2.2.0.7 false Long-term Debt 0210 - Disclosure - Long-term Debt true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Long-term Debt [Abstract] 0 us-gaap_LongTermDebtByCurrentAndNoncurrentAbstract us-gaap true na duration No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string No definition available. false 3 Long-term Debt 1 us-gaap_LongTermDebtTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10.</b>  <b>Long-term Debt</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2010 and December 31, 2009, long-term debt consists of the following: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> </tr>   <tr valign="bottom" style="line-height: 3pt"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">3.0% Notes </div></td> <td> </td> <td align="left">$</td> <td align="right">48,866</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">48,866</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized discount </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(254</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,248</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net carrying value of 3.0% Notes </div></td> <td> </td> <td> </td> <td align="right">48,612</td> <td> </td> <td> </td> <td> </td> <td align="right">47,618</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">4.0% Notes </div></td> <td> </td> <td> </td> <td align="right">224,960</td> <td> </td> <td> </td> <td> </td> <td align="right">224,960</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized discount </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(24,792</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(27,953</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net carrying value of 4.0% Notes </div></td> <td> </td> <td> </td> <td align="right">200,168</td> <td> </td> <td> </td> <td> </td> <td align="right">197,007</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">8.375% Senior Notes </div></td> <td> </td> <td> </td> <td align="right">365,000</td> <td> </td> <td> </td> <td> </td> <td align="right">365,000</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Unamortized discount </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(10,355</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(11,002</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net carrying value of 8.375% Notes </div></td> <td> </td> <td> </td> <td align="right">354,645</td> <td> </td> <td> </td> <td> </td> <td align="right">353,998</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">7.625% Senior Notes </div></td> <td> </td> <td> </td> <td align="right">400,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Senior Secured Term Loan </div></td> <td> </td> <td> </td> <td align="right">30,000</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right">4,433</td> <td> </td> <td> </td> <td> </td> <td align="right">1,966</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right">1,037,858</td> <td> </td> <td> </td> <td> </td> <td align="right">600,589</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: current portion </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(82,282</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(48,462</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Total long-term debt </div></td> <td> </td> <td align="left">$</td> <td align="right">955,576</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">552,127</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>Senior Secured Term Loan</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">On May 26, 2010, we entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with Goldman Sachs Credit Partners L.P. and Goldman Sachs Bank USA, which provides for a single $30.0 million senior secured term loan (the “Senior Secured Term Loan”). The Senior Secured Term Loan initially bears interest at an annual rate equal to the Base Rate, as defined in the Credit Agreement, plus 1.75%, or at our option, at an annual rate equal to LIBOR, plus 2.75% (3.17% as of June 30, 2010). The Senior Secured Term Loan, together with accrued interest, is due on December 1, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The Credit Agreement limits our ability, and the ability of certain subsidiaries, to: incur or guarantee indebtedness or certain liens or enter into negative pledges; pay dividends, repurchase stock or make certain other restricted payments or subsidiary distributions; enter into transactions with affiliates; consummate asset sales, acquisitions or mergers, sales and leasebacks or dispositions of subsidiary interests; prepay other indebtedness or make investments. In July 2010, we obtained a consent waiver from Goldman Sachs that will allow us to pay the outstanding principal amount of the 3.0% Notes due August 16, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In connection with the Credit Agreement, we entered into a Pledge and Security Agreement that provides the lender a security interest in and continuing lien on certain of our assets until payment in full of the Senior Secured Term Loan. The Senior Secured Term Loan is guaranteed by certain of our subsidiaries that are presently guarantors of the 7.625% Senior Notes and the 8.375% Senior Notes (each as defined below). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">We expect that the Senior Secured Term Loan will be refinanced pursuant to the Commitment Letter (as defined in Note 20). </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>7.625% Senior Notes</i></b> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 12pt; margin-top: 0pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">On April 9, 2010, we issued $400.0 million aggregate principal amount of senior notes (the “7.625% Senior Notes”), at par, which bear a coupon interest rate of 7.625% and are due March 15, 2020. Interest is payable in arrears semi-annually on each March 15 and September 15. The 7.625% Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries, which are initially the same subsidiaries that guarantee our 8.375% Senior Notes (as defined below) and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness and senior to our existing and future indebtedness that expressly provides for subordination to the 7.625% Senior Notes. The 7.625% Senior Notes are effectively junior in right of payment to our existing and future secured indebtedness, to the extent of the assets securing such indebtedness. The 7.625% Senior Notes were sold in accordance with Rule 144A and Regulation S of the Securities Act and we are obligated (i) to file a registration statement with the SEC that would enable the holders of the 7.625% Senior Notes to exchange them for publicly registered notes having substantially the same terms and (ii) to complete such exchange offer within 365 days of April 9, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">We may redeem some or all of the 7.625% Senior Notes at any time prior to March 15, 2015 by paying a redemption price equal to the principal amount of the 7.625% Senior Notes, plus the Applicable Premium (as defined in the indenture as discussed below), plus accrued and unpaid interest, if any, to the redemption date. At any time prior to March 15, 2013, we may use the net cash proceeds of certain equity offerings of our capital stock to redeem up to 35% of the principal amount of the 7.625% Senior Notes at a redemption price equal to 107.625% of their principal amount plus accrued and unpaid interest, plus certain additional interest as specified in the indenture, if any, to the redemption date; provided that at least 65% of the aggregate principal amount of notes issued under the indenture remain outstanding immediately after such redemption and the redemption occurs within 90 days after the closing of such equity offering. At any time on or after March 15, 2015, we may redeem some or all of the 7.625% Senior Notes by paying a redemption price expressed as a percentage of the principal amount (103.813% if redeemed during the twelve-month period beginning on March 15, 2015, 102.542% if redeemed during the twelve-month period beginning on March 15, 2016, 101.271% if redeemed during the twelve-month period beginning on March 15, 2017 and 100% if redeemed on or after March 15, 2018), plus accrued and unpaid interest, plus certain liquidated damages as specified in the indenture, if any, to the redemption date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">If we experience a change of control (as defined in the indenture governing the 7.625% Senior Notes), we may be required to offer to purchase the 7.625% Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, plus certain liquidated damages as specified in the indenture, if any, to but excluding the repurchase date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The indenture governing the 7.625% Senior Notes contains covenants that will limit our ability and the ability of our restricted subsidiaries to, among other things: incur additional debt; pay dividends or make other distributions, repurchase capital stock, repurchase subordinated debt and make certain investments; create liens; create restrictions on the payment of dividends and other amounts to us from restricted subsidiaries; sell assets or merge or consolidate with or into other companies; and engage in transactions with affiliates. If an event of default, as specified in the indenture governing the 7.625% Senior Notes, shall occur and be continuing, either the trustee or the holders of a specified percentage of the 7.625% Senior Notes may accelerate the maturity of all the 7.625% Senior Notes. As of June 30, 2010, we were in compliance with these covenants. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">We expect that the 7.625% Senior Notes will be refinanced pursuant to the Commitment Letter (as defined in Note 20) or alternative financing in connection with the merger. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>8.375% Senior Notes</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In June 2009, we issued $365.0 million aggregate principal amount of senior notes (the “8.375% Senior Notes”), which bear a coupon interest rate of 8.375% and are due June 15, 2016. The 8.375% Senior Notes were issued at a discounted price of 96.797%, resulting in an effective annual yield of 9.0%. Interest is payable in arrears semi-annually on each June 15 and December 15. The 8.375% Senior Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries. If we experience a change of control, we may be required to offer to purchase the 8.375% Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, plus liquidated damages, if any, to the redemption date. The indenture governing the 8.375% Senior Notes contains covenants that will limit our ability and the ability of our restricted subsidiaries to, among other things: incur additional debt; pay dividends or make other distributions; repurchase capital stock; repurchase subordinated debt and make certain investments; create liens; create restrictions on the payment of dividends and other amounts to us from restricted subsidiaries; sell assets or merge or consolidate with or into other companies; and engage in transactions with affiliates. As of June 30, 2010, we were in compliance with these covenants. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The 8.375% Senior Notes were sold in accordance with Rule 144A of the Securities Act and Regulation S of the Securities Act. On March 5, 2010, we filed a registration statement on Form S-4, which was declared effective on March 29, 2010. The registration statement registered the exchange of the 8.375% Senior Notes for publicly registered notes with substantially the same terms. The exchange offer for the 8.375% Senior Notes commenced on March 30, 2010 and expired on April 28, 2010. In May 2010, the 8.375% Senior Notes were exchanged for publicly registered notes with substantially the same terms. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">We expect that the 8.375% Senior Notes will be refinanced pursuant to the Commitment Letter (as defined in Note 20) or alternative financing in connection with the merger. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>3.0% and 4.0% Convertible Subordinated Notes</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In November 2003, we issued $240.0 million aggregate principal amount of 3.0% Convertible Subordinated Notes due August 2010 (the “3.0% Notes”) and $240.0 million aggregate principal amount of 4.0% Convertible Subordinated Notes due 2013 (the “4.0% Notes”), which were issued as two series of notes under a single indenture. Interest on the 3.0% Notes is payable semi-annually on February 16 and August 16 of each year. Interest on the 4.0% Notes is payable semi-annually on May 15 and November 15 of each year. We have the right to redeem the 4.0% Notes, in whole or in part, at their principal amount on or after May 20, 2011. The 3.0% Notes and 4.0% Notes are convertible into our common stock at an initial conversion rate of 31.6336 shares per $1,000 principal amount of notes, subject to adjustment. Upon conversion, we will have the right to satisfy the conversion obligations by delivery, at our option in shares of our common stock, in cash or in a combination thereof. It is our intent to settle the principal amount of the 3.0% Notes and 4.0% Notes in cash. In July 2010, pursuant to the indenture, we notified the trustee of our election to settle the principal amount of the 3.0% Notes in cash, and to settle the remainder of the conversion obligation in shares of our common stock. The 3.0% Notes and 4.0% Notes are subordinated unsecured obligations, ranking in right of payment behind our senior debt, if any. As of June 30, 2010, $48.9 million aggregate principal amount of 3.0% Notes and $225.0 million aggregate principal amount of 4.0% Notes were outstanding. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the six months ended June 30, 2009, we purchased an aggregate of $117.6 million principal amount of the 3.0% Notes and 4.0% Notes at a purchase price of $115.2 million. The carrying amount of the 3.0% Notes and 4.0% Notes purchased was $109.2 million and the estimated fair value of the Notes exclusive of the conversion feature was $101.8 million. The difference between the carrying amount and the estimated fair value was recognized as a gain of $7.4 million upon early extinguishment of debt. The difference between the estimated fair value of $101.8 million and the purchase price of $115.2 million was $13.4 million and was charged to additional capital. A portion of the purchase price was attributable to accreted interest on the debt discount and deferred loan costs and is presented in the statement of cash flows for the six months ended June 30, 2009 as payments of accreted interest on long-term debt in cash flow from operating activities in continuing operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">In connection with the offering of the 3.0% Notes and the 4.0% Notes, we entered into convertible note hedge and written call option transactions with respect to our common stock (the “Convertible Note Hedge”). The Convertible Note Hedge consisted of our purchasing call options on 12,653,440 shares of our common stock at a strike price of $31.61 and selling call options on the identical number of shares at $39.52. The number of shares covered by the Convertible Note Hedge is the same number of shares underlying the conversion of $200.0 million principal amount of the 3.0% Notes and $200.0 million principal amount of the 4.0% Notes. The Convertible Note Hedge is expected to reduce the potential dilution from conversion of the 3.0% Notes and the 4.0% Notes. The written call options offset, to some extent, the cost of the call options purchased. As a result of the cessation of Valeant’s common dividend, the strike price on the purchased call options were adjusted during 2007, with the new strike prices becoming $34.61 and $35.36 for the 3.0% Notes and the 4.0% Notes, respectively. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0%"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="center" style="font-size: 1pt; margin-top: 0pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">During the year ended December 31, 2009, corresponding to the partial redemption of the 3.0% Notes, we also effected a proportionate partial termination of the Convertible Note Hedge, reducing the number of shares covered by the Convertible Note Hedge by 4,780,913 shares. As of June 30, 2010 and December 31, 2009, the number of shares covered by the Convertible Note Hedge was 7,872,527, the same number of shares underlying the conversion of the remaining balance of $48.9 million principal amount of the 3.0% Notes and $200.0 million principal amount of the 4.0% Notes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; text-indent: 4%">The estimated fair value of our 3.0% Notes, 4.0% Notes and the 8.375% Senior Notes, based on quoted market prices or on current interest rates for similar obligations with like maturities, was approximately $877.2 million and $697.8 million at June 30, 2010 and December 31, 2009, respectively, compared to its carrying value of $603.4 million and $598.6 million, respectively, and principal amount of $638.8 million. At June 30, 2010, our 7.625% Senior Notes had an estimated fair value of $476.0 million compared to the carrying value and principal amount of $400.0 million. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock This element may be used as a single block of text to encapsulate the entire disclosure for long-term borrowings including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 false 1 2 false UnKnown UnKnown UnKnown false true