BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 30, 2011

Business Combinations

Schedule of pro forma impact of merger and acquisition

	Three Months Ended September 30					Nine Months Ended September 30
	2011		2010			2011		2010
Revenues	$	615,511	$	557,331		$	1,901,672	$	1,676,752
Net income (loss)		32,719		(102,149	)		122,282		(165,877	)
Basic earnings (loss) per share	$	0.11	$	(0.34	)	$	0.40	$	(0.55	)
Diluted earnings (loss) per share	$	0.10	$	(0.34	)	$	0.37	$	(0.55	)

Valeant Pharmaceuticals International ("Valeant")

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Merger Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of September 30, 2011 (as adjusted)
Cash and cash equivalents	$	348,637		$	—		$	348,637
Accounts receivable		194,930			—			194,930
Inventories		208,874			—			208,874
Other current assets		30,869			—			30,869
Property, plant and equipment		184,757			—			184,757
Identifiable intangible assets, excluding acquired IPR&D(c)		3,844,310			(224,939	)		3,619,371
Acquired IPR&D(d)		1,404,956			(4,195	)		1,400,761
Other non-current assets		6,108			—			6,108
Current liabilities		(385,574	)		874			(384,700	)
Long-term debt, including current portion		(2,913,614	)		—			(2,913,614	)
Deferred income taxes, net		(1,467,791	)		157,816			(1,309,975	)
Other non-current liabilities		(149,307	)		(46,022	)		(195,329	)
Total indentifiable net assets		1,307,155			(116,466	)		1,190,689
Equity component of convertible debt		(225,971	)		—			(225,971	)
Call option agreements		(28,000	)		—			(28,000	)
Goodwill		2,878,856			116,466			2,995,322
Total fair value of consideration transferred	$	3,932,040		$	—		$	3,932,040

(a)

As previously reported in the 2010 Form 10-K.

(b)

The measurement period adjustments primarily reflect: (i) changes in the estimated fair values of certain identifiable intangible assets to better reflect the competitive environment, market potential and economic lives of certain products; and (ii) the tax impact of pre-tax measurement period adjustments and resolution of certain tax aspects of the transaction. The measurement period adjustments were made to reflect market participant assumptions about facts and circumstances existing as of the Merger Date, and did not result from intervening events subsequent to the Merger Date.

(c)

The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of September 30, 2011 (as adjusted)
Product brands		16	$	3,114,689	$	(190,779	)	$	2,923,910
Corporate brands		20		168,602		98			168,700
Product rights		9		360,970		(52,949	)		308,021
Out-licensed technology and other		7		200,049		18,691			218,740
Total identifiable intangible assets acquired		15	$	3,844,310	$	(224,939	)	$	3,619,371

(d)

The following table summarizes the amounts assigned to acquired IPR&D assets:

	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of September 30, 2011 (as adjusted)
Ezogabine/retigabine(1)	$	891,461	$	—		$	891,461
Dermatology products		431,323		(3,100	)		428,223
Other		82,172		(1,095	)		81,077
Total IPR&D assets acquired	$	1,404,956	$	(4,195	)	$	1,400,761

(1)

Refer to note 5 — Collaboration Agreement.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of September 30, 2011 (as adjusted)
Product brands		16	$	3,114,689	$	(190,779	)	$	2,923,910
Corporate brands		20		168,602		98			168,700
Product rights		9		360,970		(52,949	)		308,021
Out-licensed technology and other		7		200,049		18,691			218,740
Total identifiable intangible assets acquired		15	$	3,844,310	$	(224,939	)	$	3,619,371

Summary of amounts assigned to acquired IPR&D assets

	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of September 30, 2011 (as adjusted)
Ezogabine/retigabine(1)	$	891,461	$	—		$	891,461
Dermatology products		431,323		(3,100	)		428,223
Other		82,172		(1,095	)		81,077
Total IPR&D assets acquired	$	1,404,956	$	(4,195	)	$	1,400,761

(1)

Refer to note 5 — Collaboration Agreement.

PharmaSwiss S.A.

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of September 30, 2011 (as adjusted)
Cash and cash equivalents	$	43,940		$	—		$	43,940
Accounts receivable(c)		63,509			(1,880	)		61,629
Inventories(d)		72,144			(1,825	)		70,319
Other current assets		14,429			—			14,429
Property, plant and equipment		9,737			—			9,737
Identifiable intangible assets(e)		202,071			7,169			209,240
Other non-current assets		3,122			—			3,122
Current liabilities		(46,866	)		(138	)		(47,004	)
Deferred income taxes, net		(18,176	)		10,540			(7,636	)
Other non-current liabilities		(720	)		—			(720	)
Total indentifiable net assets		343,190			13,866			357,056
Goodwill(f)		171,105			(9,453	)		161,652
Total fair value of consideration transferred	$	514,295		$	4,413		$	518,708

(a)

As previously reported in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

(b)

The measurement period adjustments primarily reflect: (i) changes to deferred taxes based on estimates of income tax rates; (ii) changes in the estimated fair value of certain intangible assets; (iii) an increase in the total fair value of consideration transferred pursuant to a working capital adjustment provision of the purchase agreement; and (iv) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company's previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c)

The fair value of trade accounts receivable acquired was $61.6 million, with the gross contractual amount being $66.8 million, of which the Company expects that $5.2 million will be uncollectible.

(d)

Includes $18.2 million to record PharmaSwiss's inventory at its estimated fair value.

(e)

The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of September 30, 2011 (as adjusted)
Partner relationships(1)		7	$	130,183	$	—	$	130,183
Product brands		9		71,888		7,169		79,057
Total identifiable intangible assets acquired		7	$	202,071	$	7,169	$	209,240

(1)

The partner relationships intangible asset represents the value of existing arrangements with various pharmaceutical and biotech companies, for whom PharmaSwiss provides regulatory, compliance, sales, marketing and distribution functions.

(f)

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the provisional values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

•

cost savings, operating synergies and other benefits expected to result from combining the operations of PharmaSwiss with those of the Company;

•

the value of the going-concern element of PharmaSwiss's existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

•

intangible assets that do not qualify for separate recognition (for instance, PharmaSwiss's assembled workforce).

• The provisional amount of goodwill has been allocated to the Company's Branded Generics — Europe business segment as indicated in note 10.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of September 30, 2011 (as adjusted)
Partner relationships(1)		7	$	130,183	$	—	$	130,183
Product brands		9		71,888		7,169		79,057
Total identifiable intangible assets acquired		7	$	202,071	$	7,169	$	209,240

(1)

The partner relationships intangible asset represents the value of existing arrangements with various pharmaceutical and biotech companies, for whom PharmaSwiss provides regulatory, compliance, sales, marketing and distribution functions.

Sanitas

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date
Cash and cash equivalents	$	5,607
Accounts receivable(a)		25,645
Inventories		22,010
Other current assets		3,166
Property, plant and equipment		83,288
Identifiable intangible assets, excluding acquired IPR&D(b)		247,127
Acquired IPR&D		747
Other non-current assets		2,662
Current liabilities		(30,428	)
Long-term debt, including current portion		(67,134	)
Deferred income taxes, net		(43,269	)
Other non-current liabilities		(6,049	)
Total indentifiable net assets		243,372
Goodwill(c)		204,791
Total fair value of consideration transferred	$	448,163

(a)

The fair value of trade accounts receivable acquired was $25.6 million, with the gross contractual amount being $27.8 million, of which the Company expects that $2.2 million will be uncollectible.

(b)

The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Acquisition Date
Product brands		7	$	164,823
Product rights		7		43,027
Corporate brands		15		25,227
Partner relationships		7		14,050
Total identifiable intangible assets acquired		8	$	247,127

(c)

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the provisional values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

•

cost savings, operating synergies and other benefits expected to result from combining the operations of Sanitas with those of the Company;

•

the value of the continuing operations of Sanitas's existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

•

intangible assets that do not qualify for separate recognition (for instance, Sanitas's assembled workforce).

• The provisional amount of goodwill has been allocated to the Company's Branded Generics — Europe business segment as indicated in note 10.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)		Amounts Recognized as of Acquisition Date
Product brands		7	$	164,823
Product rights		7		43,027
Corporate brands		15		25,227
Partner relationships		7		14,050
Total identifiable intangible assets acquired		8	$	247,127