Valeant Pharmaceuticals Reports Fourth Quarter and Full Year 2005 Results

-- Product Sales Advance 17 Percent in the Fourth Quarter, 21 Percent in the Year

-- 2005 Operating Metrics Achieved

Valeant Pharmaceuticals International (NYSE:VRX) today announcedfourth quarter and full year results for 2005 showing strong revenuegrowth and continued improvement in key operating metrics.

Fourth Quarter 2005 vs. Fourth Quarter 2004 Highlights:

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

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

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

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

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

A reconciliation of GAAP to non-GAAP results is provided in Tables2-4.

Timothy C. Tyson, Valeant's president and chief executive officer,said, "Strategic acquisitions and the strength of key promoted brandshave enabled us to turn in another year of solid, double-digit revenuegrowth. Our promoted brands, excluding products acquired, led us toagain exceed the average growth for the industry. Because of thisstrong top-line growth and our continued focus on operatingefficiencies, we achieved every one of our metric targets for theyear."

Full Year 2005 vs. 2004:

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

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

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

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

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

Revenues:

The advance in product sales in the 2005 fourth quarter and fullyear was led by the growth of products from the acquisition of XcelPharmaceuticals earlier in the year and growth in other key promotedbrands. Acquisitions have been a core component of the company'sgrowth strategy as evidenced by the success of our Xcel acquisitionand the company's recent purchase of Infergen(R). Overall, promotedbrands grew 33 percent in the 2005 fourth quarter and 44 percent forthe full year, primarily from sales of Diastat(R), Migranal(R),Efudex(R), Bedoyecta(TM), Kinerase(R) and Cesamet(TM).

Sales of products acquired from Xcel totaled $18.9 million in the2005 fourth quarter, compared to the $18.5 million in sales recordedby Xcel in the same period last year. Sales of products acquired fromXcel since the acquisition date of March 1, 2005 were $73.4 million.On a pro forma basis, assuming Valeant's ownership for the full year,sales of these products in 2005 would have been $85.0 million, a 32percent increase over the $64.4 million in sales recorded by Xcel in2004.

Foreign currency reduced product sales by $0.7 million in the 2005fourth quarter and increased product sales by $19.4 million for the2005 full year. Foreign currency had a favorable impact on thecompany's adjusted operating loss of $2.3 million in the 2005 fourthquarter and $7.4 million in the 2005 full year.

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

Regional Sales Performance:

North America product sales increased 42 percent in the 2005fourth quarter and 62 percent for the 2005 year, compared to the sameperiods last year. Increases in both periods were primarily due to thegrowth of acquired products, particularly Diastat and Migranal, andfrom the promoted products, Kinerase, Efudex and Cesamet. Excludingacquired products, sales in North America decreased 2 percent in the2005 fourth quarter and increased 10 percent for the full yearcompared to the same periods last year. The 2005 fourth quarterdecline was primarily due a combination of wholesale purchasingpatterns and the discontinuation of unprofitable, non-promotedproducts.

European product sales increased three percent in the 2005 fourthquarter and year, compared to the same periods last year. Foreigncurrency translation had a negative impact on European sales in the2005 fourth quarter, reducing product sales by $4.4 million. For the2005 full year, Europe benefited from currency translation, whichincreased product sales by $7.6 million. A number of promoted productsperformed well in Europe, including Solcoseryl(TM), Bisocard(TM),Mestinon(R), Dermatix(TM) and Tasmar(R).

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

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

Financial Metrics:

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

Adjusted for non-GAAP items, selling expense was 31 percent ofproduct sales in 2005, compared to 32 percent in 2004. General andadministrative expenses were 15 percent of sales in 2005, compared to16 percent a year ago. The improvements reflect increased productsales and an ongoing effort to control expenses, partially offset byinvestments for business expansion, product launches and investmentsin the company's infrastructure to support future growth.

Research and development costs were 16 percent of sales in 2005compared to 15 percent in 2004. The increase reflects investment inthe company's late-stage pipeline for the development ofViramidine(R), pradefovir, retigabine and Zelapar(TM).

Balance Sheet Information:

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

Recent developments and Expectations:

The company expects operating metrics in 2006 to be in the rangesnoted in the table below. These metrics are compared against thecompany's performance in 2004 and 2005, as well as its previouslycommunicated goals for 2008 as follows:
2004A(1) 2005A(1) 2006E(1) 2008E(1)
-----------------------------------------------
Gross Margin 67% 69% 69-71% 75-80%
Cost of Goods Sold 33% 31% 29-31% 20-25%
Selling Expense 32% 31% 30-32%(2) 25-30%
G & A 16% 15% 12-14% 10-12%
R&D 15% 16% 16-18% 10-12%
Effective Tax Rate 26% 35% 30-32% 28-30%

(1) Includes non-GAAP adjustments. A reconciliation of GAAP to
non-GAAP results is provided in Tables 2-4.

(2) Does not include costs for pre-launch activities associated with
Viramidine, estimated to be between $10-15 million.

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

Conference Call and Webcast Information:

Valeant will host a conference call today at 9:00 a.m. EST (6:00a.m. PST) to discuss its 2005 fourth quarter and year results. Thedial-in number to participate on this call is 877-295-5743,confirmation code 5902588. International callers should dial706-679-0845, confirmation code 5902588. The company will also webcastthe conference call live over the Internet. The webcast may beaccessed through the investor relations section of Valeant's corporateWeb site at www.valeant.com.

About Valeant:

Valeant Pharmaceuticals International (NYSE:VRX) is a global,research-based specialty pharmaceutical company that discovers,develops, manufactures and markets pharmaceutical products primarilyin the areas of neurology, infectious disease and dermatology. Moreinformation about Valeant can be found at www.valeant.com.

Viramidine, Efudex, Diastat, Migranal, Kinerase, Infergen,Mestinon, Bedoyecta, Dermatix, Cesamet, Solcoseryl, Bisocard andTasmar are trademarks or registered trademarks of ValeantPharmaceuticals International or its related companies. All othertrademarks are the trademarks or the registered trademarks of theirrespective owners.

FORWARD-LOOKING STATEMENTS:

This press release may contain forward-looking statements that arebased on management's current expectations and involve risks anduncertainties, including, but not limited to, risks and uncertaintiesrelating to projections of future sales, returns on invested assetsand clinical development, regulatory approval processes, marketplaceacceptance of the company's products, success of the company'sstrategic repositioning initiatives and the ability of management toexecute them, cost-cutting measures, success of the company'sstrategic plan and the ability to achieve financial targets and costreduction goals, general economic factors and business and capitalmarket conditions, general industry trends, changes in tax lawrequirements and government regulation, adverse events that wouldrequire clinical trials to be prematurely terminated, clinical resultsthat indicate continuing clinical and commercial pursuit of productcandidates is not advisable, and the fact that Phase 2 clinical trialresults are not always indicative of those seen in Phase 3 clinicaltrials, and other risks detailed from time to time in Valeant's SECfilings. Valeant wishes to caution the reader that these factors, aswell as other factors described in Valeant's SEC filings, are amongthe factors that could cause actual results to differ materially fromthe expectations described in the forward-looking statements. Valeantalso cautions the reader that undue reliance should not be placed onany of the forward-looking statements, which speak only as of the dateof this release. The company undertakes no responsibility to updateany of these forward-looking statements to reflect events orcircumstances after the date of this release or to reflect actualoutcomes.

NON-GAAP INFORMATION:

To supplement the consolidated financial results prepared inaccordance with Generally Accepted Accounting Principles (GAAP), thecompany uses non-GAAP financial measures that exclude certain items,such as in-process research and development expenses, special chargesand credits, and results of discontinued businesses. Management doesnot consider the excluded items part of day-to-day business orreflective of the core operational activities of the company as theyresult from transactions outside the ordinary course of business.Management uses non-GAAP financial measures internally for strategicdecision making, forecasting future results and evaluating currentperformance. Guidance is provided only on a non-GAAP basis due to theinherent difficulty in forecasting such items. By disclosing non-GAAPfinancial measures, management intends to provide investors with amore meaningful, consistent comparison of the company's core operatingresults and trends for the periods presented. Non-GAAP financialmeasures are not prepared in accordance with GAAP; therefore, theinformation is not necessarily comparable to other companies andshould be considered as a supplement to, not a substitute for, orsuperior to, the corresponding measures calculated in accordance withGAAP.

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



Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- ---------------------
(In thousands,
except per % %
share data) 2005 2004 Change 2005 2004 Change
-------- -------- -------- --------- -------- ------

Product sales $205,400 $175,035 17% $ 731,035 $ 606,093 21%
Ribavirin
royalties 26,152 12,983 101% 91,646 76,427 20%
-------- -------- --------- ---------
Total
revenues 231,552 188,018 23% 822,681 682,520 21%
-------- -------- --------- ---------

Cost of goods
sold 65,871 58,399 13% 223,226 200,313 11%
Selling expenses 58,890 50,204 17% 232,176 196,567 18%
General and
administrative
expenses 30,517 24,880 23% 107,744 98,566 9%
Research and
development
costs 31,589 28,067 13% 113,755 92,496 23%
Acquired in-
process
research and
development (a) 47,200 - - 173,599 11,770 1375%
Restructuring
charges (b) 747 (772) - 1,253 19,344 (94%)
Amortization
expense 21,871 17,789 23% 68,832 59,303 16%
-------- -------- --------- ---------
256,685 178,567 44% 920,585 678,359 36%
-------- -------- --------- ---------
Income
(loss)
from
operations (25,133) 9,451 (97,904) 4,161

Interest
expense, net (6,663) (6,012) (27,157) (36,833)
Loss on early
extinguishment
of debt - - - (19,892)
Other income
(expense), net
including
translation and
exchange (729) 2,334 (6,358) 141
-------- -------- --------- ---------
Income (loss)
from continuing
operations
before
provision
for income
taxes and
minority
interest (32,525) 5,773 (131,419) (52,423)

Provision for
income taxes 12,442 95,428 54,187 83,597
Minority
interest (202) 225 287 233
-------- -------- --------- ---------
Loss from
continuing
operations (44,765) (89,880) (185,893) (136,253)

Income (loss)
from
discontinued
operations, net 2 (9,152) (2,366) (33,544)
-------- -------- --------- ---------


Net loss $(44,763) $(99,032) $(188,259)$(169,797)
======== ======== ========= =========


Basic earnings
per common
share
Loss from
continuing
operations $ (0.48) $ (1.07) $ (2.03)$ (1.62)
Discontinued
operations,
net - (0.11) (0.02) (0.40)
-------- -------- --------- ---------
Net loss $ (0.48) $ (1.18) $ (2.05)$ (2.02)
======== ======== ========= =========
Shares used
in per
share
computation 92,701 84,161 91,696 83,887
======== ======== ========= =========

Diluted earnings
per common
share
Loss from
continuing
operations $ (0.48) $ (1.07) $ (2.03)$ (1.62)
Discontinued
operations,
net - (0.11) (0.02) (0.40)
-------- -------- --------- ---------
Net loss $ (0.48) $ (1.18) $ (2.05)$ (2.02)
======== ======== ========= =========
Shares used
in per
share
computation 92,701 84,161 91,696 83,887
======== ======== ========= =========

(a) Expense associated with the write-off of acquired in-process
research and development ("IPR&D") related to the Xcel
Pharmaceuticals, Inc. and Infergen acquisitions in 2005 and the
Amarin acquisition in 2004.

(b) Restructuring charges relate to our manufacturing rationalization
plan.



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

Three Months Ended
December 31, 2005
-------------------------------
Non-GAAP
GAAP Adjustments Adjusted
-------- ------------ ---------
(In thousands, except per share
data)

Product sales $205,400 $ - $205,400
Ribavirin royalties 26,152 - 26,152
-------- -------- --------
Total revenues 231,552 - 231,552
-------- -------- --------

Cost of goods sold 65,871 - 65,871
Selling expenses 58,890 (3,041) (a) 55,849
General and administrative expenses 30,517 (158) (a) 30,359
Research and development costs 31,589 - 31,589
Acquired in-process research and
development 47,200 (47,200) (b) -
Restructuring charges 747 (747) (c) -
Amortization expense 21,871 (5,885) (d) 15,986
-------- -------- --------
256,685 (57,031) 199,654
-------- -------- --------
Income (loss) from operations (25,133) 57,031 31,898

Interest expense, net (6,663) - (6,663)
Other expense, net including
translation and exchange (729) - (729)
-------- -------- --------
Income (loss) from continuing operations
before provision for income taxes
and minority interest (32,525) 57,031 24,506

Provision for income taxes 12,442 (3,865) (e) 8,577
Minority interest (202) - (202)
-------- -------- --------
Income (loss) from continuing
operations (44,765) 60,896 16,131

Income from discontinued
operations, net 2 55 (f) 57
-------- -------- --------


Net income (loss) $(44,763)$ 60,951 $ 16,188
======== ======== ========


Basic earnings per common share
Income (loss) from continuing
operations $ (0.48) $ 0.17
Discontinued operations, net - 0.01
-------- --------
Net income (loss) $ (0.48) $ 0.18
======== ========
Shares used in per share
computation 92,701 92,701
======== ========

Diluted earnings per common share
Income (loss) from continuing
operations $ (0.48) $ 0.17
Discontinued operations, net - -
-------- --------
Net income (loss) $ (0.48) $ 0.17 (g)
======== ========
Shares used in per share
computation 92,701 95,338
======== ========

(a) Costs associated with the restructuring of the sales force in
Iberia.

(b) Expense associated with the write-off of acquired IPR&D related to
the Infergen acquisition.

(c) Restructuring charges relate to our manufacturing rationalization
plan.

(d) Impairment charges on products primarily sold in Germany $5.1
million, U.K. $0.6 million and Brazil $0.2 million, which have
either been discontinued or where sales are projected to decrease
due to regulatory or other reasons.

(e) Tax effect for non-GAAP adjustments, including $8.6 million
attributable to tax benefits from U.S. net operating losses not
recognized for GAAP purposes and $3.4 million of favorable
settlements in foreign locations.

(f) Net gain on sale of discontinued operations in Hungary.

(g) Shares used in adjusted diluted earnings per share ("EPS")
includes the effect of diluted shares which are anti-dilutive to
GAAP EPS.

To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles (GAAP), the
company uses non-GAAP financial measures that exclude certain items,
such as in-process research and development expenses, special charges
and credits, and results of discontinued businesses. Management does
not consider the excluded items part of day-to-day business or
reflective of the core operational activities of the company as they
result from transactions outside the ordinary course of business.
Management uses non-GAAP financial measures internally for strategic
decision making, forecasting future results and evaluating current
performance. Guidance is provided only on a non-GAAP basis due to the
inherent difficulty in forecasting such items.
By disclosing non-GAAP financial measures, management intends to
provide investors with a more meaningful, consistent comparison of the
company's core operating results and trends for the periods presented.
Non-GAAP financial measures are not prepared in accordance with GAAP;
therefore, the information is not necessarily comparable to other
companies and should be considered as a supplement to, not a
substitute for, or superior to, the corresponding measures calculated
in accordance with GAAP.



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

Twelve Months Ended
December 31, 2005
---------------------------------
Non-GAAP
GAAP Adjustments Adjusted
---------- ------------- ---------
(In thousands, except per share
data)

Product sales $ 731,035 $ - $731,035
Ribavirin royalties 91,646 - 91,646
--------- --------- --------
Total revenues 822,681 - 822,681

Cost of goods sold 223,226 - 223,226
Selling expenses 232,176 (3,041) (a) 229,135
General and administrative
expenses 107,744 (158) (a) 107,586
Research and development costs 113,755 - 113,755
Acquired in-process research and
development 173,599 (173,599) (b) -
Restructuring charges 1,253 (1,253) (c) -
Amortization expense 68,832 (7,417) (d) 61,415
--------- --------- --------
920,585 (185,468) 735,117
--------- --------- --------
Income (loss) from operations (97,904) 185,468 87,564

Interest expense, net (27,157) - (27,157)
Other expense, net including
translation and exchange (6,358) - (6,358)
--------- --------- --------
Income (loss) from continuing operations
before provision for income taxes
and minority interest (131,419) 185,468 54,049

Provision for income taxes 54,187 (35,270) (e) 18,917
Minority interest 287 - 287
--------- --------- --------
Income (loss) from continuing
operations (185,893) 220,738 34,845

Loss from discontinued
operations, net (2,366) (1,725) (f) (4,091)
--------- --------- --------


Net income (loss) $(188,259)$ 219,013 $ 30,754
========= ========= ========


Basic earnings per common share
Income (loss) from continuing
operations $ (2.03) $ 0.38
Discontinued operations, net (0.02) (0.04)
--------- --------
Net income (loss) $ (2.05) $ 0.34
========= ========
Shares used in per share
computation 91,696 91,696
========= ========

Diluted earnings per common share
Income (loss) from continuing
operations $ (2.03) $ 0.37
Discontinued operations, net (0.02) (0.05)
--------- --------
Net income (loss) $ (2.05) $ 0.32
========= ========
Shares used in per share
computation 91,696 94,844 (g)
========= ========


(a) Costs associated with the restructuring of the sales force in
Iberia.

(b) Expense associated with the write-off of acquired IPR&D related to
the Xcel Pharmaceuticals and Infergen acquisitions.

(c) Restructuring charges relate to our manufacturing rationalization
plan.

(d) Impairment charges on products sold primarily in Germany, U.S.,
U.K., Brazil and Spain.

(e) Tax effect for non-GAAP adjustments. The tax adjustment includes
$24.3 million attributable to tax benefits from U.S. net operating
losses not recognized for GAAP purposes, $21.7 million relating to
our estimate of expenses associated with issues raised by the
Internal Revenue Service, $4.5 million related to the repatriation
of foreign earnings related to the American Jobs Creation Act of
2004, $3.4 million of favorable settlements in foreign locations
and $10.5 million of foreign valuation allowance releases. $126.4
million of the IPR&D charge, is not deductible for income tax
purposes.

(f) Net gain on sale of discontinued operations in Hungary.


(g) Shares used in adjusted diluted earnings per share ("EPS")
includes the effect of diluted shares which are anti-dilutive to
GAAP EPS.

See non-GAAP financial measure disclosure on Table 2.




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

Three Months Ended
December 31, 2004
-----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- -------------- ----------
(In thousands, except per share
data)

Product sales $175,035 $ - $175,035
Ribavirin royalties 12,983 - 12,983
-------- -------- --------
Total revenues 188,018 - 188,018
-------- -------- --------

Cost of goods sold 58,399 - 58,399
Selling expenses 50,204 (50) (a) 50,154
General and administrative
expenses 24,880 2,973 (a),(b) 27,853
Research and development costs 28,067 - 28,067
Restructuring charges (772) 772 (c) -
Amortization expense 17,789 (4,797) (d) 12,992
-------- -------- --------
178,567 (1,102) 177,465
-------- -------- --------
Income from operations 9,451 1,102 10,553

Interest expense, net (6,012) - (6,012)
Other income, net including
translation and exchange 2,334 - 2,334
-------- -------- --------
Income from continuing
operations before provision
for income taxes and
minority interest 5,773 1,102 6,875

Provision for income taxes 95,428 (93,639) (e) 1,789
Minority interest 225 - 225
-------- -------- --------
Income (loss) from
continuing operations (89,880) 94,741 4,861

Loss from discontinued
operations, net (9,152) 6,362 (f) (2,790)
-------- -------- --------


Net Income (loss) $(99,032) $101,103 $ 2,071
======== ======== ========


Basic earnings per common share
Income (loss) from
continuing operations $ (1.07) $ 0.06
Discontinued operations, net (0.11) (0.03)
-------- --------
Net Income (loss) $ (1.18) $ 0.03
======== ========
Shares used in per share
computation 84,161 84,161
======== ========

Diluted earnings per common
share
Income (loss) from
continuing operations $ (1.07) $ 0.06
Discontinued operations, net (0.11) (0.03)
-------- --------
Net Income (loss) $ (1.18) $ 0.03
======== ========
Shares used in per share
computation 84,161 87,327 (g)
======== ========

(a) Sales force reduction costs.

(b) Legal expenses related to the settlement of a bondholder class
action lawsuit.

(c) Restructuring charges were primarily related to our manufacturing
rationalization plan and include impairment charges on
manufacturing sites and severance charges.

(d) Product impairment.

(e) Tax effect on non-GAAP adjustments. Includes an increase of $95.6
million in the valuation allowance to recognize the uncertainty of
realizing the benefits of U.S. net operating losses and research
credits.

(f) Increase in the tax valuation allowance to recognize the
uncertainty of realizing the benefits of U.S. net operating
losses.

(g) Shares used in adjusted diluted EPS includes the effect of diluted
shares which are anti-dilutive to GAAP EPS.

See non-GAAP financial measure disclosure on Table 2.



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

Twelve Months Ended
December 31, 2004
------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
---------- -------------- ---------
(In thousands, except per share
data)

Product sales $ 606,093 $ - $606,093
Ribavirin royalties 76,427 - 76,427
--------- -------- --------
Total revenues 682,520 - 682,520

Cost of goods sold 200,313 - 200,313
Selling expenses 196,567 (3,611) (a) 192,956
General and administrative
expenses 98,566 (1,376)(a),(b) 97,190
Research and development costs 92,496 - 92,496
Acquired in-process research
and development 11,770 (11,770) (c) -
Restructuring charges 19,344 (19,344) (d) -
Amortization expense 59,303 (4,797) (e) 54,506
--------- -------- --------
678,359 (40,898) 637,461
--------- -------- --------
Income from operations 4,161 40,898 45,059

Interest expense, net (36,833) - (36,833)
Other income (expense), net
including translation and
exchange (19,751) 19,892 (f) 141
--------- -------- --------
Income (loss) from continuing
operations before provision
for income taxes and
minority interest (52,423) 60,790 8,367

Provision for income taxes 83,597 (81,421) (g) 2,176
Minority interest 233 - 233
--------- -------- --------
Income (loss) from
continuing operations (136,253) 142,211 5,958

Loss from discontinued
operations, net (33,544) 16,442 (h) (17,102)
--------- -------- --------


Net loss $(169,797) $158,653 $(11,144)
========= ======== ========


Basic earnings per common share
Income (loss) from
continuing operations $ (1.62) $ 0.07
Discontinued operations,
net (0.40) (0.20)
--------- --------
Net loss $ (2.02) $ (0.13)
========= ========
Shares used in per share
computation 83,887 83,887
========= ========

Diluted earnings per common
share
Income (loss) from
continuing operations $ (1.62) $ 0.07
Discontinued operations,
net (0.40) (0.20)
--------- --------
Net loss $ (2.02) $ (0.13)
========= ========
Shares used in per share
computation 83,887 86,742 (i)
========= ========

(a) Sales force reduction costs.

(b) Legal expenses related to the settlement of the bondholder class
action lawsuit.

(c) In-process research and development charge related to the
acquisition of Amarin.

(d) Restructuring charges were primarily related to our manufacturing
rationalization plan and include impairment charges on
manufacturing sites and severance charges.

(e) Product impairment.

(f) Loss on early extinguishment of debt.

(g) Tax effect on non-GAAP adjustments. Includes an increase of $95.6
million in the valuation allowance to recognize the uncertainty of
realizing the benefits of U.S. net operating losses and research
credits, plus a $6.5 million valuation allowance on Spanish and
Argentine net operating losses and a $1.8 million Puerto Rico tax
settlement.

(h) Environmental reserve, net of tax.

(i) Shares used in adjusted diluted EPS includes the effect of diluted
shares which are anti-dilutive to GAAP EPS.

See non-GAAP financial measure disclosure on Table 2.



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

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- ---------------------
(In thousands, except per
share data) 2005 2004 2005 2004
-------- -------- --------- ---------

Loss from continuing
operations $(44,765) $(89,880) $(185,893) $(136,253)

Non-GAAP pre-tax
adjustments:
Acquired IPR&D 47,200 - 173,599 11,770
Sales force reduction costs 3,199 (423) 3,199 4,262
Product impairment charges 5,885 4,797 7,417 4,797
Restructuring charges 747 (772) 1,253 19,344
Loss on early
extinguishment of debt - - - 19,892
Settlement of class action
lawsuit - (2,500) - 725
Tax effect on the above
charges and tax settlements 3,865 93,639 35,270 81,421
-------- -------- --------- ---------


Adjusted income from
continuing operations
before the above charges $ 16,131 $ 4,861 $ 34,845 $ 5,958
======== ======== ========= =========

Adjusted basic EPS from
continuing operations $ 0.17 $ 0.06 $ 0.38 $ 0.07
======== ======== ========= =========

Adjusted diluted EPS from
continuing operations $ 0.17 $ 0.06 $ 0.37 $ 0.07
======== ======== ========= =========

Shares used in basic per
share calculation 92,701 84,161 91,696 83,887
======== ======== ========= =========

Shares used in diluted per
share calculation 95,338 87,327 94,844 86,742
======== ======== ========= =========



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

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
% %
2005 2004 Change 2005 2004 Change
-------- ------- -------- -------- -------- --------

Consolidated
operating
income (loss)
(GAAP) $(25,134) $ 9,451 -- $(97,905) $ 4,161 --
Depreciation
and
amortization 29,030 24,617 18% 97,351 87,138 12%
-------- ------- -------- --------
EBITDA (non-
GAAP) (a) 3,896 34,068 -89% (554) 91,299 --
Non-GAAP
adjustments
(b) 51,146 (3,695) 178,051 36,101
-------- ------- --------- --------

Adjusted
EBITDA (non-
GAAP) (a) $ 55,042 $30,373 81% $177,497 $127,400 39%
======== ======= ======== ========

(a) We believe that EBITDA is a meaningful non-GAAP financial measure
as an earnings-derived indicator of the cashflow generation
ability of the company. We calculate EBITDA by adding depreciation
and amortization back to consolidated operating income. Adjusted
EBITDA excludes the additional costs set forth in note (b) below.
Adjusted EBITDA, as defined and presented by us, may not be
comparable to similar measures reported by other companies.

(b) See Tables 2, 2.1, 3 and 3.1 for explanation of non-GAAP
adjustments.

See non-GAAP financial measure disclosure in Table 2.



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

Three Months Ended Twelve Months Ended
December 31, % December 31, %
----------------- Increase/ ------------------ Increase/
2005 2004 (Decrease) 2005 2004 (Decrease)
-------- -------- ---------- -------- -------- ---------
Dermatology
Efudix/
Efudex(R)
(G)(P) $ 14,307 $ 11,237 27% $ 60,179 $ 45,453 32%
Kinerase(R)
(G)(P) 6,090 3,744 63% 22,267 15,619 43%
Oxsoralen-
Ultra(R)
(G)(P) 1,820 2,768 (34%) 9,365 10,910 (14%)
Dermatix(TM)
(G)(P) 2,479 1,936 28% 9,189 7,034 31%
Eldoquin (P) 1,798 1,842 (2%) 6,316 6,099 4%
Other
Dermatology 9,625 (a) -- 34,366 (a) --

Infectious Disease
Virazole(R)
(G)(P) 4,180 3,704 13% 15,352 13,822 11%
Other
Infectious
Disease 6,414 (a) -- 21,465 (a) --

Neurology
Diastat(P)
(b) 10,639 -- -- 47,631 -- --
Mestinon(R)
(G)(P) 11,031 11,304 (2%) 43,531 41,631 5%
Librax(P) 8,367 5,554 51% 18,159 16,868 8%
Migranal(P)
(b) 4,300 -- -- 12,949 -- --
Dalmane/
Dalmadorm(P) 3,716 3,276 13% 12,285 12,146 1%
Cesamet(P) 3,117 1,705 83% 10,009 4,957 102%
Limbitrol(P) 1,510 1,763 (14%) 5,858 5,869 (0%)
TASMAR(R)
(G)(P)(c) 1,919 846 127% 5,829 3,551 64%
Other
Neurology 17,608 (a) -- 54,658 (a) --

Other Therapeutic Classes
Bedoyecta(TM)
(P) 12,115 13,239 (8%) 46,884 30,654 53%
Solcoseryl(P) 5,041 4,009 26% 18,983 14,397 32%
Nyal(P) 1,716 2,498 (31%) 13,747 11,904 15%
Bisocard(P) 3,544 3,562 (1%) 12,847 10,613 21%
Calcitonin(P) 2,492 2,298 8% 9,645 10,420 (7%)
Espaven(P) 3,877 2,455 58% 9,272 7,010 32%
Aclotin(P) 1,374 1,443 (5%) 5,643 5,606 1%
Espacil(P) 1,979 1,437 38% 5,979 5,028 19%
Other Pharma-
ceutical
Products 64,342 94,415 (a)(32%) 218,627 326,502 (a) (33%)
-------- -------- -------- --------

Total Product
Sales $205,400 $175,035 17% $731,035 $606,093 21%
======== ======== ======== ========

Total Global
Brand
Product
Sales(G) $ 41,826 $ 35,539 18% $165,712 $138,020 20%
======== ======== ======== ========

Total
Promoted
Product
Sales(P) $107,411 $ 80,620 33% $401,919 279,591 44%
======== ======== ======== ========

(a) In 2004, the Company tracked other products, but not by quarter
and therapeutic classes; therefore, our ability to provide
additional data by therapeutic classes is not practicable at this
time. A total for other pharmaceutical products is not provided as
the amount would not be comparable to 2005 periods.

(b) Diastat and Migranal were acquired in March 2005; total sales of
products acquired in the Xcel transaction were $18.9 million and
$73.4 million for the three and twelve months ended December 31,
2005, respectively.

(c) Tasmar was acquired in April 2004.

(G) Global products represent those products with targeted centralized
promotional strategy.

(P) Promoted products represent promoted products with annualized
sales greater than $5 million.



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

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ --------------------
Revenues % %
2005 2004 Change 2005 2004 Change
-------- ------- -------- --------- -------- -------



North America 61,272 43,299 42% $ 231,137 $142,799 62%
Latin America 56,356 47,568 18% 173,233 151,726 14%
Europe 71,046 69,077 3% 260,372 253,748 3%
AAA 16,726 15,091 11% 66,293 57,820 15%
-------- ------- --------- --------
Total
specialty
pharma-
ceuticals 205,400 175,035 17% 731,035 606,093 21%

Ribavirin
royalty
revenues 26,152 12,983 101% 91,646 76,427 20%
-------- ------- --------- --------

Consolidated
revenues $231,552 $188,018 23% $ 822,681 $682,520 21%
======== ======= ========= ========

Cost of
goods sold $ 65,871 $ 58,399 13% $ 223,226 $200,313 11%
======== ======= ========= ========

Gross profit
margin on
pharmaceutical
sales 68% 67% 69% 67%
======== ======= ========= ========


Operating Income (Loss)



North
America $ 18,717 $ 14,591 28% $ 68,081 $ 44,438 53%
Latin America 23,454 16,888 39% 60,796 46,124 32%
Europe 4,661 5,575 (16%) 35,389 31,347 13%
AAA (781) 329 -- 4,472 3,103 44%
-------- ------- --------- --------
46,051 37,383 23% 168,738 125,012 35%

Corporate
expenses (9,054) (11,817) -23% (52,720) (50,877) 4%
-------- ------- --------- --------

Total
specialty
pharma-
ceuticals 36,997 25,566 45% 116,018 74,135 56%

Restructuring
charges (747) 772 -- (1,253) (19,344) (94%)
R&D (14,184) (16,887) (16%) (39,071) (38,860) 1%
Acquired
IPR&D (47,200) -- -- (173,599) (11,770) 1375%
-------- ------- --------- --------

Total
consolidated
operating
income
(loss) $(25,134) $ 9,451 $ (97,905) $ 4,161
======== ======= ========= ========








Three Months Ended Twelve Months Ended
Gross Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Profit 2005 % 2004 % 2005 % 2004 %
--------- -- -------- -- --------- -- --------- --



North America $ 48,951 80% $ 33,289 77% $ 185,608 80% $115,640 81%
Latin America 41,686 74% 36,779 77% 127,953 74% 110,764 73%
Europe 41,780 59% 39,140 57% 161,352 62% 150,830 59%
AAA 7,112 43% 7,428 49% 32,896 50% 28,546 49%
--------- -------- --------- ---------

Total
specialty
pharma-
ceuticals $139,529 68% $116,636 67% $ 507,809 69% $405,780 67%
========= ======== ========= =========



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

December 31, December 31,
Balance Sheet Data 2005 2004
------------ -------------

Cash and cash equivalents $ 224,856 $ 222,590
Marketable securities 10,210 238,918
--------- ---------
Total cash and marketable securities $ 235,066 $ 461,508
========= =========

Accounts receivable, net $ 187,987 $ 171,859
Inventory, net 136,034 112,250
Long-term debt 788,439 793,139
Total equity 435,187 476,224






Other Data Twelve Months Ended
December 31, December 31,
2005 2004
------------ -------------
Cash flow provided by (used in) continuing
operations

Operating activities $ 63,798 $ 36,018
Investing activities (223,493) 135,071
Financing activities 168,970 (368,984)
Effect of exchange rate changes on cash and
cash equivalents (7,009) 10,466
--------- ---------

Net increase (decrease) in cash and cash
equivalents 2,266 (187,429)
Net increase (decrease) in marketable
securities (228,708) (225,044)
--------- ---------

Net decrease in cash and marketable
securities $(226,442) $(412,473)
========= =========


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

Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- --------------------
2005 2004 2005 2004
-------- -------- --------- --------
Consolidated

Product sales $205,400 $175,035 $ 731,035 $606,093
Currency effect 702 (19,440)
Product sales, excluding
currency impact $206,102 $ 711,595

Operating income (loss) $(25,133) $ 9,451 $ (97,904) $ 4,161
Currency effect (2,327) (7,427)
Operating income, excluding
currency impact $(27,460) $(105,331)

Geographic Product Sales

North America
pharmaceuticals $ 61,272 $ 43,299 $ 231,137 $142,799
Currency effect (343) (2,008)
North America
pharmaceuticals, excluding
currency impact $ 60,929 $ 229,129

Latin America
pharmaceuticals $ 56,356 $ 47,568 $ 173,233 $151,726
Currency effect (3,688) (8,924)
Latin America
pharmaceuticals, excluding
currency impact $ 52,668 $ 164,309

Europe pharmaceuticals $ 71,046 $ 69,077 $ 260,372 $253,748
Currency effect 4,353 (7,609)
Europe pharmaceuticals,
excluding currency impact $ 75,399 $ 252,763

AAA pharmaceuticals $ 16,726 $ 15,091 $ 66,293 $ 57,820
Currency effect 380 (899)
AAA pharmaceuticals,
excluding currency impact $ 17,106 $ 65,394

Note: Currency effect is determined by comparing adjusted 2005
reported amounts, calculated using 2004 monthly average exchange
rates, to the actual 2004 reported amounts. Constant currency sales is
not a GAAP defined measure of revenue growth. Constant currency sales
as defined and presented by us may not be comparable to similar
measures reported by other companies.