
    
    
    148,013
    
    
    
    103,573Alliances
    
    
    12,284
    
    
    
    16,436Corporate
    
    
    420,674
    
    
    
    153,955Total
    
    $
    1,424,120
    
    
    $
    1,185,932
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Sales:McKesson
    
    $
    37,612
    
    
    $
    29,140
    
    
    $
    108,396
    
    
    $
    78,533Cardinal
    
    
    27,560
    
    
    
    15,887
    
    
    
    72,993
    
    
    
    47,972Percentage of total product sales:McKesson
    
    
    21
    %
    
    
    19
    %
    
    
    22
    %
    
    
    18
    %Cardinal
    
    
    15
    %
    
    
    10
    %
    
    
    15
    %
    
    
    11
    %
 15. Alliance Revenue
  32




---



##### Table of Contents



VALEANT
PHARMACEUTICALS INTERNATIONAL
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  (Continued)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Ribavirin royalty
    
    $
    12,160
    
    
    $
    15,243
    
    
    $
    37,982
    
    
    $
    42,8211% clindamycin and 5% benzoyl peroxide gel (IDP-111) profit share
    
    
    8,535
    
    
    
    
    
    
    
    8,535
    
    
    
    Other royalties
    
    
    2,281
    
    
    
    
    
    
    
    7,920
    
    
    
    License payments
    
    
    6,000
    
    
    
    
    
    
    
    6,000
    
    
    
    GSK Collaboration
    
    
    3,778
    
    
    
    
    
    
    
    9,896
    
    
    
    Total alliance revenue
    
    $
    32,754
    
    
    $
    15,243
    
    
    $
    70,333
    
    
    $
    42,821
 16. Related Parties
   17. Subsequent Events
   33




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Company Overview
 Introduction
    Business Strategy
    34




---



##### Table of Contents



Pharmaceutical Products
   Alliance Revenue
 35




---



##### Table of Contents



in vitro
 Research and Development
  Collaboration Agreement
   36




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009(in thousands)Valeant research and development costs
    
    $
    7,456
    
    
    $
    20,880Valeant selling, general and administrative
    
    
    9
    
    
    
    2147,465
    
    
    
    21,094GSK expenses
    
    
    10,019
    
    
    
    23,298Total spending for Collaboration Agreement
    
    $
    17,484
    
    
    $
    44,392Equalization charge
    
    $
    1,277
    
    
    $
    1,102
  37




---



##### Table of Contents



Nine Months Ended September 30, 2009Selling,
    
    
    ResearchBalance
    
    
    Alliance
    
    
    General and
    
    
    andCollaboration Accounting Impact
    
    Sheet
    
    
    Revenue
    
    
    Administrative
    
    
    DevelopmentUpfront payment from GSK
    
    $
    125,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Release from upfront payment in 2008
    
    
    (10,909
    )
    
    
    
    
    
    
    
    
    
    
    Incurred cost in 2009
    
    
    
    
    
    
    
    
    
    
    214
    
    
    
    20,880Incurred cost offset in 2009
    
    
    (22,196
    )
    
    
    
    
    
    
    (1,040
    )
    
    
    (21,156
    )Recognize alliance revenue
    
    
    (9,896
    )
    
    
    (9,896
    )
    
    
    
    
    
    
    Release from upfront payment
    
    
    (32,092
    )
    
    
    
    
    
    
    
    
    
    
    Remaining upfront payment from GSK
    
    $
    81,999
    
    
    
    
    
    
    
    
    
    
    
    Total equalization payable to GSK
    
    $
    (1,102
    )
    
    
    
    
    
    
    826
    
    
    
    276Total expense and revenue
    
    
    
    
    
    $
    (9,896
    )
    
    $
    
    
    
    $
    Accrued liabilities
    
    $
    26,012Other liabilities
    
    
    39,018Deferred revenue short-term
    
    
    5,939Deferred revenue long-term
    
    
    11,030Remaining upfront payment from GSK
    
    $
    81,999
  Results of Operations
    38




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)RevenuesSpecialty pharmaceuticals product sales
    
    $
    101,616
    
    
    $
    70,124
    
    
    $
    284,562
    
    
    $
    214,551Specialty pharmaceuticals service and alliance revenue
    
    
    25,629
    
    
    
    
    
    
    
    49,730
    
    
    
    Branded generics  Europe product sales
    
    
    40,234
    
    
    
    40,430
    
    
    
    109,604
    
    
    
    116,883Branded generics  Latin America product sales
    
    
    40,679
    
    
    
    42,627
    
    
    
    108,061
    
    
    
    99,708Alliances (ribavirin royalties only)
    
    
    12,160
    
    
    
    15,243
    
    
    
    37,982
    
    
    
    42,821Consolidated revenues
    
    
    220,318
    
    
    
    168,424
    
    
    
    589,939
    
    
    
    473,963Costs and expensesCost of goods sold (excluding amortization)
    
    
    52,295
    
    
    
    42,698
    
    
    
    134,742
    
    
    
    126,327Cost of services
    
    
    4,047
    
    
    
    
    
    
    
    13,710
    
    
    
    Selling, general and administrative
    
    
    67,230
    
    
    
    71,458
    
    
    
    193,981
    
    
    
    211,669Research and development costs, net
    
    
    11,296
    
    
    
    23,239
    
    
    
    29,176
    
    
    
    75,100Special charges and credits including acquired in-process research and
development
    
    
    
    
    
    
    
    
    
    
    1,974
    
    
    
    Restructuring, asset impairments and dispositions
    
    
    307
    
    
    
    3,527
    
    
    
    3,212
    
    
    
    4,294Amortization expense
    
    
    17,616
    
    
    
    11,488
    
    
    
    51,725
    
    
    
    37,616Income from operations
    
    $
    67,527
    
    
    $
    16,014
    
    
    $
    161,419
    
    
    $
    18,957
  Product Sales Revenues:
   39




---



##### Table of Contents



Specialty Pharmaceuticals Service and Alliance Revenue
 Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Service revenue
    
    $
    5,035
    
    
    $
    17,379Specialty pharmaceuticals alliance revenue:Royalties
    
    
    2,281
    
    
    
    7,9201% clindamycin and 5% benzoyl peroxide gel profit share
    
    
    8,535
    
    
    
    8,535License payments
    
    
    6,000
    
    
    
    6,000GSK Collaboration
    
    
    3,778
    
    
    
    9,896Total specialty pharmaceuticals alliance revenue
    
    
    20,594
    
    
    
    32,351Total specialty pharmaceuticals service and alliance revenue
    
    $
    25,629
    
    
    $
    49,730
 in vitro
   Alliance Revenue (Ribavirin Royalties only)
 Gross Profit Margin:
 40




---



##### Table of Contents



Three Months EndedSeptember 30,
    
    
    Increase
    
    
    Percent2009
    
    
    2008
    
    
    (Decrease)
    
    
    Change(dollars in thousands)Gross Profit (excluding product amortization)Specialty pharmaceuticals
    
    $
    79,371
    
    
    $
    54,205
    
    
    $
    25,166
    
    
    
    46
    %% of product sales
    
    
    78
    %
    
    
    77
    %Branded generics  Europe
    
    
    23,382
    
    
    
    27,239
    
    
    
    (3,857
    )
    
    
    (14
    )%% of product sales
    
    
    58
    %
    
    
    67
    %Branded generics  Latin America
    
    
    27,537
    
    
    
    29,027
    
    
    
    (1,490
    )
    
    
    (5
    )%% of product sales
    
    
    68
    %
    
    
    68
    %Corporate
    
    
    (56
    )
    
    
    11
    
    
    
    (67
    )
    
    
    % of product sales
    
    
    
    
    
    
    Consolidated gross profit
    
    $
    130,234
    
    
    $
    110,482
    
    
    $
    19,752
    
    
    
    18
    %% of product sales
    
    
    71
    %
    
    
    72
    %Product AmortizationSpecialty pharmaceuticals
    
    $
    13,609
    
    
    $
    8,641
    
    
    $
    4,968
    
    
    
    57
    %Branded generics  Europe
    
    
    711
    
    
    
    316
    
    
    
    395
    
    
    
    125
    %Branded generics  Latin America
    
    
    900
    
    
    
    1,086
    
    
    
    (186
    )
    
    
    (17
    )%Total product amortization
    
    $
    15,220
    
    
    $
    10,043
    
    
    $
    5,177
    
    
    
    52
    %Gross Profit (including product amortization)Specialty pharmaceuticals
    
    $
    65,762
    
    
    $
    45,564
    
    
    $
    20,198
    
    
    
    44
    %% of product sales
    
    
    65
    %
    
    
    65
    %Branded generics  Europe
    
    
    22,671
    
    
    
    26,923
    
    
    
    (4,252
    )
    
    
    (16
    )%% of product sales
    
    
    56
    %
    
    
    67
    %Branded generics  Latin America
    
    
    26,637
    
    
    
    27,941
    
    
    
    (1,304
    )
    
    
    (5
    )%% of product sales
    
    
    65
    %
    
    
    66
    %Corporate
    
    
    (56
    )
    
    
    11
    
    
    
    (67
    )
    
    
    % of product sales
    
    
    
    
    
    
    Consolidated gross profit
    
    $
    115,014
    
    
    $
    100,439
    
    
    $
    14,575
    
    
    
    15
    %% of product sales
    
    
    63
    %
    
    
    66
    %
 41




---



##### Table of Contents



Nine Months EndedSeptember 30,
    
    
    Increase
    
    
    Percent2009
    
    
    2008
    
    
    (Decrease)
    
    
    Change(dollars in thousands)Gross Profit (excluding product amortization)Specialty pharmaceuticals
    
    $
    228,773
    
    
    $
    168,965
    
    
    $
    59,808
    
    
    
    35
    %% of product sales
    
    
    80
    %
    
    
    79
    %Branded generics  Europe
    
    
    61,351
    
    
    
    72,394
    
    
    
    (11,043
    )
    
    
    (15
    )%% of product sales
    
    
    56
    %
    
    
    62
    %Branded generics  Latin America
    
    
    77,423
    
    
    
    62,563
    
    
    
    14,860
    
    
    
    24
    %% of product sales
    
    
    72
    %
    
    
    63
    %Corporate
    
    
    (62
    )
    
    
    892
    
    
    
    (954
    )
    
    
    % of product sales
    
    
    
    
    
    
    Consolidated gross profit
    
    $
    367,485
    
    
    $
    304,814
    
    
    $
    62,671
    
    
    
    21
    %% of product sales
    
    
    73
    %
    
    
    71
    %Product AmortizationSpecialty pharmaceuticals
    
    $
    40,723
    
    
    $
    27,444
    
    
    $
    13,279
    
    
    
    48
    %Branded generics  Europe
    
    
    1,442
    
    
    
    907
    
    
    
    535
    
    
    
    59
    %Branded generics  Latin America
    
    
    2,534
    
    
    
    3,093
    
    
    
    (559
    )
    
    
    (18
    )%Total product amortization
    
    $
    44,699
    
    
    $
    31,444
    
    
    $
    13,255
    
    
    
    42
    %Gross Profit (including product amortization)Specialty pharmaceuticals
    
    $
    188,050
    
    
    $
    141,521
    
    
    $
    46,529
    
    
    
    33
    %% of product sales
    
    
    66
    %
    
    
    66
    %Branded generics  Europe
    
    
    59,909
    
    
    
    71,487
    
    
    
    (11,578
    )
    
    
    (16
    )%% of product sales
    
    
    55
    %
    
    
    61
    %Branded generics  Latin America
    
    
    74,889
    
    
    
    59,470
    
    
    
    15,419
    
    
    
    26
    %% of product sales
    
    
    69
    %
    
    
    60
    %Corporate
    
    
    (62
    )
    
    
    892
    
    
    
    (954
    )
    
    
    % of product sales
    
    
    
    
    
    
    Consolidated gross profit
    
    $
    322,786
    
    
    $
    273,370
    
    
    $
    49,416
    
    
    
    18
    %% of product sales
    
    
    64
    %
    
    
    63
    %
 Selling, General and Administrative Expenses:
 Research and Development Costs:
 42




---



##### Table of Contents



Special Charges and Credits Including Acquired In-process Research and Development: ® ®
 Restructuring, Asset Impairments and Dispositions:
 2008 Restructuring
   43




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2009
    
    
    2009Severance costs (455 employees, cumulatively)
    
    $
    247
    
    
    $
    2,022Contract cancellation costs, legal and professional fees and other associated costs
    
    
    58
    
    
    
    1,152Subtotal: cash charges
    
    
    305
    
    
    
    3,174Non-cash charges
    
    
    2
    
    
    
    38Restructurings, asset impairments and dispositions
    
    $
    307
    
    
    $
    3,212
    44




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2008
    
    
    2008Severance costs (160 employees, cumulatively)
    
    $
    220
    
    
    $
    12,289Contract cancellation costs, legal and professional fees and other associated costs
    
    
    2,478
    
    
    
    11,030Subtotal: cash charges
    
    
    2,698
    
    
    
    23,319Stock compensation
    
    
    
    
    
    
    4,778Impairment of long-lived assets
    
    
    
    
    
    
    8,537Loss on sale of long-lived assets
    
    
    
    
    
    
    2,736Subtotal: restructuring expenses
    
    
    2,698
    
    
    
    39,370Gain on Invida transaction
    
    
    829
    
    
    
    (35,076
    )Restructurings, asset impairments and dispositions
    
    $
    3,527
    
    
    $
    4,294
  Reconciliation of Cash Restructuring Payments with Restructuring Accrual
  Reconciliation of Cash Payments and Accruals
 Restructuring accrual, December 31, 2008
    
    $
    10,926Charges to earnings
    
    
    3,174Cash paid
    
    
    (7,446
    )Restructuring accrual, September 30, 2009
    
    $
    6,654
  Amortization:
 Interest Expense and Income:
 45




---



##### Table of Contents



Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)
 Gain (loss) on Early Extinguishment of Debt:
 Other Income (Expense) Net, Including Translation and Exchange:
 Income Taxes:
  46




---



##### Table of Contents



Income (loss) from Discontinued Operations, Net:
 Liquidity and Capital Resources
    47




---



##### Table of Contents



Off-Balance Sheet Arrangements
  48




---



##### Table of Contents



Products in Development
 Retigabine
    >
   >
  49




---



##### Table of Contents



Taribavirin
   Dermatology Products
      50




---



##### Table of Contents



Foreign Operations
  Critical Accounting Estimates
  Other Financial Information
  Forward-Looking Statements
  51




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Notional/
    
    Assets (Liabilities)Contract
    
    Carrying
    
    FairDescription
    
    Amount
    
    Value
    
    ValueUndesignated hedges
    
    $
    108,541
    
    
    $
    (1,412
    )
    
    $
    (1,412
    )Net investment derivative contracts
    
    
    24,332
    
    
    
    204
    
    
    
    204Cash flow derivative contracts
    
    
    2,132
    
    
    
    (100
    )
    
    
    (100
    )
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   52




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    53




---



##### Table of Contents



Approximate DollarTotal Number of
    
    
    Value of Shares thatTotal Number of
    
    
    Average Price
    
    
    Shares Purchased
    
    
    May Yet BeShares
    
    
    Paid Per
    
    
    as Part of Publicly
    
    
    Purchased under thePeriod
    
    Repurchased
    
    
    Share
    
    
    Announced Plan
    
    
    Plan(In thousands)7/1/09 - 7/31/09
    
    
    1,222,746
    
    
    $
    23.77
    
    
    
    1,222,746
    
    
    $
    294,9568/1/09 - 8/31/09
    
    
    99,300
    
    
    $
    25.46
    
    
    
    99,300
    
    
    $
    236,5019/1/09 - 9/30/09
    
    
    187,032
    
    
    $
    25.67
    
    
    
    187,032
    
    
    $
    231,698Total
    
    
    1,509,078
    
    
    $
    24.12
    
    
    
    1,509,078
 
 Item 6. Exhibits
 Exhibit2.1
    
    Amendment No. 1 to Agreement and Plan of Merger, dated as of
September 28, 2009, by and among Valeant Pharmaceuticals
International and Harris Goodman in his capacity as the
Stockholder Representative on behalf of the Securityholders of
Dow Pharmaceutical Sciences, Inc.*3.1
    
    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 (No. 03995078), 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, filed October 6,
2004 (No. 041068838), 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, filed
February 25, 2008, which is incorporated herein by reference.4.1
    
    Form of Rights Agreement, dated as of November 2, 1994, between
the Registrant and American Stock Transfer & Trust Company, as
trustee, previously filed as Exhibit 4.3 to the Registrants
Registration Statement on Form 8-A, filed November 10, 1994 (No.
94558814), which is incorporated herein by reference.4.2
    
    Amendment No. 1 to Rights Agreement, dated as of October 5, 2004,
by and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed
October 6, 2004 (No. 041068838), which is incorporated herein by
reference.4.3
    
    Amendment No. 2 to Rights Agreement, dated as of June 5, 2008, by
and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.3 to the Registrants Amendment No. 4 to Form 8-A/A,
filed June 6, 2008, which is incorporated herein by reference.4.4
    
    Amendment No. 3 to Rights Agreement, dated as of May 15, 2009, by
and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.4 to the Registrants Amendment No. 5 to Form 8-A/A,
filed May 15, 2009, which is incorporated herein by reference.10.1
    
    Product Commercialization Agreement, dated as of March 14, 2008,
by and between Mylan Pharmaceuticals Inc. and Dow Pharmaceutical
Sciences, Inc.10.2
    
    Form of Warrant issued pursuant to that certain Exchange
Agreement, dated August 13, 2009, by and among Valeant
Pharmaceuticals International and certain holders of the
Companys 3.00% Convertible Subordinated Notes due August 16,
2010.
 54




---



##### Table of Contents



Exhibit15.1
    
    Review Report of Independent Registered Public Accounting Firm.15.2
    
    Awareness Letter 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.
 
 
    
    Portions of this exhibit have been omitted pursuant to a request for confidential treatment
filed with the SEC. Such information has been omitted and filed separately with the Securities
and Exchange Commission.*
    
    One or more exhibits to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We undertake to
furnish supplementally a copy of any omitted exhibit to the SEC upon request. 55




---



##### Table of Contents



SIGNATURES
  Valeant Pharmaceuticals International
Registrant/s/ J. Michael PearsonJ. Michael PearsonChairman and Chief Executive Officer  /s/ Peter J. BlottPeter J. BlottExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)  56




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit2.1
    
    Amendment No. 1 to Agreement and Plan of Merger, dated as of
September 28, 2009, by and among Valeant Pharmaceuticals
International and Harris Goodman in his capacity as the
Stockholder Representative on behalf of the Securityholders of
Dow Pharmaceutical Sciences, Inc.*3.1
    
    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 (No. 03995078), 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, filed October 6,
2004 (No. 041068838), 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, filed
February 25, 2008, which is incorporated herein by reference.4.1
    
    Form of Rights Agreement, dated as of November 2, 1994, between
the Registrant and American Stock Transfer & Trust Company, as
trustee, previously filed as Exhibit 4.3 to the Registrants
Registration Statement on Form 8-A, filed November 10, 1994 (No.
94558814), which is incorporated herein by reference.4.2
    
    Amendment No. 1 to Rights Agreement, dated as of October 5, 2004,
by and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed
October 6, 2004 (No. 041068838), which is incorporated herein by
reference.4.3
    
    Amendment No. 2 to Rights Agreement, dated as of June 5, 2008, by
and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.3 to the Registrants Amendment No. 4 to Form 8-A/A,
filed June 6, 2008, which is incorporated herein by reference.4.4
    
    Amendment No. 3 to Rights Agreement, dated as of May 15, 2009, by
and between Valeant Pharmaceuticals International and American
Transfer & Trust Company as Rights Agent, previously filed as
Exhibit 4.4 to the Registrants Amendment No. 5 to Form 8-A/A,
filed May 15, 2009, which is incorporated herein by reference.10.1
    
    Product Commercialization Agreement, dated as of March 14, 2008,
by and between Mylan Pharmaceuticals Inc. and Dow Pharmaceutical
Sciences, Inc.10.2
    
    Form of Warrant issued pursuant to that certain Exchange
Agreement, dated August 13, 2009, by and among Valeant
Pharmaceuticals International and certain holders of the
Companys 3.00% Convertible Subordinated Notes due August 16,
2010.15.1
    
    Review Report of Independent Registered Public Accounting Firm.15.2
    
    Awareness Letter 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.




---



##### Table of Contents




    
    Portions of this exhibit have been omitted pursuant to a request for confidential treatment
filed with the SEC. Such information has been omitted and filed separately with the Securities
and Exchange Commission.*
    
    One or more exhibits to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We undertake to
furnish supplementally a copy of any omitted exhibit to the SEC upon request.