SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2011

SHARE-BASED COMPENSATION

Summary of the components and classification of share-based compensation expense

	Three Months Ended September 30				Nine Months Ended September 30
	2011		2010		2011		2010
Stock options(a)	$	9,218	$	41,082	$	35,943	$	42,264
RSUs		8,369		27,202		37,095		29,572
Stock-based compensation expense	$	17,587	$	68,284	$	73,038	$	71,836
Cost of goods sold(a)(b)	$	278	$	536	$	980	$	797
Selling, general and administrative expenses(a)(b)		16,581		21,435		70,479		24,267
Research and development expenses(a)(b)		278		648		980		1,107
Restructuring and integration costs		450		45,665		599		45,665
Stock-based compensation expense	$	17,587	$	68,284	$	73,038	$	71,836

(a)

On March 9, 2011, the Company's compensation committee of the board of directors approved an equitable adjustment to all stock options outstanding as of that date for employees and directors as of such date, in connection with the post-Merger special dividend of $1.00 per common share declared on November 4, 2010 and paid on December 22, 2010. As the Company's stock option awards do not automatically adjust for dividend payments, this adjustment was treated as a modification of the terms and conditions of the outstanding options. The incremental fair value of the modified awards was determined to be $15.4 million, of which $9.2 million related to vested options, which was expensed as of March 9, 2011 as follows: cost of goods sold ($0.2 million), selling, general and administrative expenses ($8.8 million) and research and development expenses ($0.2 million). The remaining $6.2 million is being recognized over the remaining requisite service period of the unvested options.

(b)

Includes the excess of the fair value of Biovail stock options and time-based RSUs over the fair value of the vested and partially vested Valeant stock options and time-based RSUs of $20.9 million, which was recognized immediately as post-Merger compensation expense in 2010 and allocated as follows: cost of goods sold ($0.4 million), selling, general and administrative expenses ($20.1 million) and research and development expenses ($0.4 million).

Summary of stock option activity

	Options (000s)			Weighted- Average Exercise Price		Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2011		12,203		$	11.99
Granted		934			47.75
Equitable adjustment		380			11.00
Exercised		(2,158	)		15.20
Expired or forfeited		(459	)		21.34
Outstanding, September 30, 2011		10,900		$	13.79		6.1	$	264,032
Vested and exercisable, September 30, 2011		4,795		$	6.70		5.5	$	145,890

Summary of non-vested time-based RSU activity

	Time-Based RSUs (000s)			Weighted- Average Grant-Date Fair Value
Non-vested, January 1, 2011		2,213		$	24.61
Granted		228			50.02
Vested		(287	)		17.63
Forfeited		(115	)		19.42
Non-vested, September 30, 2011		2,039		$	28.72

Summary of non-vested performance-based RSU activity

	Performance- Based RSUs (000s)			Weighted- Average Grant-Date Fair Value
Non-vested, January 1, 2011		2,496		$	33.25
Granted		219			56.31
Vested		(751	)		52.72
Forfeited		(82	)		17.82
Non-vested, September 30, 2011		1,882		$	28.85

Summary of deferred share unit ("DSU") activity

	DSUs (000s)			Weighted- Average Grant-Date Fair Value
Outstanding, January 1, 2011		382		$	14.43
Granted		18			39.79
Settled for cash		(204	)		15.09
Outstanding, September 30, 2011		196		$	16.06