MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS

6 Months Ended

Jun. 30, 2011

MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS

MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS

6.     MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS

• In connection with the Merger, the Company initiated measures to integrate the operations of Biovail and Valeant, capture operating synergies and generate cost savings across the Company. Costs associated with these initiatives include: employee termination costs (including related share-based payments) payable to approximately 500 employees of Biovail and Valeant who have been, or will be, terminated as a result of the Merger; IPR&D termination costs related to the transfer of product-development programs that did not align with the Company's research and development model to other parties; costs to consolidate or close facilities and relocate employees; asset impairment charges to write down property, plant and equipment to fair value; and contract termination and lease cancellation costs. The following table summarizes the major components of costs incurred in connection with these initiatives and a reconciliation of the liability balance:

	Employee Termination Costs
										Contract Termination, Facility Closure and Other Costs
	Severance and Related Benefits			Share-Based Compensation			IPR&D Termination Costs						Total
Balance, January 1, 2010	$	—		$	—		$	—		$	—		$	—
Costs incurred and charged to expense		58,727			49,482			13,750			12,862			134,821
Cash payments		(33,938	)		—			(13,750	)		(8,755	)		(56,443	)
Non-cash adjustments		—			(49,482	)		—			(2,437	)		(51,919	)
Balance, December 31, 2010		24,789			—			—			1,670			26,459
Costs incurred and charged to expense		5,260			3,446			—			8,833			17,539
Cash payments		(20,603	)		—			—			(2,510	)		(23,113	)
Non-cash adjustments		—			(165	)		—			—			(165	)
Balance, March 31, 2011		9,446			3,281			—			7,993			20,720
Costs incurred and charged to expense		5,632			295			—			15,847			21,774
Cash payments		(8,305	)		(2,033	)		—			(7,067	)		(17,405	)
Non-cash adjustments		—			—			—			(1,300	)		(1,300	)
Balance, June 30, 2011	$	6,773		$	1,543		$	—		$	15,473		$	23,789

• Facility closure costs incurred in the three-month period ended June 30, 2011 included a $9.0 million charge for the remaining operating lease obligation (net of estimated sublease rentals that could be reasonably obtained) related to the Company's Mississauga, Ontario corporate office facility, which was vacated as of June 30, 2011, and a charge of $1.3 million related to a lease termination payment on the Company's Aliso Viejo, California corporate office facility. The Company is transitioning a number of its corporate office functions to Bridgewater, New Jersey. As a result, a portion of the previously vacated space in the Bridgewater facility has been reoccupied, resulting in a $1.1 million reversal of a previously recognized restructuring accrual related to that space.

  In addition to costs identified with the Company's restructuring initiatives, the Company incurred $7.1 million of integration-related costs in the three-month period ended June 30, 2011, of which $3.5 million had been paid as of June 30, 2011. These costs were primarily related to the alignment of manufacturing operations in Brazil and the integration of PharmaSwiss into the Company's European operations.