EX-99.4 5 a52847exv99w4.htm EX-99.4 exv99w4
Exhibit 99.4
Summary Historical and Adjusted Financial Data
The following table sets forth summary historical and adjusted financial data for Valeant Pharmaceuticals International. The consolidated statement of operations data for the years ended December 31, 2006, 2007 and 2008 and the consolidated balance sheet data as of December 31, 2006, 2007 and 2008 have been derived from our audited financial statements. The consolidated statements of operations data for the three-month periods ended March 31, 2008 and 2009 and the consolidated condensed balance sheet data as of March 31, 2009 have been derived from our unaudited consolidated condensed financial statements. The consolidated statement of operations data for the twelve-month period ended March 31, 2009 have been derived from the consolidated statement of operations data for the year ended December 31, 2008 and the three-month periods ended March 31, 2008 and 2009. You should read this summary historical financial data together with our consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2009.
                                                 
                                            Twelve Months  
                            Three Months     Ended  
    Year Ended December 31,     Ended March 31,     March 31,  
    2006     2007     2008     2008     2009     2009  
    (Dollar amounts in thousands)            
Revenues:
                                                
Product sales
   $ 603,810     $ 603,051     $ 593,165     $ 139,210     $ 152,833     $ 606,788  
Services revenue
     —       —       —       —       6,738       6,738  
Alliance revenue (including ribavirin royalties)
     81,242       86,452       63,812       12,773       18,352       69,391  
 
                                    
Total revenues
     685,052       689,503       656,977       151,983       177,923       682,917  
 
                                    
Costs and expenses:
                                                
Cost of goods sold (excluding amortization)
     161,008       158,060       167,916       35,755       39,697       171,858  
Cost of services
     —       —       —       —       4,326       4,326  
Selling, general and administrative
     283,559       292,001       278,019       69,439       64,216       272,796  
Research and development costs, net
     105,443       97,957       86,967       29,294       8,735       66,408  
Acquired in-process research and development
     —       —       186,300       —       —       186,300  
Gain on litigation settlements
     (51,550 )     —       —       —       —       —  
Restructuring, asset impairments and dispositions
     88,616       27,675       21,295       (13,190 )     1,211       35,696  
Amortization expense
     51,295       55,985       49,973       13,329       17,004       53,648  
 
                                    
Total costs and expenses
     638,371       631,678       790,470       134,627       135,189       791,032  
 
                                    
Income (loss) from operations
     46,681       57,825       (133,493 )     17,356       42,734       (108,115 )
Other income (expense), net including translation and exchange
     766       1,659       2,063       (1,531 )     1,212       4,806  
Gain (loss) on early extinguishment of debt
     —       —       (12,994 )     —       4,599       (8,395 )
Interest income
     12,367       17,584       17,129       4,724       1,835       14,240  
Interest expense
     (56,292 )     (56,923 )     (45,385 )     (13,384 )     (8,013 )     (40,014 )
 
                                    
Income (loss) from continuing operations before income taxes
     3,522       20,145       (172,680 )     7,165       42,367       (137,478 )
Provision for income taxes
     36,577       13,535       34,688       4,659       11,569       41,598  
 
                                    
Income (loss) from continuing operations
     (33,055 )     6,610       (207,368 )     2,506       30,798       (179,076 )
Income (loss) from discontinued operations, net of tax
     (37,332 )     (26,796 )     166,548       3,293       398       163,653  
 
                                    
Net income (loss)
     (70,387 )     (20,186 )     (40,820 )     5,799       31,196       (15,423 )
Less: Net income attributable to noncontrolling interest
     3       2       7       2       1       6  
 
                                    
Net income (loss) attributable to Valeant
   $ (70,390 )   $ (20,188 )   $ (40,827 )   $ 5,797     $ 31,195     $ (15,429 )
 
                                    

 

 

                                                 
                                            Twelve Months
                            Three Months   Ended
    Year Ended December 31,   Ended March 31,   March 31,
    2006   2007   2008   2008   2009   2009
    (Dollar amounts in thousands)      
Balance Sheet Data (at end of period):
                                                
Cash and cash equivalents
   $ 311,012     $ 287,728     $ 199,582                     $ 139,909  
Total assets
     1,503,386       1,492,321       1,185,932                       1,068,886  
Long-term debt
     698,502       716,821       398,802                       340,394  
Stockholders’ equity
     509,857       479,571       251,748                       259,381  
Other Data:
                                                
EBITDA (1)
     116,708       129,459       (65,052 )     35,151       63,498       (36,705 )
Adjusted EBITDA (2)
     153,774       157,134       142,543       21,961       64,709       185,291  
Capital Expenditures
     35,625       29,140       16,575       3,631       7,076       20,020  
 
                                                
Credit Statistics:
                                                
Ratio of long-term debt to Adjusted EBITDA
                                             1.8 x
Ratio of Adjusted EBITDA to interest expense
                                             4.6 x
Ratio of Adjusted EBITDA minus capital expenditures to interest expense
                                             4.1 x
 
(1)   EBITDA is a non-GAAP measurement that consists of income (loss) from operations plus depreciation and amortization. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Management uses EBITDA to measure and evaluate the operating performance of our core business operations because our resource allocation, cost of capital and income tax positions are managed at a corporate level, apart from the activities of the operating segments, and the operating facilities are located in different taxing jurisdictions which can cause considerable variation in tax expense.
 
(2)   Adjusted EBITDA is a non-GAAP measurement that consists of EBITDA plus the sum of acquired in-process research and development, gain on litigation settlements, and restructuring, asset impairments and dispositions. For the purposes of calculating Adjusted EBITDA, we have not included stock based compensation of $20.3 million, $12.4 million, and $5.1 million for the 2006, 2007, and 2008 fiscal years, respectively, and $2.4 million and $4.3 million for the three months ended March 31, 2008 and 2009, respectively.
 
    We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future. Such supplementary adjustments to EBITDA may not be in accordance with current SEC practice or with regulations adopted by the SEC that apply to registration statements filed under the Securities Act and periodic reports presented under the Securities Exchange Act of 1934, as amended.

 

 

The following table reconciles income (loss) from operations, as reflected on our summary historical financial data in accordance with GAAP, to Adjusted EBITDA.
                                                 
                                            Twelve Months  
                            Three Months     Ended  
    Year Ended December 31,     Ended March 31,     March 31,  
    2006     2007     2008     2008     2009     2009  
    (In thousands)          
Income (loss) from operations
   $ 46,681     $ 57,825     $ (133,493 )   $ 17,356     $ 42,734     $ (108,115 )
Depreciation and amortization
     70,027       71,634       68,441       17,795       20,764       71,410  
 
                                    
EBITDA
   $ 116,708     $ 129,459     $ (65,052 )   $ 35,151     $ 63,498     $ (36,705 )
Adjustments:
                                                
Acquired in-process research and development (a)
     —       —       186,300       —       —       186,300  
Gain on litigation settlements (b)
     (51,550 )     —       —       —       —       —  
Restructuring, asset impairments and dispositions (c)
     88,616       27,675       21,295       (13,190 )     1,211       35,696  
 
                                    
Adjusted EBITDA
   $ 153,774     $ 157,134     $ 142,543     $ 21,961     $ 64,709     $ 185,291  
 
                                    
 
(a)   In connection with our acquisitions, portions of the purchase price are allocated to acquired in-process research and development on projects that, as of the acquisition date, had not yet reached technological feasibility and had no alternative future use. Such costs are charged to research and development expense as of the date of the acquisition. In October 2008, we acquired Coria for approximately $96.9 million of which $0.5 million was allocated to in-process research and development costs and charged to expense. In December 2008, we acquired Dow for approximately $385.1 million of which $185.8 million was allocated to in-process research and development costs and charged to expense.
 
(b)   In 2006, we recorded a gain on litigation settlement from litigation with a former chief executive officer, Milan Panic, of $17.6 million relating to Ribapharm bonuses. We also recorded a gain on litigation settlement from litigation with the Republic of Serbia of $34.0 million relating to the ownership and operations of a joint venture we formerly participated in known as Galenika.
 
(c)   In 2006, we incurred an expense of $88.6 million relating to the 2006 Restructuring. The expense included employee severance costs of $11.6 million, abandoned software and other capital assets of $22.2 million, asset impairment charges relating to fixed assets at a manufacturing facility and our former headquarters and research facility of $53.2 million and contract cancellation and other cash charges of $1.6 million.

 

 

CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2009 on an actual and on an as adjusted basis to give effect to the previously announced offering of the notes and the receipt of the net proceeds therefrom, but does not give effect to any specific application of such proceeds.
                 
    As of  
    March 31, 2009  
    Actual     As Adjusted  
    (In thousands)  
Cash and cash equivalents
   $ 139,909     $ 485,418  
 
            
Debt:
                
8.375% Senior Unsecured Notes (1)
   $ —     $ 353,309  
3.0% Convertible Subordinated Notes due 2010 (2) (3)
     133,885       133,885  
4.0% Convertible Subordinated Notes due 2013 (2) (4)
     205,369       205,369  
Capital Leases
     1,140       1,140  
 
            
Total Long-Term Debt
     340,394       693,703  
Total Stockholders’ Equity
     259,381       259,381  
 
            
Total Capitalization
   $ 599,775     $ 953,084  
 
            
 
(1)   The face value of the 8.375% Senior Unsecured Notes is $365.0 million. The notes were issued at a price of 96.797% of their face value, resulting in approximately $353.3 million of gross proceeds. The $11.7 million discount will be amortized and included in interest expense over the term of the notes.
 
(2)   FSB APB 14-1 requires bifurcation of a component of the convertible debt instruments, classification of that component in equity, and the accretion of the resulting discount on the debt to be recognized as interest expense. Since adoption of FSP APB 14-1, we are required to separately account for the debt and equity components of our convertible notes. The balance above represents the carrying values for the convertible notes net of unamortized discount.
 
(3)   The face value of the 3.0% Convertible Subordinated Notes as of March 31, 2009 was $141.6 million.
 
(4)   The face value of the 4.0% Convertible Subordinated Notes as of March 31, 2009 was $240.0 million.