Exhibit 99.1

Contact:
Jeff Misakian, Valeant Pharmaceuticals
949-461-6184

VALEANT PHARMACEUTICALS FILES RESTATED FINANCIAL
STATEMENTS AND SEPTEMBER 30, 2006 FORM 10-Q

— Company Completes Stock Option Review; Revises Previously Released
Preliminary September 30, 2006 Financial Information –

     ALISO VIEJO, Calif., January 23, 2007 – Valeant Pharmaceuticals International (NYSE: VRX) today announced that it has filed with the United States Securities and Exchange Commission (SEC) an amended annual report on Form 10-K for the year ended December 31, 2005. The company also filed its quarterly report on Form 10-Q for the quarter ended September 30, 2006. The company expects to file its amended quarterly reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006 in the next few days.

     The company has restated its financial statements primarily to reflect the results of its review of historical stock option granting practices. The company recorded a cumulative pretax charge of $31.1 million for additional compensation expense on stock options granted from 1982 through June 2006 as a result of the completed review. The company also restated its financial statements to correct certain additional accounting errors that were considered immaterial at the time the financial statements were prepared, and to record the tax effect of these items and other issues. The cumulative after-tax impact of all restatement charges was $23.5 million.

Stock Option Review:

     As previously announced, the company received a request from the SEC for data on its stock option granting practices as part of an informal inquiry. Following this request, a special committee of the board, comprised solely of independent directors (the Special Committee), conducted an extensive review of the company’s historical stock option granting practices and related accounting.

     The Special Committee has concluded its comprehensive investigation and reported its findings to the board of directors. For the period between November 1994 and July 2006, the Special Committee reviewed paper and electronic documents supporting or related to the company’s stock option grants, the accounting for those grants, compensation-related financial and securities disclosures and e-mail communications, and conducted interviews with numerous current and former employees and current and former members of the board of directors. The Special Committee also analyzed supporting documentation for awards granted between 1982 and 1994.

     While the Special Committee concluded that there were some errors as late as January 2006, the majority of errors in accounting for options pertained to those options granted prior to the change in the company’s board of directors and management in mid-2002 (the Change in Control). None of the errors that occurred in periods after the Change in Control related to options granted to the chief executive officer, chief financial officer or members of the board of directors.

     The Special Committee found that the recorded grant dates for the majority of the stock options awarded prior to the Change in Control differed from the actual grant dates for those transactions. In connection with that finding, the Special Committee concluded that, with respect to many broad-based grants of stock options prior to the Change in Control, prior management used a methodology of selecting a recorded grant date based on the lowest closing price during some time period (e.g., quarter, ten trading days) preceding the actual grant date. While the Special Committee did not reach a conclusion as to how prior management selected other recorded grant dates for broad-based or individual grants that did not use the lowest closing price methodology, there is some evidence that dates were selected based on the occurrence of an event or when the company’s former chief executive officer, Milan Panic, agreed in principle to the grant.

     The Special Committee also found that, due to flaws in the processes relied on to make its annual broad-based grants after the Change in Control, the company did not correctly apply the requirements of Accounting Principles Board Opinion No. 25. These option accounting errors, however, differ significantly from those made prior to the Change in Control. Unlike the broad-based grants made prior to the Change in Control, for which the recorded grant dates were selected from a period prior to the approval dates, all of the broad-based grants after the Change in Control were approved either at regularly scheduled meetings of the compensation committee or at meetings of the board of directors, and the exercise price for each of these grants was the closing price on the date of such meetings.

     The stock option accounting errors after the Change in Control resulted from allocation adjustments to the list of grants to individual rank-and-file employees after the compensation committee or the board of directors had approved the allocation of an aggregate number of shares to be available to rank-and-file employees. In no event did the adjustments result in shares being granted in excess of the aggregate number of shares approved by the compensation committee or the board of directors.

     The Special Committee concluded that there was no evidence that management operating since the Change in Control were aware that the processes used to grant and account for broad-based grants were flawed or that the process employed was for the purpose of granting in-the-money stock options. In reaching this conclusion, the Special Committee took note that that process had been consistently employed even for the November 2005 grants in which the process resulted in stock option grants at higher exercise prices than the closing price of the company’s common stock on the date of finalization of the allocation list for rank-and-file employees. The Special Committee also concluded that there was no evidence that current management was aware of any financial statement impact, tax consequences or disclosure implications of its flawed processes.

     Based on the findings of the Special Committee, the board of directors has concluded that the company’s consolidated financial statements as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004 and 2003, and the selected financial data as of and for the years ended December 31, 2002 and 2001, should be restated to record additional stock-based compensation expense, correct certain accounting errors, and record related tax effects. The impacts of the restatement adjustments on Valeant’s statement of operations for the periods are presented in Table 10 to this release. Adjustments for periods prior to 2003 have been made to the Selected Financial Data in item 6 of the amended annual report on Form 10-K for the year ended December 31, 2005 and a cumulative adjustment has been made to the December 31, 2004 balance sheet for all adjustments for periods prior to that time. Valeant has not amended and does not intend to amend any of its other previously filed annual reports on Form 10-K for the periods affected by the restatements or adjustments.

     The board of directors also concluded that the company’s condensed consolidated financial statements and related disclosures for the quarters ended March 31, 2006 and 2005, the quarters ended June 30, 2006 and 2005 and the quarter ended September 30, 2005 should be restated.

Revised September 30, 2006 Results:

     On November 2, 2006, Valeant released preliminary financial information for the quarter ended September 30, 2006. Today, the company released final financial results for the quarter and year-to-date periods ended September 30, 2006. The results were revised to reflect the effects of the restatement associated with the stock option review, as well as information that has subsequently become available which has altered certain estimates and assumptions used in the preparation of the September 30, 2006 preliminary information.

     Income from continuing operations for the September 30, 2006 quarter improved to $0.18 per diluted share from the preliminary $0.14 per diluted share released earlier, adjusted for non-GAAP items. The improvement is due to adjustments made to certain estimates and assumptions used in the preparation of the preliminary financial information to recognize new information received, principally to eliminate an inventory provision for Infergen^® for $4.8 million

following positive stability testing results allowing for extension of the shelf life of the product.

     The company also restated its results for the quarter and nine months ended September 30, 2005 primarily as a result of the stock option review.

Revised Third Quarter 2006 vs. Third Quarter 2005 Highlights:

§	Revenues increased 7 percent to $220.0 million, compared to $205.4 million.
§	Product sales increased 8 percent to $199.0 million, compared to $183.4 million.
§	Ribavirin royalties decreased 4 percent to $21.0 million, compared to $22.0 million.
§	Income from continuing operations was $6.2 million, or $0.06 per diluted share, compared to a loss of $3.8 million, or $0.04 per diluted share.
§	Adjusted for non-GAAP items, income from continuing operations was $16.8 million, or $0.18 per diluted share, compared to $8.2 million, or $0.09 per diluted share.

     The company’s financial results for the quarter and year-to-date periods ended September 30, 2006, compared to the same periods in 2005 are attached to this release. A reconciliation of GAAP to non-GAAP results is provided in Tables 2-4. A reconciliation of revised financial results for the September 30, 2006 quarter to the previously released preliminary information is provided in Table 9.

Fourth Quarter 2006 Results Conference Call Information:

     Valeant Pharmaceuticals will host a conference call on Wednesday, February 28, 2007 at 10:00 a.m. EST (7:00 a.m. PST) to discuss its 2006 fourth quarter and year results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 6658657. International callers should dial (706) 679-0845, confirmation code 6658657. A replay will be available approximately two hours following the conclusion of the conference call through Wednesday, March 7, 2007 and can be accessed by dialing (800) 642-1687, confirmation code 6658657.

     The company also will webcast the call live over the Internet, which will be hosted in the investor relations section of its corporate Web site at www.valeant.com. Participants should allow approximately five to ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the Internet webcast. An online archive of the webcast will be available following the end of the live call in the webcast archive portion of the investor relations section at www.valeant.com.

About Valeant:

     Valeant Pharmaceuticals International (NYSE:VRX) is a global specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, infectious disease and dermatology. More information about Valeant can be found at www.valeant.com.

FORWARD-LOOKING STATEMENTS:

     This press release contains forward-looking statements, including, but not limited to, statements regarding the company’s plans to file amended quarterly reports on Form 10-Q. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties relating to its ability to file amended quarterly reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006, the completion of the SEC’s informal inquiry, and other risks and uncertainties discussed in the company’s filings with the SEC. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this release or to reflect actual outcomes.

NON-GAAP INFORMATION:

     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, stock compensation expense, gain on litigation settlement, 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, or, as in the case of stock compensation expense, adjusts for this impact since such amounts were not included in comparative periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. 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.

Financial Tables Follow

###

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Income
For the Three and Nine Months Ended September 30, 2006 and 2005 Table 1

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
(In thousands, except per share data)	2006			2005			% Change			2006			2005			% Change
Product sales	$	199,006		$	183,442			8	%	$	589,163		$	526,166			12	%
Ribavirin royalties		20,968			21,953			-4	%		60,694			65,494			-7	%
Total revenues		219,974			205,395			7	%		649,857			591,660			10	%
Cost of goods sold (a)		60,305			54,637			10	%		184,665			156,423			18	%
Selling expenses (a)		67,582			59,052			14	%		198,127			173,391			14	%
General and administrative expenses (a)		27,212			26,792			2	%		86,325			77,607			11	%
Research and development costs (a)		20,849			28,961			-28	%		77,270			82,421			-6	%
Acquired in-process research and development (b)		—			—						—			126,399			—
Gain on litigation settlement (c)		(17,550	)		—						(51,550	)		—
Restructuring charges (d)		17,139			135			—			96,687			506			—
Amortization expense		18,424			15,782			17	%		53,461			46,961			14	%
		193,961			185,359			5	%		644,985			663,708			-3	%
Income (loss) from operations		26,013			20,036						4,872			(72,048	)
Interest expense, net		(7,751	)		(6,884	)					(23,677	)		(20,494	)
Other income (expense), net including translation and exchange		(454	)		(1,207	)					1,240			(5,629	)
Income (loss) from continuing operations before provision for income taxes and minority interest		17,808			11,945						(17,565	)		(98,171	)
Provision for income taxes		11,646			15,569						24,351			42,340
Minority interest		1			184						2			489
Income (loss) from continuing operations		6,161			(3,808	)					(41,918	)		(141,000	)
Income (loss) from discontinued operations, net		7,546			1,123						7,137			(2,367	)
Net income (loss)	$	13,707		$	(2,685	)				$	(34,781	)	$	(143,367	)
Basic earnings per common share
Income (loss) from continuing operations	$	0.07		$	(0.04	)				$	(0.45	)	$	(1.54	)
Discontinued operations, net		0.08			0.01						0.08			(0.03	)
Net income (loss)	$	0.15		$	(0.03	)				$	(0.37	)	$	(1.57	)
Shares used in per share computation		93,093			92,626						92,907			91,357
Diluted earnings per common share
Income (loss) from continuing operations	$	0.06		$	(0.04	)				$	(0.45	)	$	(1.54	)
Discontinued operations, net		0.08			0.01						0.08			(0.03	)
Net income (loss)	$	0.14		$	(0.03	)				$	(0.37	)	$	(1.57	)
Shares used in per share computation		95,265			92,626						92,907			91,357

(a)	In 2006 Valeant adopted a new accounting standard FAS 123(R) which requires that the estimated value of employee stock options and stock purchase plans be recorded as an expense. Stock compensation expense in the three months ended September 30, 2006 totaled $5.7 million, consisting of $0.2 million in cost of sales, $0.8 million in selling expenses, $0.5 million in research and development and $4.2 million in general and administrative expenses. In the nine months ended September 30, 2006 stock compensation expense totaled $16.4 million, consisting of $1.0 million in cost of sales, $2.5 million in selling expenses, $2.1 million in research and development and $10.8 million in general and administrative expenses.
	In 2005, Valeant recorded $0.8 million and $2.5 million of stock compensation expense in the three and nine month periods ended September 30, 2005, respectively. Had the new accounting standard been adopted in 2005, stock compensation expense would have been increased by $5.1 million and $10.1 million in the three and nine month periods ended September, 30 2005, respectively.
(b)	In-process research and development (IPR&D) charges related to the acquisition of Xcel.
(c)	For the three months ended September 30, 2006, the $17.6 million gain relates to the settlement of disclosed litigation with Milan Panic. For the nine months ended September 30, 2006, the $51.6 million total comprises this gain and the settlement with the Republic of Serbia.
(d)	Charges relate to our restructuring program which includes the write-down of manufacturing plants which will be sold, the write off of certain information system costs and a portion of the employee severance costs associated with our restructuring plan. The $96.7 million for the nine months ended September 30, 2006 includes approximately $13.9 million for employee severance benefits associated with the restructuring program.

Valeant Pharmaceuticals International
Consolidated Condensed Statements of Operations and Reconciliation of Non-GAAP Adjustments Table 2

	Three Months Ended
	September 30, 2006
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales	$	199,006		$	—		$	199,006
Ribavirin royalties		20,968			—			20,968
Total revenues		219,974			—			219,974
Cost of goods sold		60,305			(225	)(a)		60,080
Selling expenses		67,582			(745	)(a)		66,837
General and administrative expenses		27,212			(4,151	)(a)		23,061
Research and development costs		20,849			(533	)(a)		20,316
Acquired in-process research and development		—			—			—
Gain on litigation settlement		(17,550	)		17,550	(b)		—
Restructuring charges		17,139			(17,139	)(c)		—
Amortization expense		18,424			(683	)		17,741
		193,961			(5,926	)		188,035
Income from operations		26,013			5,926			31,939
Interest expense, net		(7,751	)		—			(7,751	)
Other expense, net including translation and exchange		(454	)		—			(454	)
Income from continuing operations before provision for income taxes and minority interest		17,808			5,926			23,734
Provision for income taxes		11,646			(4,749	)(d)		6,897
Minority interest		1			—			1
Income from continuing operations		6,161			10,675			16,836
Income from discontinued operations, net		7,546			—			7,546
Net Income	$	13,707		$	10,675		$	24,382
Basic earnings per common share
Income from continuing operations	$	0.07					$	0.18
Discontinued operations, net		0.08						0.08
Net Income	$	0.15					$	0.26
Shares used in per share computation		93,093						93,093
Diluted earnings per common share
Income (loss) from continuing operations	$	0.06					$	0.18
Discontinued operations, net		0.08						0.08
Net income	$	0.14					$	0.26
Shares used in per share computation		95,265						95,265

(a)	Consists of stock-based compensation expense totaling $5.7 million. After income taxes, the effect on non-GAAP adjusted net income is $4.1 million or $.04 per share.
(b)	Gain of $17.6 milion results from settlement of disclosed litigation with Milan Panic.
(c)	Charges relate to our restructuring program which includes the write-down of manufacturing plants which will be sold and a portion of the employee severance costs associated with our restructuring plan. The $17.1 million for the three months ended September 30, 2006 includes approximately $1.9 million for employee severance benefits associated with the restructuring program.
(c)	Gain results from settlement of a long-standing dispute with Republic of Serbia over joint venture. In March 2006 Valeant collected $28 million of this amount; an additional $6 million will be paid in 2007.
(d)	Tax effect for non-GAAP adjustments, including tax benefits from U.S. net operating losses not recognized for GAAP purposes.

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, stock compensation expense and results of discontinued businesses. Management does not consider the excluded items part of the 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 Table 2.1

	Three Months Ended
	September 30, 2005
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales	$	183,442		$	—		$	183,442
Ribavirin royalties		21,953			—			21,953
Total revenues		205,395			—			205,395
Cost of goods sold		54,637			(63	)(a)		54,574
Selling expenses		59,052			(35	)(a)		59,017
General and administrative expenses		26,792			(480	)(a)		26,312
Research and development costs		28,961			(224	)(a)		28,737
Acquired in-process research and development		—			—			—
Restructuring charges		135			(135	)(b)		—
Amortization expense		15,782			—			15,782
		185,359			(937	)		184,422
Income from operations		20,036			937			20,973
Interest expense, net		(6,884	)		—			(6,884	)
Other expense, net including translation and exchange		(1,207	)		—			(1,207	)
Income from continuing operations before provision for income taxes and minority interest		11,945			937			12,882
Provision for income taxes		15,569			(11,061	)(c)		4,508
Minority interest		184			—			184
Income (loss) from continuing operations		(3,808	)		11,998			8,190
Income (loss) from discontinued operations, net		1,123			(1,777	)(d)		(654	)
Net Income (loss)	$	(2,685	)	$	10,221		$	7,536
Basic earnings per common share
Income (loss) from continuing operations	$	(0.04	)				$	0.09
Discontinued operations, net		0.01						(0.01	)
Net income (loss)	$	(0.03	)				$	0.08
Shares used in per share computation		92,626						92,626
Diluted earnings per common share
Income (loss) from continuing operations	$	(0.04	)				$	0.09
Discontinued operations, net		0.01						(0.01	)
Net income (loss)	$	(0.03	)				$	0.08
Shares used in per share computation		92,626						95,316	(e)

(a)	Consists of stock-based compensation expense totaling $0.8 million.
(b)	Related to net loss on sale of manufacturing sites.
(c)	The tax adjustment of $11.1 million includes $5.5 million attributable to U.S. net operating losses (“NOL”) not recognized for GAAP purposes and $3.9 million related to the repatriation of foreign earnings related to the American Jobs Creation Act of 2004.
(d)	Net gain on sale of Hungary discontinued operations.
(e)	Shares used in adjusted diluted EPS include 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 Table 3

	Nine Months Ended
	September 30, 2006
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales	$	589,163		$	—		$	589,163
Ribavirin royalties		60,694			—			60,694
Total revenues		649,857			—			649,857
Cost of goods sold		184,665			(1,026	)(a)		183,639
Selling expenses		198,127			(2,458	)(a)		195,669
General and administrative expenses		86,325			(10,752	)(a)		75,573
Research and development costs		77,270			(2,116	)(a)		75,154
Acquired in-process research and development		—			—			—
Gain on litigation settlement (b)		(51,550	)		51,550	(b)		—
Restructuring charges		96,687			(96,687	)(c)		—
Amortization expense		53,461			(683	)		52,778
		644,985			(62,172	)		582,813
Income from operations		4,872			62,172			67,044
Interest expense, net		(23,677	)		—			(23,677	)
Other income, net including translation and exchange		1,240			—			1,240
Income (loss) from continuing operations before provision for income taxes and minority interest		(17,565	)		62,172			44,607
Provision for income taxes		24,351			(11,417	)(d)		12,934
Minority interest		2			—			2
Income (loss) from continuing operations		(41,918	)		73,589			31,671
Income from discontinued operations, net		7,137			—			7,137
Net Income (loss)	$	(34,781	)	$	73,589		$	38,808
Basic earnings per common share
Income (loss) from continuing operations	$	(0.45	)				$	0.34
Discontinued operations, net		0.08						0.08
Net income (loss)	$	(0.37	)				$	0.42
Shares used in per share computation		92,907						92,907
Diluted earnings per common share
Income (loss) from continuing operations	$	(0.45	)				$	0.33
Discontinued operations, net		0.08						0.08
Net income (loss)	$	(0.37	)				$	0.41
Shares used in per share computation		92,907						94,880	(e)

(a)	Consists of stock based compensation expense totalling $16.4 million. After income taxes, the effect on non-GAAP adjusted net income is $12.0 million or $.13 per share.
(b)	Gain of $51.6 million results from settlements of litigation with Milan Panic and the dispute with the Republic of Serbia.
(c)	Charges relate to our restructuring program which includes the write-down of manufacturing plants which will be sold, the write off of certain information system costs and a portion of the employee severance costs associated with our restructuring plan. The $96.7 million for the nine months ended September 30, 2006 includes approximately $13.9 million for employee severance benefits associated with the restructuring program.
(d)	Tax effect for non-GAAP adjustments, including tax benefits from U.S. net operating losses not recognized for GAAP purposes.
(e)	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 Table 3.1

	Nine Months Ended
	September 30, 2005
				Non-GAAP
	GAAP			Adjustments			Adjusted
(In thousands, except per share data)
Product sales	$	526,166		$	—		$	526,166
Ribavirin royalties		65,494			—			65,494
Total revenues		591,660			—			591,660
Cost of goods sold		156,423			(188	)(a)		156,235
Selling expenses		173,391			(105	)(a)		173,286
General and administrative expenses		77,607			(1,485	)(a)		76,122
Research and development costs		82,421			(674	)(a)		81,747
Acquired in-process research and development		126,399			(126,399	)(b)		—
Restructuring charges		506			(506	)(c)		—
Amortization expense		46,961			(1,532	)(d)		45,429
		663,708			(130,889	)		532,819
Income (loss) from operations		(72,048	)		130,889			58,841
Interest expense, net		(20,494	)		—			(20,494	)
Other expense, net including translation and exchange		(5,629	)		—			(5,629	)
Income (loss) from continuing operations before provision for income taxes and minority interest		(98,171	)		130,889			32,718
Provision for income taxes		42,340			(30,889	)(e)		11,451
Minority interest		489			—			489
Income (loss) from continuing operations		(141,000	)		161,778			20,778
Loss from discontinued operations, net		(2,367	)		(1,779	)(f)		(4,146	)
Net Income (loss)	$	(143,367	)	$	159,999		$	16,632
Basic earnings per common share
Income (loss) from continuing operations	$	(1.54	)				$	0.23
Discontinued operations, net		(0.03	)					(0.05	)
Net income (loss)	$	(1.57	)				$	0.18
Shares used in per share computation		91,357						91,357
Diluted earnings per common share
Income (loss) from continuing operations	$	(1.54	)				$	0.22
Discontinued operations, net		(0.03	)					(0.04	)
Net income (loss)	$	(1.57	)				$	0.18
Shares used in per share computation		91,357						94,612	(g)

(a)	Consists of stock-based compensation expense totaling $2.5 million.
(b)	In-process research and development charge related to the acquisition of Xcel.
(c)	Impairment charge on our manufacturing site in China and net gain on sale of four manufacturing sites.
(d)	Impairment charges on products sold in Spain and North America.
(e)	The IPR&D charge and the restructuring charge are not deductible for income tax purposes. The tax adjustment of $30.9 million includes $22.2 million relating to our estimate of expenses associated with various tax issues raised by the Internal Revenue Service and $15.7 million attributable to U.S. NOLs not recognized for GAAP purposes partially offset by the reversal of foreign tax valuation allowances.
(f)	Net gain on sale of Hungary discontinued operations.
(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
GAAP reconciliation of basic and diluted earnings per share
For the Three and Nine Months Ended September 30, 2006 and 2005 Table 4

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands, except per share data)	2006			2005			2006			2005
Income (loss) from continuing operations	$	6,161		$	(3,808	)	$	(41,918	)	$	(141,000	)
Non-GAAP adjustments:
Acquired IPR&D		—			—			—			126,399
Stock-based compensation expense		5,654			802			16,352			2,452
Product impairment		683			—			683			1,532
Gain on litigation settlement		(17,550	)		—			(51,550	)		—
Restructuring charges		17,139			135			96,687			506
Tax effect on the above charges and tax settlements		4,749			11,061			11,417			30,889
Adjusted income from continuing operations before the above charges	$	16,836		$	8,190		$	31,671		$	20,778
Adjusted basic EPS from continuing operations	$	0.18		$	0.09		$	0.34		$	0.23
Adjusted diluted EPS from continuing operations	$	0.18		$	0.09		$	0.33		$	0.22
Shares used in basic per share calculation		93,093			92,626			92,907			91,357
Shares used in diluted per share calculation		95,265			95,316			94,880			94,612

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

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2006			2005		% Change			2006		2005			% Change
Consolidated operating income (loss) (GAAP)	$	26,013		$	20,036		30	%	$	4,872	$	(72,048	)		—
Depreciation and amortization		23,637			22,823		4	%		70,707		68,321			3	%
EBITDA (non-GAAP) (a)		49,650			42,859		16	%		75,579		(3,727	)		—
Stock-based compensation expense (b)		5,654			802		605	%		16,352		2,452			567	%
Other Non-GAAP adjustments (b)		(411	)		135		—			45,137		126,905			-64	%
Adjusted EBITDA (non-GAAP) (a)	$	54,893		$	43,796		25	%	$	137,068	$	125,630			9	%

(a)

We believe that EBITDA is a meaningful non-GAAP financial measure as an earnings-derived indicator of the cash flow 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 and 3 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 Nine Months Ended September 30, 2006 and 2005
(In thousands) Table 5

	Three Months Ended				%			Nine Months Ended				%
	September 30,				Increase/			September 30,				Increase/
	2006		2005		(Decrease)			2006		2005		(Decrease)
Dermatology
Efudix/Efudex(P)	$	15,502	$	14,365		8	%	$	46,061	$	45,872		0	%
Kinerase(P)		6,622		5,921		12	%		22,506		16,177		39	%
Oxsoralen-Ultra(P)		613		449		37	%		7,714		7,544		2	%
Dermatix(P)		2,553		2,249		14	%		7,364		6,711		10	%
Eldoquin (P)		1,935		2,000		(3	%)		4,688		4,521		4	%
Other Dermatology		8,380		8,590		(2	%)		26,206		23,100		13	%
Infectious Disease
Infergen(P) (a)		9,134		—		—			34,148		—		—
Virazole(P)		2,142		3,377		(37	%)		11,723		11,704		0	%
Other Infectious Disease		4,448		4,952		(10	%)		14,069		15,049		(7	%)
Neurology
Diastat(P) (b)		14,802		17,525		(16	%)		38,533		36,993		4	%
Mestinon(P)		11,449		12,206		(6	%)		33,592		32,500		3	%
Cesamet(P)		6,487		2,919		122	%		13,832		6,893		101	%
Librax(P)		3,002		4,042		(26	%)		10,926		9,792		12	%
Dalmane/Dalmadorm(P)		2,538		2,597		(2	%)		7,548		8,568		(12	%)
Migranal(P) (b)		1,133		3,744		(70	%)		6,949		8,648		(20	%)
Limbitrol(P)		1,721		1,430		20	%		4,548		4,348		5	%
TASMAR(P)		1,635		1,438		14	%		4,487		3,910		15	%
Zelapar (P)		3,824		—		—			3,824		—		—
Other Neurology		15,938		10,958		45	%		46,103		37,050		24	%
Other Therapeutic Classes
Bedoyecta(P)		13,879		14,549		(5	%)		36,970		34,769		6	%
Solcoseryl(P)		4,908		5,837		(16	%)		12,882		13,942		(8	%)
Bisocard(P)		4,045		3,284		23	%		11,522		9,303		24	%
Nyal(P)		2,134		4,191		(49	%)		8,691		12,031		(28	%)
Espaven(P)		3,340		2,324		44	%		7,625		5,395		41	%
Calcitonin(P)		1,149		1,835		(37	%)		5,227		7,154		(27	%)
Espacil(P)		1,235		1,909		(35	%)		4,092		4,000		2	%
Aclotin(P)		1,364		1,379		(1	%)		3,956		4,269		(7	%)
Other Pharmaceutical Products		53,094		49,372		8	%		153,377		155,923		(2	%)
Total Product Sales	$	199,006	$	183,442		8	%	$	589,163	$	526,166		12	%
Total Promoted Product Sales(P)	$	117,146	$	109,570		7	%	$	349,408	$	295,044		18	%

(a)	Infergen was acquired from InterMune on December 30, 2005.
(b)	Diastat and Migranal were acquired with the Xcel transaction on March 1, 2005.
(P)	Promoted products represent promoted products with estimated annualized sales greater than $5 million.

Valeant Pharmaceuticals International
Consolidated Condensed Statement of Revenue and Operating Income — Regional
For the Three and Nine Months Ended September 30, 2006 and 2005
(In thousands) Table 6

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2006			2005			% Change			2006			2005			% Change
Revenues
North America	$	71,225		$	60,962			17	%	$	219,385		$	170,396			29	%
International		60,530			56,178			8	%		170,191			152,524			12	%
EMEA		67,251			66,302			1	%		199,587			203,246			-2	%
Total specialty pharmaceuticals		199,006			183,442			8	%		589,163			526,166			12	%
Ribavirin royalty revenues		20,968			21,953			-4	%		60,694			65,494			-7	%
Consolidated revenues	$	219,974		$	205,395			7	%	$	649,857		$	591,660			10	%
Cost of goods sold	$	60,305		$	54,637			10	%	$	184,665		$	156,423			18	%
Gross profit margin on pharmaceutical sales		70	%		70	%					69	%		70	%

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
	2006			2005			% Change			2006			2005			% Change
Operating Income (Loss) (a)
North America	$	16,433		$	16,555			-1	%	$	53,658		$	49,893			8	%
International		18,589			17,235			8	%		50,695			42,996			18	%
EMEA		10,658			10,568			1	%		27,268			31,449			-13	%
		45,680			44,358			3	%		131,621			124,338			6	%
Corporate expenses	$	(16,712	)	$	(15,257	)		10	%	$	(55,272	)	$	(44,594	)		24	%
Total specialty pharmaceuticals		28,968			29,101			0	%		76,349			79,744			-4	%
Restructuring charges		(17,139	)		(135	)		—			(96,687	)		(506	)		—
Gain on litigation settlement		17,550			—						51,550			—
R&D		(3,366	)		(8,930	)		-62	%		(26,340	)		(24,887	)		6	%
Acquired IPR&D		—			—			—			—			(126,399	)		—
Total consolidated operating income (loss)	$	26,013		$	20,036					$	4,872		$	(72,048	)

	Three Months Ended										Nine Months Ended
	September 30, 2006		%			September 30, 2005		%			September 30, 2006		%			September 30, 2005		%
Gross Profit
North America	$	56,311		79	%	$	49,467		81	%	$	177,163		81	%	$	137,000		80	%
International		43,312		72	%		39,315		70	%		115,686		68	%		106,247		70	%
EMEA		39,078		58	%		40,023		60	%		111,649		56	%		126,496		62	%
Total specialty pharmaceuticals	$	138,701		70	%	$	128,805		70	%	$	404,498		69	%	$	369,743		70	%

(a) Includes $5.7 million and $16.4 million of stock-based compensation expense in the three and nine months ended September 30, 2006, respectively, and $0.8 million and $2.5 million in the three and nine months ended September 30, 2005, respectively.

Valeant Pharmaceuticals International
Consolidated Balance Sheet and Other Data
(In thousands) Table 7

	September 30,		December 31,
	2006		2005
Balance Sheet Data
Cash and cash equivalents	$	267,887	$	224,856
Marketable securities		9,563		10,210
Total cash and marketable securities	$	277,450	$	235,066
Accounts receivable, net	$	211,823	$	187,987
Inventory, net		148,578		136,034
Long-term debt		782,821		788,439
Total equity		416,062		433,944

	Nine Months Ended
	September 30,			September 30,
	2006			2005
Other Data
Cash flow provided by (used in) continuing operations
Operating activities	$	79,161		$	67,500
Investing activities		(22,126	)		(85,864	)
Financing activities		(18,684	)		173,662
Effect of exchange rate changes on cash and cash equivalents		4,680			(8,070	)
Net increase in cash and cash equivalents		43,031			147,228
Net increase (decrease) in marketable securities		(647	)		(223,696	)
Net increase (decrease) in cash and marketable securities	$	42,384		$	(76,468	)

Valeant Pharmaceuticals International	Table 8
Supplemental Non-GAAP Information on Currency Effect
(In thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2006			2005		2006			2005
Consolidated
Product sales	$	199,006		$	183,442	$	589,163		$	526,166
Currency effect		(2,403	)				(1,564	)
Product sales, excluding currency impact	$	196,603				$	587,599
Operating income (loss)	$	26,013		$	20,036	$	4,872		$	(72,048	)
Currency effect		(160	)				(1,211	)
Operating income, excluding currency impact	$	25,853				$	3,661
Geographic Product Sales
North America pharmaceuticals	$	71,225		$	60,962	$	219,385		$	170,396
Currency effect		(734	)				(2,141	)
North America pharmaceuticals, excluding currency impact	$	70,491				$	217,244
International pharmaceuticals	$	60,530		$	56,178	$	170,191		$	152,524
Currency effect		538					(300	)
International pharmaceuticals, excluding currency impact	$	61,068				$	169,891
EMEA pharmaceuticals	$	67,251		$	66,302	$	199,587		$	203,246
Currency effect		(2,207	)				877
EMEA pharmaceuticals, excluding currency impact	$	65,044				$	200,464

Note: Currency effect is determined by comparing adjusted 2006 reported amounts, calculated using 2005 monthly average exchange rates, to the actual 2005 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.

Valeant Pharmaceuticals International	Table 9
Consolidated Condensed Statements of Operations including GAAP to Non-GAAP Reconciliation
For the Three Months Ended September 30, 2006 reconciliation to previously reported numbers

	Three Months Ended						Three Months Ended
	September 30, 2006						September 30, 2006
(In thousands, except per share data)	Preliminary			Adjustments			Final
Product sales	$	199,214		$	(208	) (a)	$	199,006
Ribavirin royalties		20,185			783	(b)		20,968
Total revenues		219,399			575			219,974
Cost of goods sold		63,903			(3,598	) (c)(d)		60,305
Selling expenses		67,671			(89	) (d)(e)		67,582
General and administrative expenses		27,010			202	(d)(e)		27,212
Research and development costs		21,189			(340	) (d)(e)		20,849
Gain on litigation settlement		(17,550	)					(17,550	)
Restructuring charges		15,039			2,100	(f)		17,139
Amortization expense		17,732			692	(g)		18,424
		194,994			(1,033	)		193,961
Income from operations		24,405			1,608			26,013
Interest expense, net		(7,751	)					(7,751	)
Other expense, net including translation and exchange		(454	)		—			(454	)
Income from continuing operations before provision for income taxes and minority interest		16,200			1,608			17,808
Provision for income taxes		12,287			(641	) (h)		11,646
Minority interest		1			—			1
Income from continuing operations		3,912			2,249			6,161
Income from discontinued operations, net		7,546			—			7,546
Net Income	$	11,458		$	2,249		$	13,707
Income from continuing operations		3,912			2,249			6,161
Non-GAAP adjustments:
Acquired IPR&D		—						—
Stock-based compensation expense		5,615			39			5,654
Product impairment		—			683			683
Gain on litigation settlement		(17,550	)					(17,550	)
Restructuring charges		15,039			2,100			17,139
Tax effect on the above items and from U.S. net operating losses		6,609			(1,860	)		4,749
Adjusted income from continuing operations before the above charges	$	13,625		$	3,211		$	16,836
Adjusted basic EPS from continuing operations	$	0.15					$	0.18
Adjusted diluted EPS from continuing operations	$	0.14					$	0.18
Shares — Basic		92,960						93,093
Shares — Diluted		95,131						95,265

(a)	Amendment to accounting estimates of balance sheet accruals and reserves to recognize new information on Italian government reimbursement rebates on Mestinon -$0.3 million, Nyal instore rebate utilization -$0.3 million and Virazole exchange program $0.4 million.
(b)	Payment received for ribavirin royalties exceeded previously estimated amount.
(c)	Amended inventory provision following product life extension on Infergen products $4.8 million, offset by increased provisions for other inventory items and contractual obligations to product suppliers -$1.2 million.
(d)	Modification of stock based compensation charge to account for special committee findings (cost of goods sold $4,000,selling expenses $1,000, general and administrative expenses $16,000, research and development $18,000)
(e)	Amendment to accounting estimates of balance sheet accruals and reserves to recognize new information received since preliminary results announced (selling expenses -$52,000, general and administrative expenses -$185,000, research and development $359,000)
(f)	Additional non-cash impairment charge to reflect revised property appraisal value and other accounting estimate changes
(g)	Product impairment
(h)	Tax effect for non-GAAP adjustments, including tax benefits from U.S. net operating losses not recognized for GAAP purposes.

Valeant Pharmaceuticals International	Table 10
Restatement Summary

We have filed an amended Annual Report on Form 10K/A for the fiscal year ended December 31, 2005 and intend to file amended Quarterly Reports on Form 10-Q/A for the quarters ended March 31, and June 30, 2006, to restate our condensed consolidated financial statements and the related disclosures for these periods. The table below summarizes the effect of the restatement on net income:

																		Total Additional
																		Expense			Six Months
																Cumulative		(Income)			Ended
	Year Ended December 31,															Effect		Through			June 30,			Total Through
	2005			2004			2003			2002			2001			1982 -2000		12/31/2005			2006			6/30/2006
Stock option grants prior to 2002 change in control:
Broad-based option grants with improper measurement dates	$	—		$	—		$	—		$	2,657		$	2,701		$	6,130	$	11,488		$	—		$	11,488
Option grants to directors with improper measurement dates		—			—			—			119			9			20		148			—			148
Other option grants with improper measurement dates		—			—			—			546			999			2,993		4,538			—			4,538
Repriced option grant		—			—			—			(482	)		783			696		997			—			997
Improper measurement dates for option grants 1982-1994		—			—			—			—			—			1,375		1,375			—			1,375
Incremental charge in connection with Change in Control		—			—			—			10,105			—			—		10,105			—			10,105
Sub-total pre-Change in Control		—			—			—			12,945			4,492			11,214		28,651			—			28,651
Stock option grants after 2002 Change in Control:
Company-wide option grants with improper measurement dates		1,171			1,085			172			—			—			—		2,428			(3	)		2,425
Other stock option matters after June 2002		22			(7	)		20			—			—			—		35			—			35
Sub total post-Change in Control		1,193			1,078			192			—			—			—		2,463			(3	)		2,460
Total impact of additional stock compensation on operating income		1,193			1,078			192			12,945			4,492			11,214		31,114			(3	)		31,111
Other items corrected in connection with restatement		(2,273	)		(1,265	)		(90	)		1,209			(1,184	)		7,741		4,138			(1,772	)		2,366
Tax effects of above and other tax items		963			(14,957	)		1,785			(4,461	)		(2,471	)		10,289		(8,852	)		(1,170	)		(10,022	)
Net income decrease (increase) resulting from all restatement items	$	(117	)	$	(15,144	)	$	1,887		$	9,693		$	837		$	29,244	$	26,400		$	(2,945	)	$	23,455