EX-99.2 3 a12432exv99w2.htm EXHIBIT 99.2 Exhibit 99.2
 

EXHIBIT 99.2
September 12, 2005
Additional Disclosures to Support Presentations at Bear Stearns 18th Annual Healthcare Conference
During a presentation at the Bear Stearns 18th Annual Healthcare Conference on September 12, 2005, Valeant Pharmaceuticals International (the “Company”) presented certain non-GAAP financial information for the purpose of explaining in greater detail the historical operations of the Company. Pursuant to Regulation G, below are the reconciliations of such non-GAAP information to GAAP information.
We use certain non-GAAP financial measures, including adjusted net income (loss) from continuing operations and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), which excludes acquired in-process research and development charges (“IPR&D”) and restructuring costs and other charges. We exclude these items in assessing financial performance, primarily due to their non-operational nature or because they are outside of our normal operations. The non-GAAP financial measures should not be considered as an alternative to, or more meaningful than the GAAP financial measures.
Table 1
 Valeant Pharmaceuticals International
Reconciliation of Adjusted Operating Income and Financial Metrics Excluding Non-GAAP Adjustments to
      Operating Income and Financial Metrics, as measured under GAAP
For the Year Ended December 31, 2004
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Product sales
   $ 606     $ —     $ 606  
Royalties
     77       —       77  
Total revenues
     683       —       683  
Cost of goods sold
     200       —       200  
Selling expenses
     197       (4 ) (a)     193  
General and administrative expenses
     98       (1 ) (a)(b)     97  
Research and development costs
     93       —       93  
Acquired in-process research and development
     12       (12 ) (c)     —  
Restructuring charges
     19       (19 ) (d)     —  
Amortization expense
     60       (5 ) (e)     55  
Total expenses
     679       (41 )     638  
Income from operations
   $ 4     $ 41     $ 45  
 
                        
Financial metrics as a percentage of product sales
                        
Cost of goods sold
     33 %             33 %
Selling expenses
     33 %             32 %
General and administrative expenses
     16 %             16 %
Research and development expenses
     15 %             15 %
 
                        
Calculation of effective tax rate
                        
Income (loss) from continuing operations before provision for income taxes and minority interest
   $ (52 )   $ 61     $ 9  
Provision (benefit) for income taxes
     84       (82 ) (f)     2  
Effective tax rate
     -159 %             26 %
(a)   Sales force reduction costs.
 
(b)   Legal expenses related to the settlement of the bondholder class action lawsuit, net of an insurance refund.
 
(c)   IPR&D 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 charges, which were primarily related to products sold in Italy for which the patent life was reduced by a decree by the Italian government.
 
(f)   Increase in tax valuation allowance of $96 million due to the uncertainty of realizing the benefits of U.S. net operating losses, partially offset by the tax effect on non-GAAP adjustments and other tax benefits.

 

 

Table 2
 Valeant Pharmaceuticals International
Reconciliation of Adjusted Operating Income and Financial Metrics Excluding Non-GAAP Adjustments to
      Operating Income and Financial Metrics, as measured under GAAP
For the Year Ended December 31, 2003
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Product sales
   $ 518     $ —     $ 518  
Royalties
     168       —       168  
Total revenues
     686       —       686  
Cost of goods sold
     185       —       185  
Selling expenses
     167       —       167  
General and administrative expenses
     111       —       111  
Research and development costs
     45       —       45  
Acquired in-process research and development
     118       (118 ) (a)     —  
Amortization expense
     39       —       39  
Total expenses
     665       (118 )     547  
Income from operations
   $ 21     $ 118     $ 139  
 
                        
Financial metrics as a percentage of product sales
                        
Cost of goods sold
     36 %             36 %
Selling expenses
     32 %             32 %
General and administrative expenses
     22 %             22 %
Research and development expenses
     9 %             9 %
 
                        
Calculation of effective tax rate
                        
Income (loss) from continuing operations before provision for income taxes and minority interest
   $ (14 )   $ 131     $ 117  
Provision for income taxes
     39       5 (b)     44  
Effective tax rate
     -287 %             38 %
(a)   IPR&D charge related to the Ribapharm tender offer.
 
(b)   Tax effect for loss on extinguishment of debt.

 

 

Table 3
 Valeant Pharmaceuticals International
Reconciliation of Adjusted Operating Income and Financial Metrics Excluding Non-GAAP Adjustments to
      Operating Income and Financial Metrics, as measured under GAAP
For the Year Ended December 31, 2002
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Product sales
   $ 467     $ —     $ 467  
Royalties
     270       —       270  
Total revenues
     737       —       737  
Cost of goods sold
     157       —       157  
Selling expenses
     164       —       164  
General and administrative expenses
     367       (240 ) (a)     127  
Research and development costs
     49       —       49  
Amortization expense
     31       —       31  
Total expenses
     768       (240 )     528  
Income (loss) from operations
   $ (31 )   $ 240     $ 209  
 
                        
Financial metrics as a percentage of product sales
                        
Cost of goods sold
     34 %             34 %
Selling expenses
     35 %             35 %
General and administrative expenses
     79 %             27 %
Research and development expenses
     11 %             11 %
 
                        
Calculation of effective tax rate
                        
Income from continuing operations before provision for income taxes and minority interest
   $ 177     $ 4     $ 181  
Provision for income taxes
     75       1 (b)     76  
Effective tax rate
     42 %             42 %
(a)   Non-recurring and other unusual charges primarily include: stock compensation costs related to the change of control under a stock option plan, severance costs, incentive compensation costs related to the accelerated vesting of restricted stock upon the change of control under a long-term incentive plan, executive and director bonuses paid in connection with Ribapharm’s public offering, professional fees related to Ribapharm, the write-off of capitalized offering costs, the write-down of certain assets, costs incurred in the 2002 proxy contest and environmental related expenses.
 
(b)   Net tax effect on non-GAAP adjustments.

 

 

Table 4
 Valeant Pharmaceuticals International
Reconciliation of Specialty Pharmaceuticals Adjusted Operating Income Excluding Non-GAAP
      Adjustments to Operating Income, as measured under GAAP
For the Year Ended December 31, 2004
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty Pharmaceuticals
                        
Product sales
   $ 606     $ —     $ 606  
Cost of goods sold
     200       —       200  
Selling expenses
     197       (4 ) (a)     193  
General and administrative expenses
     92       (1 ) (a)(b)     91  
Restructuring charges
     19       (19 ) (c)     —  
Research and development expenses
     6       —       6  
Amortization expense
     42       (5 ) (d)     37  
Total specialty pharmaceuticals
     50       29       79  
Research and development division
     (111 )     —       (111 )
Acquired in-process research and development
     (12 )     12 (e)     —  
Ribavirin royalties
     77       —       77  
Income from operations
   $ 4     $ 41     $ 45  
(a)   Sales force reduction costs.
 
(b)   Legal expenses related to the settlement of the bondholder class action lawsuit, net of an insurance refund.
 
(c)   Restructuring charges were primarily related to our manufacturing rationalization plan and include impairment charges on manufacturing sites and severance charges.
 
(d)   Product impairment charges were primarily related to products sold in Italy for which the patent life was reduced by a decree by the Italian government.
 
(e)   IPR&D charge related to the acquisition of Amarin.

 

 

Table 5
 Valeant Pharmaceuticals International
Reconciliation of Specialty Pharmaceuticals Adjusted Operating Income Excluding Non-GAAP
      Adjustments to Operating Income, as measured under GAAP
For the Year Ended December 31, 2003
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty Pharmaceuticals
                        
Product sales
   $ 518     $ —     $ 518  
Cost of goods sold
     185       —       185  
Selling expenses
     167       —       167  
General and administrative expenses
     90       —       90  
Research and development expenses
     2       —       2  
Amortization expense
     31       —       31  
Total specialty pharmaceuticals
     43       —       43  
Research and development division
     (72 )     —       (72 )
Acquired in-process research and development
     (118 )     118 (a)     —  
Ribavirin royalties
     168       —       168  
Income from operations
   $ 21     $ 118     $ 139  
(a)   IPR&D charge related to the Ribapharm tender offer.

 

 

Table 6
 Valeant Pharmaceuticals International
Reconciliation of Specialty Pharmaceuticals Adjusted Operating Income Excluding Non-GAAP
      Adjustments to Operating Income, as measured under GAAP
For the Year Ended December 31, 2002
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty Pharmaceuticals
                        
Product sales
   $ 467     $ —     $ 467  
Cost of goods sold
     157       —       157  
Selling expenses
     164       —       164  
General and administrative expenses
     348       (240 ) (a)     108  
Research and development expenses
     5       —       5  
Amortization expense
     31       —       31  
Total specialty pharmaceuticals
     (238 )     240       2  
Research and development division
     (63 )     —       (63 )
Ribavirin royalties
     270       —       270  
Income (loss) from operations
   $ (31 )   $ 240     $ 209  
(a)   Non-recurring and other unusual charges primarily include: stock compensation costs related to the change of control under a stock option plan, severance costs, incentive compensation costs related to the accelerated vesting of restricted stock upon the change of control under a long-term incentive plan, executive and director bonuses paid in connection with Ribapharm’s public offering, professional fees related to Ribapharm, the write-off of capitalized offering costs, the write-down of certain assets, costs incurred in the 2002 proxy contest and environmental related expenses.

 

 

Table 7
 Valeant Pharmaceuticals International
Reconciliation of Operating Income to Adjusted EBITDA
For the Year Ended December 31, 2004
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty pharmaceuticals
                        
Operating income (from Table 4)
   $ 50     $ 29 (a)   $ 79  
Depreciation and amortization
     61       —       61  
Adjusted EBITDA
   $ 111     $ 29     $ 140  
 
                        
Consolidated
                        
Operating income (from Table 4)
   $ 4     $ 41 (a)   $ 45  
Depreciation and amortization
     82       —       82  
Adjusted EBITDA
   $ 86     $ 41     $ 127  
(a)   See explanation of non-GAAP adjustments on Table 4.

 

 

Table 8
Valeant Pharmaceuticals International
Reconciliation of Operating Income to Adjusted EBITDA
For the Year Ended December 31, 2003
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty pharmaceuticals
                        
Operating income (from Table 5)
   $ 43     $ —     $ 43  
Depreciation and amortization
     54       —       54  
Adjusted EBITDA
   $ 97     $ —     $ 97  
 
                        
Consolidated
                        
Operating income (from Table 5)
   $ 21     $ 118 (a)   $ 139  
Depreciation and amortization
     65       —       65  
Adjusted EBITDA
   $ 86     $ 118     $ 204  
(a)   See explanation of non-GAAP adjustments on Table 5.

 

 

Table 9
Valeant Pharmaceuticals International
Reconciliation of Operating Income to Adjusted EBITDA
For the Year Ended December 31, 2002
(In millions)
                         
            Non-GAAP    
    GAAP   Adjustments   Adjusted
Specialty pharmaceuticals
                        
Operating income (loss) (from Table 6)
   $ (238 )   $ 240 (a)   $ 2  
Depreciation and amortization
     51       —       51  
Adjusted EBITDA
   $ (187 )   $ 240     $ 53  
 
                        
Consolidated
                        
Operating income (loss) (from Table 6)
   $ (31 )   $ 240 (a)   $ 209  
Depreciation and amortization
     54       —       54  
Adjusted EBITDA
   $ 23     $ 240     $ 263  
(a)   See explanation of non-GAAP adjustments on Table 6.