8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of the earliest event reported): February 17, 2012 (July 15, 2011)

Valeant Pharmaceuticals International, Inc.

(Exact name of registrant as specified in its charter)

Canada	001-14956	98-0448205
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S Employer Identification No.)

7150 Mississauga Road,

Mississauga, Ontario,

Canada L5N 8M5

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code): (905) 286-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01. Completion of Acquisition or Disposition of Assets.

On December 12, 2011, Valeant Pharmaceuticals International, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) to report the completion of our acquisition of substantially all of the assets and rights relating to the Ortho Dermatologics Division of Janssen Pharmaceuticals, Inc. (“Ortho Dermatologics”), in the United States (the “Acquisition”), including prescription brands RETIN-A MICRO®, RETIN-A®, BIAFINE®, GRIFULVIN V®, ERTACZO®, and RENOVA®. The Acquisition was consummated pursuant to the terms of an Asset Purchase Agreement, dated July 15, 2011 by and among Ortho Dermatologics and the purchasers named therein (the “Agreement”). We are filing this amendment to the Initial Form 8-K to include the financial information required by Item 9.01.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of business acquired

The audited special-purpose statement of assets to be sold of Ortho Dermatologics as of January 2, 2011 and the related statement of revenues and expenses for the fiscal year ended January 2, 2011, and the unaudited special-purpose statement of assets to be sold of Ortho Dermatologics as of October 2, 2011, and the related statements of revenues and expenses for the nine-month periods ended October 2, 2011 and October 3, 2010 are filed as Exhibit 99.1 to this amendment.

(b) Pro Forma Financial Information

The required unaudited pro forma condensed combined statements of income of the Company for the year ended December 31, 2010 and the nine-month period ended September 30, 2011 giving effect to the Company’s acquisition of Ortho Dermatologics, and the unaudited pro forma condensed combined balance sheet as of September 30, 2011 giving effect to the Company’s acquisition of Ortho Dermatologics, are attached as Exhibit 99.2 to this amendment.

(c) Exhibits

Exhibit No.	Description of Exhibit
23.1	Consent of PricewaterhouseCoopers LLP.
99.1	Audited special-purpose statement of assets to be sold of Ortho Dermatologics as of January 2, 2011 and the related statement of revenues and expenses for the fiscal year ended January 2, 2011. Unaudited special-purpose statement of assets to be sold of Ortho Dermatologics as of October 2, 2011, and the related statements of revenues and expenses for the nine-month periods ended October 2, 2011 and October 3, 2010.
99.2	Unaudited pro forma condensed combined statements of income of the Company for the year ended December 31, 2010 and the nine-month period ended September 30, 2011, giving effect to the Company’s acquisition of Ortho Dermatologics. Unaudited pro forma condensed combined balance sheet as of September 30, 2011, giving effect to the Company’s acquisition of Ortho Dermatologics.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
Date: February 17, 2012	By:	/s/ Howard B. Schiller
		Howard B. Schiller
		Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
23.1	Consent of PricewaterhouseCoopers LLP.
99.1	Audited special-purpose statement of assets to be sold of Ortho Dermatologics as of January 2, 2011 and the related statement of revenues and expenses for the fiscal year ended January 2, 2011. Unaudited special-purpose statement of assets to be sold of Ortho Dermatologics as of October 2, 2011, and the related statements of revenues and expenses for the nine-month periods ended October 2, 2011 and October 3, 2010.
99.2	Unaudited pro forma condensed combined statements of income of the Company for the year ended December 31, 2010 and the nine-month period ended September 30, 2011, giving effect to the Company’s acquisition of Ortho Dermatologics. Unaudited pro forma condensed combined balance sheet as of September 30, 2011, giving effect to the Company’s acquisition of Ortho Dermatologics.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-4 (No. 333-168254) and Forms S-8 (Nos. 333-92229, 333-138697, 333-168629, 333-168254, 333-176205) of Valeant Pharmaceuticals International, Inc. of our report dated January 17, 2012 relating to the financial statements of Ortho Dermatologics, a division of Janssen Pharmaceuticals, Inc. which appears in this Current Report on Form 8-K of Valeant Pharmaceuticals International, Inc. dated February 17, 2012.

/s/PricewaterhouseCoopers LLP

Florham Park, New Jersey

February 17, 2012

EX-99.1

Exhibit 99.1

Ortho Dermatologics

A Division of Janssen Pharmaceuticals, Inc.

Special-Purpose Statements of Assets to be Sold as of January 2, 2011 and October 2, 2011 (unaudited) and the related Statements of Revenues and Expenses for the Fiscal Year ended January 2, 2011 and unaudited Nine-Month Periods Ended October 2, 2011 and October 3, 2010

Ortho Dermatologics

Index to Special-Purpose Financial Statements

	Page
Report of Independent Auditors		1
Special-Purpose Financial Statements:
Statements of Assets to be Sold as of January 2, 2011 and October 2, 2011 (unaudited)		2
Statements of Revenues and Expenses for fiscal year ended January 2, 2011 and unaudited nine-month periods ended October 2, 2011 and October 3, 2010		3
Notes to Special-Purpose Financial Statements		4 –10

Report of Independent Auditors

To the Management of Ortho Dermatologics:

We have audited the accompanying special-purpose statement of assets to be sold of the Ortho Dermatologics (the “Business”) division of Janssen Pharmaceuticals, Inc. (the “Company”), a wholly-owned subsidiary of Johnson & Johnson, Inc. (“J&J”), as of January 2, 2011, and the related special-purpose statement of revenues and expenses for the fiscal year ended January 2, 2011. These special-purpose financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these special-purpose financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the special-purpose financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the special-purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall special-purpose financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

The accompanying special-purpose financial statements were prepared in connection with the Company’s divesture of the Business as discussed in Note 1 and are not intended to be a complete presentation of the Company’s assets and liabilities or revenues and expenses in conformity with accounting principles generally accepted in the United States of America. As described in Note 2 to the special-purpose financial statements, these statements have been derived from the Company’s historical accounting records and reflect management’s estimates of allocations of certain costs and expenses of cost of goods and services provided to the Business by the Company or other J&J subsidiaries. Accordingly, they do not necessarily represent the assets and liabilities or revenues and expenses of the Business had it been operated as a separate independent entity.

In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the assets to be sold of the Business as of January 2, 2011 and the Business’ revenues and expenses for the fiscal year ended January 2, 2011, as described in Notes 1 through 3, in accordance with accounting principles generally accepted in the United States of America.

January 17, 2012

PricewaterhouseCoopers LLP, 400 Campus Drive, P.O. Box 988, Florham Park, NJ 07932

T: (973) 236 4000, F: (973) 236 5000, www.pwc.com / us

Ortho Dermatologics

Special-Purpose Statements of Assets to be Sold

January 2, 2011 and October 2, 2011 (unaudited)

	January 2,		October 2,
(dollars in thousands)	2011		2011
			(unaudited)
Current Assets:
Finished Goods Inventories, net	$	2,835	$	2,183
		2,835		2,183
Property, plant and equipment, net		303		222
Intangible assets, net		6,887		6,237
	$	10,025	$	8,642

The accompanying notes are an integral part of these special-purpose financial statements.

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Ortho Dermatologics

Special-Purpose Statements of Revenues and Expenses

For the Fiscal Year ended January 2, 2011 and unaudited Nine-Month Periods Ended

October 2, 2011 and October 3, 2010

(dollars in thousands)	Fiscal Year Ended January 2, 2011		Nine Month Period Ended October 2, 2011		Nine Month Period Ended October 3, 2010
			(unaudited)		(unaudited)
Revenues, Net	$	147,097	$	104,999	$	110,857
Direct and Allocated Expenses
Costs of Sales		20,358		15,444		14,486
Selling and Marketing		40,467		29,066		30,156
General and Administrative		5,537		5,447		4,726
Research and Development		18,599		12,714		12,304
Total Expenses	$	84,961	$	62,671	$	61,672
Revenues in excess of direct and allocated expenses	$	62,136	$	42,328	$	49,185

The accompanying notes are an integral part of these special-purpose financial statements.

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

1. Background

Ortho Dermatologics (the “Business”) is a specialty healthcare division of Janssen Pharmaceuticals, Inc. (also referred to herein as, “JPI”), which is a wholly owned subsidiary of Johnson & Johnson (“J&J”) that discovers, develops, and distributes products for dermatological conditions. The major products of the Business include RETIN-A MICRO ^®, used for the treatment of acne vulgaris, RENOVA^® used to reduce fine facial wrinkles and ERTACZO^® Cream, a topical antifungal used for tinea pedis.

On July 15, 2011, JPI entered into an Asset Purchase Agreement with wholly owned subsidiaries of Valeant Pharmaceutical International, Inc. (“Valeant”) providing for the sale of the Business. Under the terms of the Asset Purchase Agreement, the sales price was $345 million, subject to certain adjustments. The transaction closed on December 12, 2011.

The asset sale includes fixed assets owned by the Business, intellectual property that is owned or licensed by the Business, including rights associated with the related domain names, trademarks and patents; related marketing materials owned by the Business, and inventory on hand at time of closing. As part of the asset sale, third-party manufacturing and supply agreements, to the extent permitted under the terms of such agreements, and third-party distribution and other agreements related to the Business as well as personnel of the Business were transferred to Valeant.

2. Basis of Presentation

The Special-Purpose Statements of Assets to be Sold as of January 2, 2011 and October 2, 2011 (unaudited) and the related Special-Purpose Statements of Revenues and Expenses for the fiscal year ended January 2, 2011 and unaudited nine-month periods ended October 2, 2011 and October 3, 2010, are derived from the historical books and records of the Business and certain of its affiliates and only present the assets to be sold and the revenues and expenses, including certain allocated expenses, of the Business. Therefore, these special-purpose financial statements are not intended to be a complete presentation of the financial position, results of operations or cash flows of the Business in conformity with accounting principles generally accepted in the United States of America. The operations of the Business rely, to varying degrees on JPI and other J&J subsidiaries for certain procurement, warehousing, information technology, insurance, human resource, accounting, regulatory, treasury, tax and legal support, and these expenses have been allocated in the Statements of Revenues and Expenses as appropriate.

During the fiscal year ended January 2, 2011, and the nine-month periods ended October 2, 2011 and October 3, 2010, the Business’ financing needs were provided by J&J, and cash generated by the Business was transferred to J&J. As the Business has historically been managed as part of the operations of JPI and has not been operated as a stand-alone entity, it is not practical to prepare historical cash flow information regarding the Business’ operating, investing, and financing cash flows. As such, statements of cash flows are not presented.

3. Allocation of Certain Costs and Expenses

Certain costs and expenses presented in the special-purpose Statements of Revenues and Expenses have been allocated to the Business by certain of its affiliates based on management’s estimates of the cost of services provided to the Business and assumptions that management has deemed reasonable. Selling, marketing, general and administrative expenses include allocations of such expenses from J&J and certain of its affiliates based on a percentage of net revenue and headcount. Additionally, research and development expenses are allocated from J&J and certain of its affiliates based on a percentage of effort and headcount.

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

The special-purpose Statements of Revenues and Expenses reflect a consistent application of methodology for each reporting period presented. Allocations of J&J corporate overhead unrelated to the operations of the Business have been excluded from these special-purpose financial statements.

Due to the reliance of the Business on J&J and certain of its affiliates for the above described activities, and because products of the Business are often sold together with other unrelated products, the historical operating results of the Business may not be indicative of future results.

The costs and expenses allocated to the Business by J&J and its affiliates for the periods presented are as follows:

	Fiscal Year Ended January 2, 2011		Nine Month Period Ended October 2, 2011		Nine Month Period Ended October 3, 2010
			(unaudited)		(unaudited)
Costs of Sales	$	1,620	$	1,423	$	1,223
Selling and Marketing		6,518		4,972		4,788
General and Administrative		4,693		4,308		4,362
Research and Development		18,599		12,714		12,304
Total	$	31,430	$	23,417	$	22,677

There was no direct interest expense incurred by or allocated to the Business; therefore, no interest expense has been reflected in the special-purpose Statements of Revenues and Expenses.

The Business utilizes a centralized approach to cash management and financing of operations. The Business's cash was available for use and was regularly transferred to J&J at its discretion. Any cash required to fund the operations of the Business were obtained through J&J's centralized treasury function.

All significant intercompany accounts and transactions within the Business have been eliminated.

4. Summary of Significant Accounting Policies

Fiscal Year

The fiscal year end and nine-month periods end on the Sunday nearest to the end of the period. The January 2, 2011 fiscal year presented consists of 53 weeks. The unaudited nine-month periods ended October 2, 2011 and October 3, 2010, each consisted of 39 weeks.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out method. Market is deemed to be replacement cost to the extent it does not exceed net realizable value (the estimated selling price less any cost of completion and distribution). Inventories are adjusted for estimated obsolescence and written down to net realizable value based upon estimates of future demand.

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

Revenue Recognition

The Business recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; the price to the buyer is fixed or determined; and collectability is reasonably assured. For product related sales, revenues are recognized when title and risk of loss has been passed to the customer, which is typically upon shipment. Product revenues are recorded net of applicable reserves for estimated product returns and certain customer rebate programs and incentives. The estimates take into consideration historical experience, current contractual requirements, specific known events and trends.

Intangible Assets

Intangible assets have finite lives and are amortized over their useful lives and reviewed for impairment when warranted.

Research and Development Expense

Research and development activities represent a significant part of the business. These expenditures relate to the development of new products, improvement of existing products, technical support of products and compliance with governmental regulations for the protection of consumers and patients. Research and development expenses are expensed as incurred.

Employee Benefit Plans

J&J sponsors various retirement and pension plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. These plans are based on assumptions for the discount rate, expected return on plan assets, expected salary increases and health care cost trend rates.

Income Taxes

The operations of the Business are included in the consolidated federal income tax return of J&J, to the extent appropriate, and are included in the state and local returns of certain other affiliates of J&J. A provision for income taxes has not been presented in these special-purpose financial statements as the business has not operated as a standalone unit and no allocation of J&J’s income tax provision/benefit has historically been made to the Business.

Use of Estimates

The preparation of these special-purpose financial statements in conformity with the accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of revenues and expenses. Actual results could differ from those estimates. Also, as discussed in Note 3, the special-purpose financial statements include allocations and estimates that are not necessarily indicative of the amounts that would have resulted if the Business had been operated as a stand-alone entity.

Concentrations, Commitments and Contingent Liabilities

In each of the periods below, three customers represented 10% or more of total gross sales. The following table represents a summary of gross revenues to these customers as a percentage of total gross revenues to third parties:

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

	Fiscal  Year Ended January  2, 2011			Nine Month Period  Ended October 2, 2011			Nine Month Period  Ended October 3, 2010
				(unaudited)			(unaudited)
Customer A		38	%		38	%		38	%
Customer B		27	%		27	%		27	%
Customer C		23	%		23	%		23	%

The Business does not have any significant direct operating lease commitments. The Business receives indirect allocations of facility and other lease expenses from J&J and certain of its affiliates as described in Note 3.

From time to time, the Business is involved with product liability claims or other legal proceedings generally incidental to the Business activities. The Company does not believe there are existing matters that would have a material adverse effect on the Business.

Significant Supply Agreements

The Microsponge^TM System in combination with Tretinoin for the Retin-A Micro products is manufactured under an exclusive 1996 supply agreement with Amcol HBS (as successor to Advanced Polymer Systems, Inc.). The agreement can be terminated by either party with 12 months advanced notice. The supply agreement contains an annual price review by both parties with adjustments made on a cost justification provided by Amcol HBS. The last price adjustment was made in March 2011. There is no minimum purchase quantities under the exclusive supply agreement.

5. Property, Plant and Equipment

Property, plant and equipment (PP&E) consist of sales booths used to showcase marketed products at industry conventions. PP&E are stated at historical cost. Expenditures for maintenance and repairs are charged to expense as incurred, while the costs of significant improvements are capitalized. Depreciation expense is recorded on a straight-line basis over the estimated useful lives of the assets, which ranged from 5 to 8 years. The depreciation expense was $110,000, $66,000, and $83,000 for the fiscal year ended January 2, 2011 and unaudited nine-month periods ended October 2, 2011 and October 3, 2010, respectively.

As of January 2, 2011 and October 2, 2011, PP&E at cost and accumulated depreciation were:

	January 2,		October 2,
	2011		2011
			(unaudited)
Sales Booths	$	889	$	826
Less accumulated depreciation		586		604
Total property, plant and equipment, net	$	303	$	222

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

6. Intangible Assets

At the end of January 2, 2011 and October 2, 2011, the gross and net amounts of intangible assets were:

	January 2, 2011		October 2, 2011
			(unaudited)
Trademarks—gross	$	13,000	$	13,000
Less accumulated amortization		6,113		6,763
Trademarks—net	$	6,887	$	6,237

In 2003, the Business acquired an intangible asset related to the ERTACZO^® Cream product. The product was included as part of the sale of the Business. The amortization period for the trademark is 15 years. The amortization expense was $867,000, $650,000, and $650,000 for the fiscal year ended January 2, 2011 and unaudited nine-month periods ended October 2, 2011 and October 3, 2010, respectively.

7. Pensions and Other Benefits Plans

J&J sponsors various retirement plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees. J&J also provides postretirement benefits, primarily health care, to all U.S. retired employees and their dependents. Retirement plan benefits are primarily based on the employee’s compensation during the last three to five years before retirement and the number of years of service. J&J does not fund retiree health care benefits in advance and has the right to modify these plans in the future. Cost associated with pension and other benefit plans have been allocated to the Business using the methodologies described in Note 4. For the fiscal year ended January 2, 2011, and the unaudited nine-month periods ended October 2, 2011 and October 3, 2010, were $1,562,000, $1,541,000 and $1,172,000, respectively, are included in the statements of revenues and expenses.

8. Stock Option Plans and Stock Compensation Agreements

At January 2, 2011, the Business participated in J&J stock-based compensation plans. The special-purpose Statements of Revenues and Expenses include the expenses related to stock-based compensation of $1,439,000, $849,000 and $1,324,000 for the fiscal year ended January 2, 2011 and unaudited nine-month periods ended October 2, 2011 and October 3, 2010, respectively. The disclosures below represent the stock-based compensation disclosures applicable to the employees of the Business.

The shares outstanding are for contracts under J&J’s 2000 Stock Option Plan, the 2005 Long-Term Incentive Plan Stock Option Plans and the Alza Corporation Stock Option Plan. During 2010, no options or restricted shares were granted under any of these plans except under the 2005 Long-Term Incentive Plan.

Stock Options

Stock options expire 10 years from the date of grant and vest over service periods that range from six months to four years. All options are granted at the average of the high and low prices of J&J’s Common Stock on the New York Stock Exchange on the date of grant.

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatility represents a blended rate of 4-year daily historical average volatility rate, and a 5-week average implied volatility rate based on at-the-money traded J&J options with a life of 2 years. Historical data is used to determine the expected life of the option. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.

The average fair value of options granted was $8.03 in 2010. The fair value was estimated based on the weighted average assumptions of:

	2010			2009			2008
Risk-free rate		2.78	%		2.71	%		2.97	%
Expected volatility		17.4	%		19.5	%		15.0	%
Expected life		6.0 yrs			6.0 yrs			6.0 yrs
Dividend yield		3.30	%		3.30	%		2.90	%

A summary of option activity as of January 2, 2011 and changes during the year ending on that date is presented below:

Stock Options	Outstanding Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Shares at January 3, 2010		178,033		$	58.38	$	1,151
Options granted		1,879			62.62
Options exercised		(9,796	)		52.29
Options canceled/forfeited 1		(56,743	)		57.83
Shares at January 2, 2011		113,373		$	59.25	$	440

¹  Includes 53,443 options for employees who transferred out during 2010.

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Ortho Dermatologics

Notes to Special-Purpose Financial Statements

The following table summarizes stock options outstanding and exercisable at January 2, 2011:

	Outstanding						Exercisable
Exericse Price Range			Average Life		Average Exercise Price				Average Exercise Price
$ 41.26-$49.86		1,102		0.3	$	46.99		1,102	$	46.99
$ 50.52-$52.80		15,330		2.1		52.20		15,330		52.20
$ 53.00-$53.93		13,160		3.1		53.93		13,160		53.93
$ 54.04-$57.30		21,450		1.1		57.30		21,450		57.30
$ 57.44-$58.34		20,761		7.0		58.33		7,659		58.34
$ 58.42-$65.10		7,813		7.6		61.96		—		—
$ 65.62-$68.37		33,757		4.4		66.09		33,064		66.10
		113,373		4.0	$	59.25		91,765	$	59.10

Restricted Share Units

J&J grants restricted share units with a vesting period of three years. A summary of share activity under the plan as of January 2, 2011:

	Outstanding Shares
Shares at January 3, 2010		41,986
Shares granted		11,037
Shares issued		(7,868	)
Shares canceled/forfeited		(11,976	)
Shares at January 2, 2011		33,179

The average fair value of the restricted share units granted was $56.69 in 2010 using the fair market value at the date of grant. The fair value of restricted share units was discounted for dividends, which are not paid on the restricted share units during the vesting period. The fair value of restricted share units settled was $478,996 in 2010.

9. Subsequent Events

Subsequent events have been evaluated through January 17, 2012, the date the financial statements were issued. There are no additional subsequent events which have not been disclosed in these financial statements.

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EX-99.2

Exhibit 99.2

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. AND

ORTHO DERMATOLOGICS DIVISION OF JANSSEN PHARMACEUTICALS, INC

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS

The unaudited pro forma condensed combined statements of income for the fiscal year ended December 31, 2010 and for the nine months ended September 30, 2011 combine the historical consolidated statements of income of Valeant Pharmaceuticals International, Inc. (“Valeant”) and the special-purpose financial statements of Ortho Dermatologics division of Janssen Pharmaceuticals, Inc (“Ortho”), as if the acquisition had occurred on January 1, 2010. The unaudited pro forma condensed combined statements of income for the fiscal year ended December 31, 2010 also combine the historical consolidated statements of income of Biovail Corporation (“Biovail”, subsequently renamed Valeant Pharmaceuticals International, Inc.) and Valeant Pharmaceuticals International (“Old Valeant”), giving effect to the acquisition of Old Valeant by Biovail (the “Merger”), as more fully described in Valeant’s Annual Report on Form 10-K for the year ended December 31, 2010, which took place on September 28, 2010, as if it had occurred on January 1, 2010.

The unaudited pro forma condensed combined balance sheet as of September 30, 2011 combines the historical consolidated balance sheet of Valeant and the unaudited special-purpose statement of assets to be sold of Ortho, giving effect to the acquisition as if it had occurred on September 30, 2011.

The historical consolidated financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) with respect to the statements of income, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial information was based on the:

• separate audited consolidated financial statements of Valeant as of and for the year ended December 31, 2010 and the related notes included in Valeant’s Annual Report on Form 10-K for the year ended December 31, 2010;

• separate unaudited statement of income of Old Valeant for the period from January 1, 2010 to September 27, 2010, which combines the unaudited consolidated statement of operations for the six months ended June 30, 2010, which was included in Old Valeant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and the unaudited consolidated statement of operations for the period from July 1, 2010 to September 27, 2010;

• separate audited special-purpose financial statements of Ortho as of and for the year ended January 2, 2011 and the related notes for the year then ended included herein;

• separate unaudited consolidated financial statements of Valeant as of and for the nine months ended September 30, 2011 and the related notes included in Valeant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011; and

• separate unaudited special-purpose financial statements of Ortho as of and for the nine months ended October 2, 2011 and the related notes included herein.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only. The pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the acquisitions been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined

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company. There were no material transactions between Valeant and Ortho, between Old Valeant and Ortho or between Biovail and Old Valeant during the periods presented in the unaudited pro forma condensed combined financial statements that would need to be eliminated.

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting under U.S. GAAP. The accounting for the acquisition of Ortho is dependent upon certain valuations that are provisional and is subject to change. Valeant will finalize these amounts as it obtains the information necessary to complete the measurement process. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and Valeant’s future results of operations and financial position.

The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition, the costs to integrate the operations of Valeant and Ortho or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

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UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF INCOME

For the year ended December 31, 2010

	Valeant			Old Valeant (Jan 1 - Sep 27)			Pro forma adjustments (Note 6)			Valeant Pro forma			Ortho		Pro forma adjustments (Note 7)			Pro forma combined
	(All dollar amounts expressed in thousands of U.S. dollars except per share data)
Revenue
Product sales	$	1,133,371		$	634,550					$	1,767,921		$	147,097				$	1,915,018
Alliance and royalty		35,109			98,888						133,997								133,997
Service and other		12,757			13,359						26,116								26,116
		1,181,237			746,797						1,928,034			147,097					2,075,131
Expenses
Cost of goods sold (exclusive of amortization of intangible assets shown below)		395,595			185,334			(52,450	) (b),(g),(i)		528,479			20,358		(867	) (A)		547,970
Cost of alliance and service revenues		10,155			9,410						19,565								19,565
Selling, general and administrative		276,546			229,908			19,927	(b),(g)		526,381			46,004					572,385
Research and development		68,311			37,270			440	(b),(g)		106,021			18,599					124,620
Amortization of intangible assets		219,758			67,641			109,972	(a)		397,371					39,081	(A),(B)		436,452
Restructuring and integration costs		140,840			31,878			(162,722	) (h)		9,996								9,996
Acquired in-process research and development		89,245			—						89,245								89,245
Acquisition-related costs		38,262			75,718			(109,550	) (h)		4,430								4,430
Legal settlements		52,610			1,550						54,160								54,160
		1,291,322			638,709			(194,383	)		1,735,648			84,961		38,214			1,858,823
Operating income (loss)		(110,085	)		108,088			194,383			192,386			62,136		(38,214	)		216,308
Interest income		1,294			1,162						2,456								2,456
Interest expense		(84,307	)		(54,614	)		(84,870	) (c)		(223,791	)				(10,458	) (D)		(234,249	)
Write-down of deferred financing costs		(5,774	)		—			5,774	(d)		—								—
Foreign exchange and other		574			(3,253	)					(2,679	)							(2,679	)
Loss on extinguishment of debt		(32,413	)		(205,591	)		205,591	(e)		(32,413	)							(32,413	)
Gain (loss) on investments, net		(5,552	)		—						(5,552	)							(5,552	)
Income (loss) from continuing operations before recovery of income taxes		(236,263	)		(154,208	)		320,878			(69,593	)		62,136		(48,672	)		(56,129	)
(Recovery of) provision for income taxes		(28,070	)		(46,059	)		70,567	(f)		(3,562	)				957	(C)		(2,605	)
Income (loss) from continuing operations		(208,193	)		(108,149	)		250,311			(66,031	)		62,136		(49,629	)		(53,524	)
Less: income from continuing operations attributable to non-controlling interest					3						3								3
Income (loss) from continuing operations attributable to controlling interest	$	(208,193	)	$	(108,152	)	$	250,311		$	(66,034	)	$	62,136	$	(49,629	)	$	(53,527	)
Loss from continuing operations attributable to controlling interest per share - basic	$	(1.06	)							$	(0.22	)						$	(0.18	)
Loss from continuing operations attributable to controlling interest per share - diluted	$	(1.06	)							$	(0.22	)						$	(0.18	)
Weighted-average common shares
Basic		195,808									299,984								299,984
Diluted		195,808									299,984								299,984

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Notes 6. Pro Forma Adjustments in connection with the Biovail-Valeant Merger and 7. Pro Forma Adjustments in connection with the Acquisition of Ortho.

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UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF INCOME

For the nine months ended September 30, 2011

	Valeant			Pro forma adjustments (Note 6)			Valeant Pro forma			Ortho		Pro forma adjustments (Note 7)			Pro forma combined
	(All dollar amounts expressed in thousands of U.S. dollars except per share data)
Revenue
Product sales	$	1,600,879					$	1,600,879		$	104,999				$	1,705,878
Alliance and royalty		146,873						146,873								146,873
Service and other		27,245						27,245								27,245
		1,774,997						1,774,997			104,999					1,879,996
Expenses
Cost of goods sold (exclusive of amortization of intangible assets shown below)		501,767			(27,269	) (i)		474,498			15,444		(650	) (A)		489,292
Cost of alliance and service revenues		40,418						40,418								40,418
Selling, general and administrative		423,964						423,964			34,513					458,477
Research and development		48,910						48,910			12,714					61,624
Amortization of intangible assets		365,016						365,016					29,311	(A), (B)		394,327
Restructuring and integration costs		61,039						61,039								61,039
Acquired in-process research and development		4,000						4,000								4,000
Acquisition-related costs		12,874						12,874					(1,479	) (E)		11,395
Legal settlements		2,400						2,400								2,400
Acquisition-related contingent consideration		9,042						9,042								9,042
		1,469,430			(27,269	)		1,442,161			62,671		27,182			1,532,014
Operating income		305,567			27,269			332,836			42,328		(27,182	)		347,982
Interest income		2,941						2,941								2,941
Interest expense		(239,328	)					(239,328	)				(7,844	) (D)		(247,172	)
Loss on extinguishment of debt		(33,325	)					(33,325	)							(33,325	)
Foreign exchange and other		64						64								64
Gain (loss) on investments, net		22,787						22,787								22,787
Income before recovery of income taxes		58,706			27,269			85,975			42,328		(35,026	)		93,277
(Recovery of) provision for income taxes		(44,998	)		10,362	(f)		(34,636	)				547	(C)		(34,089	)
Net income	$	103,704		$	16,907		$	120,611		$	42,328	$	(35,573	)	$	127,366
Basic earnings per share	$	0.34					$	0.40							$	0.42
Diluted earnings per share	$	0.32					$	0.37							$	0.39
Weighted-average common shares
Basic		303,285						303,285								303,285
Diluted		329,010						329,010								329,010

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Notes 6. Pro Forma Adjustments in connection with the Biovail-Valeant Merger and 7. Pro Forma Adjustments in connection with the Acquisition of Ortho.

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UNAUDITED PRO FORMA CONDENSED COMBINED

BALANCE SHEET

As of September 30, 2011

	Valeant			Ortho		Pro forma adjustments (Note 7)			Pro forma combined
	(All dollar amounts expressed in thousands of U.S. dollars)
Assets
Current
Cash and cash equivalents	$	254,559		$	—	$	(26,385	) (L), (M)	$	228,174
Marketable securities		2,967			—		—			2,967
Accounts receivable, net		450,379			—		—			450,379
Inventories, net		259,648			2,183		3,986	(F)		265,817
Prepaid expenses and other current assets		32,855			—		—			32,855
Assets held for sale		3,644			—		—			3,644
Income taxes receivable		17,528			—		—			17,528
Deferred tax assets, net		77,529			—		—			77,529
		1,099,109			2,183		(22,399	)		1,078,893
Property, plant and equipment, net		355,663			222		(16	) (H)		355,869
Intangible assets, net		6,832,698			6,237		331,680	(G)		7,170,615
Goodwill		3,379,137			—		3,507	(I)		3,382,644
Deferred tax assets, net		93,637			—		—			93,637
Other long-term assets, net		58,117			—		—			58,117
Total assets	$	11,818,361		$	8,642	$	312,772		$	12,139,775
Liabilities
Current
Accounts payable	$	148,777		$	—	$	—		$	148,777
Accrued liabilities		468,241			—		—			468,241
Acquisition-related contingent consideration		145,611			—		—			145,611
Income taxes payable		41,639			—		—			41,639
Deferred revenue		14,747			—		—			14,747
Current portion of long-term debt		38,943			—		—			38,943
Liabilities for uncertain tax positions		646			—		—			646
Deferred tax liabilities, net		4,063			—		—			4,063
		862,667			—		—			862,667
Deferred revenue		41,409			—		—			41,409
Acquisition-related contingent consideration		278,706			—		—			278,706
Long-term debt		5,187,968			—		323,535	(K)		5,511,503
Liabilities for uncertain tax positions		103,208			—		—			103,208
Other long-term liabilities		1,177,905			—		—			1,177,905
Deferred tax liabilities, net		152,399			—		1,690	(J)		154,089
Total liabilities		7,804,262			—		325,225			8,129,487
Shareholders’ equity
Common shares		5,981,493			—		—			5,981,493
Additional paid-in capital		275,277			—		—			275,277
Accumulated deficit		(2,056,402	)		—		(3,811	) (M)		(2,060,213	)
Accumulated other comprehensive income		(186,269	)		—		—			(186,269	)
Total shareholders’ equity		4,014,099			—		(3,811	)		4,010,288
Total liabilities and shareholders’ equity	$	11,818,361		$	—	$	321,414		$	12,139,775

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 7. Pro Forma Adjustments in connection with the Acquisition of Ortho.

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED

COMBINED FINANCIAL STATEMENTS

1. Description of Transaction

On July 15, 2011, Valeant entered into an agreement to acquire the assets of the Ortho Dermatologics division of Janssen Pharmaceuticals, Inc. for a total consideration of $346.1 million for the assets, which includes prescription brands RETIN-A MICRO^®, ERTACZO^®, and RENOVA^®. The transaction closed on December 12, 2011.

2. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, and uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements, and was based on the historical financial statements of Valeant and the historical special-purpose financial statements of Ortho. Those special-purpose financial statements only present the assets being sold as part of the acquisition of Ortho by Valeant and the revenues and expenses of Ortho, including certain allocated expenses of Janssen Pharmaceuticals Inc.

Certain reclassifications have been made to the historical financial statements of Old Valeant and historical special-purpose financial statements of Ortho to conform to the financial statement presentation adopted by Valeant. The adjustments made to the historical financial statements of Old Valeant primarily relate to the presentation of alliance and royalty revenue, service and other revenue, in-process research and development charges, restructuring charges, acquisition-related costs, and accrued liabilities for uncertain taxes. The adjustments made to the historical special-purpose financial statements of Ortho relate to the presentation of amortization expense.

Under the acquisition method of accounting, the assets acquired of Ortho and the related deferred taxes have been recorded as of the completion of the acquisition, primarily at their respective fair values and added to those of Valeant. Financial statements and reported results of operations of Valeant issued after completion of the acquisition will reflect these values, but will not be retroactively restated to reflect the historical financial position or results of operations of Ortho.

Under ASC 805, acquisition-related transaction costs (i.e., advisory, legal, valuation, other professional fees) and certain acquisition-related restructuring charges are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. Total acquisition-related transaction costs incurred in connection with the Biovail-Valeant Merger was $109.6 million. Total acquisition-related transaction costs expected to be incurred by Valeant in connection with the acquisition of Ortho are estimated to be approximately $5.3 million, of which $1.5 million had been incurred in the nine months ended September 30, 2011. The remaining estimated transaction costs are reflected in these unaudited pro forma condensed combined balance sheet as of September 30, 2011 as a reduction to cash and cash equivalents and an increase to accumulated deficit.

3. Accounting Policies

Valeant completed a review of Ortho’s accounting policies and did not identify any differences that would have a material impact on the combined financial statements. The unaudited pro forma condensed combined financial statements do not assume any differences in accounting policies.

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4. Fair Value of Consideration Transferred

Pursuant to the terms of the Asset Purchase Agreement, Valeant acquired the assets of the Ortho for cash consideration of $346.1 million. The purchase price is subject to a closing inventory adjustment, which will be finalized within ninety days after the closing date. Purchase price adjustments recorded subsequent to this date will affect the recorded amount of goodwill.

The following table summarizes the consideration paid for the acquisition of Ortho, including an estimate of the inventory adjustment. The purchase price set out below is preliminary and subject to change as final information becomes available:

(In thousands)
Initial purchase price	$	345,000
Closing inventory adjustment		1,109
Cash consideration transferred	$	346,109

5. Assets Acquired and the Related Deferred Taxes

The following table summarizes the estimated fair values of the assets acquired by Valeant and the related deferred taxes in the connection with the acquisition of Ortho as of the acquisition date. These amounts are provisional and subject to change.

(In thousands)
Inventories (a)	$	6,169
Identifiable intangible assets (b)		337,917
Property, plant and equipment		206
Deferred income taxes, net (c)		(1,690	)
Total identifiable net assets acquired	$	342,602
Goodwill (d)		3,507
Net assets acquired	$	346,109

(a) A preliminary fair value of $6.2 million has been allocated to inventory acquired. Valeant’s assumptions as to the fair value of Ortho’s inventory may change as it conducts, with the assistance of a third party appraiser, a valuation of Ortho’s inventory. Valeant’s pro forma fair value adjustment to inventory is based on Ortho’s inventory at the acquisition date, adjusted as follows based on Valeant management’s estimates using the following valuation methods:

i. Finished goods at estimated selling prices less the sum of costs of disposal and a reasonable profit allowance for the selling effort of a market participant;

ii. Work in process at estimated selling prices of finished goods less the sum of costs to complete, costs of disposal, and a reasonable profit allowance for the completing and selling effort of a market participant based on profit for similar finished goods; and

iii. Raw materials at current replacement costs.

(b) A preliminary fair value estimate of $337.9 million has been allocated to intangible assets acquired, primarily consisting of product brands and in-process research and development (“IPR&D”). Amortization related to the fair value of amortizable intangible assets, taken over a weighted average life of 9 years for product brands is reflected as pro forma adjustments to the unaudited pro forma combined condensed statements of income.

A key variable in determining the fair value of IPR&D includes the application of probability

7

factors related to the likelihood of success of the respective products reaching each remaining stage of clinical and regulatory development, including market commercialization. Given the preliminary stage of development of the product candidates at the acquisition date, future cash flows were not estimated and the fair value of IPR&D has been determined on the basis of a cost approach. Using the cost approach, the fair value was based on the development activities and related expenditures incurred since inception of the IPR&D program.

(In thousands)	Estimated Fair Value		Average Estimated Useful Life
Product brands	$	333,599		9 years
IPR&D – indefinite-lived *		4,318		N/A
Total	$	337,917

* Acquired IPR&D assets are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the acquisition date, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing. Upon successful completion of the development process for an acquired IPR&D project, a determination as to the useful life of the asset will be made; at that point in time, the asset would then be considered a finite-lived intangible asset and amortization of the asset into earnings would commence. If an IPR&D project were not successfully developed, an impairment charge would result.

(c) Represents the estimated deferred income tax liability, based on an estimated income tax rate of 1%, multiplied by the deductible portion of the intangible assets arising from the acquisition of Ortho. The acquisition of Ortho is treated as an asset acquisition for tax purposes and there is no difference between the accounting and tax bases for the assets acquired except for intangible assets. The intangible assets were primarily acquired by Valeant’s operating subsidiary in Barbados, which is subject to a low effective tax rate. The pro forma adjustment to record the effect of deferred taxes was computed as follows:

(In thousands)
Estimated fair value adjustment of identifiable intangible assets acquired	$	337,917
Less: non-deductible portion under the respective tax laws		(168,958	)
Deductible portion of fair value adjustment of identifiable intangible assets acquired		168,959
Deferred income tax associated with the identifiable intangible assets acquired at 1% tax rate	$	1,690

(d) Goodwill is calculated as the difference between the acquisition date fair value of the consideration expected to be transferred and the preliminary fair values assigned to the assets acquired and the related deferred taxes. Goodwill is not amortized and is not deductible for tax purposes.

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6. Pro Forma Adjustments in connection with the Biovail-Valeant Merger

This note summarizes the pro forma adjustments in connection with the Biovail-Valeant Merger to give effect to the Merger as if it had occurred on January 1, 2010:

(a) To record amortization expense as follows:

(In thousands)	Year Ended December 31, 2010
Eliminate Old Valeant’s historical intangible asset amortization expense	$	(67,641	)
Estimated amortization expense of acquired finite lived intangible assets
Product brands (estimated to be $2,923,910 over weighted average useful life of 16 years)		171,814
Corporate brands (estimated to be $168,700 over weighted average useful life of 20 years)		8,435
Product rights (estimated to be $308,021 over weighted average useful life of 9 years)		43,591
Out-licensed technology and other (estimated to be $218,740 over weighted average useful life of 7 years)		39,736
Reverse post-Merger amortization expense of acquired finite lived intangible assets recognized by Valeant		(85,963	)
Total	$	109,972

Amortization expense related to intangible assets that arose from business combinations completed by Old Valeant in the second quarter of 2010 has been included in the unaudited pro forma condensed consolidated statement of income as if Biovail had acquired those intangible assets as of the date on which each respective business combination was consummated.

(b) To record depreciation expense related to property, plant and equipment fair value increments, as follows:

(In thousands)	Year Ended December 31, 2010
Estimated depreciation expense for fair value increments:
Buildings (estimated to be $(4,567) over remaining useful life of 30 years)	$	(152	)
Machinery and equipment, automobiles (estimated to be $12,453 over remaining useful life of 7 years)		1,779
Furniture and fixtures (estimated to be $(3,760) over remaining useful life of 7 years)		(537	)
Reverse post-Merger depreciation expense for the fair value increments recognized by Valeant		(272	)
Total	$	818

Depreciation expense relating to property, plant and equipment fair value increments has been allocated to cost of goods sold, research and development, and selling, general and administrative in the following percentages: 50%, 4%, 46%, respectively, which is consistent with Old Valeant’s historical allocation.

(c) To record the following debt related adjustments:

(In thousands)	Year Ended December 31, 2010
Eliminate interest expense recorded by Old Valeant related to debt that was refinanced in connection with the Biovail-Valeant Merger(a)	$	(39,317	)
Amortization of the fair value adjustment to Old Valeant’s 4% convertible subordinated notes(b)		(1,600	)
Additional interest expense related to the new debt in connection with the Biovail-Valeant Merger(c)		175,220

9

Eliminate amortization of deferred financing costs recorded by Biovail related to the senior secured revolving credit facility(d)		(1,627	)
Reverse interest expense related to the new debt in connection with the Merger recognized by Valeant in the post-Merger period		(47,806	)
Total	$	84,870

(a) Interest expense, including amortization of original issue discount and underwriter fees, on Old Valeant 8.375% and 7.625% senior unsecured notes and senior secured term loan, is eliminated as these notes and term loan were repaid as part of the Merger transaction.

(b) Fair value adjustment to existing Old Valeant debt will be amortized to net earnings of Valeant using the effective interest method. The effective interest rate is 4.62%.

(c) Old Valeant, in connection with the Merger, secured financing of $125 million under a senior secured revolving credit facility, $1.0 billion under a senior secured term loan A facility (the “Term Loan A Facility”), and $1.625 billion under a senior secured term loan B facility (the “Term Loan B Facility”). Old Valeant borrowed an aggregate of $2.5 billion under the Term Loan A and Term Loan B Facilities and used a portion of the proceeds to undertake the following transactions prior to the Merger:

• fund the payment of the special dividend of $16.77 per share of Old Valeant common stock to Old Valeant stockholders of record;

• fund the legal defeasance of Old Valeant’s existing 8.375% and 7.625% senior unsecured notes, by depositing with the trustee amounts sufficient to pay 100% of the outstanding aggregate principal amount of the notes, plus applicable premium and accrued and unpaid interest, on October 27, 2010; and

• fund the repayment in full of indebtedness under Old Valeant’s existing senior unsecured term loan.

Concurrent with the closing of the Merger, Old Valeant issued $500.0 million aggregate principal amount of 6.75% senior notes due October 1, 2017 (the “6.75% Senior Notes”) and $700.0 million aggregate principal amount of 7.00% senior notes due October 1, 2020 (the “7.00% Senior Notes”). A portion of the 6.75% Senior Notes and the 7.00% Senior Notes was used to pay down $1.0 billion of the Term B Loan Facility. The effective interest rates for the 6.75% Senior Notes and the 7.00% Senior Notes are 6.84% and 7.09%, respectively.

Effective November 29, 2010, Valeant terminated and prepaid the remaining balance of the Term Loan B Facility with the net proceeds from the issuance of the 2018 Senior Notes. The 2018 Senior Notes has aggregate principal amount of $1.0 billion and bears interest at a rate of 6.875%. The effective interest rate for the 2018 Senior Notes is 7.00%.

In addition, effective March 8, 2011, Valeant terminated and prepaid the Term Loan A Facility in full with the net proceeds from the issuance of the 2016 Senior Notes and the 2022 Senior Notes. The 2016 Senior Notes has aggregate principal amount of $950 million and bears interest at a rate of 6.5% whereas the 2022 Senior Notes has aggregate principal amount of $550 million and bears interest at a rate of 7.25%. The effective interest rates for the 2016 Senior and the 2022 Senior Notes are 6.50% and 7.50%, respectively.

The pro forma adjustment above reflects the effect of the refinancing transactions described above.

(d) Amortization of deferred financing costs related to Biovail’s senior secured revolving credit facility is eliminated as this facility has been terminated in connection with the Merger.

(d) To eliminate the write-off of deferred financing costs related to Biovail’s senior secured revolving credit facility, which was terminated in connection with the Merger, as they do not have a continuing impact on Valeant’s financial results.

(e) To eliminate the loss on extinguishment of debt related to Old Valeant’s debt that was repaid in connection with the Merger.

(f) To record an estimate of the deferred income tax impacts of the acquisition on the balance sheet and income statement, primarily related to the additional expense on incremental debt to finance the acquisition, estimated fair value adjustments for inventory, property, plant and equipment and intangibles and reversal of acquisition-related transaction costs (see note 6(a), (b), (c), (d), (e), (g), (h),

10

(i)). A combined U.S. Federal and state estimated tax rate of 38% has been used in accordance with Valeant’s intention to repatriate to the U.S. the earnings of non-U.S. subsidiaries which are owed by the U.S. corporation. The effective tax rate of Valeant could be significantly different than the tax rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors, including post-acquisition activities. Valeant has assumed that the remaining net deferred tax assets will be utilized based on reversing temporary differences, expected future income and, if necessary, available tax-planning strategies relating to the timing of the repatriation of foreign earnings which are not permanently reinvested.

(g) To adjust share-based compensation expense related to unvested stock options and restricted stock units (RSUs) issued by Valeant to replace Old Valeant stock options and RSUs:

(In thousands)	Year Ended December 31, 2010
Eliminate Old Valeant’s historical share-based compensation expense	$	(18,886	)
Estimated share-based compensation relating to the Valeant stock options and RSUs issued to replace the unvested Old Valeant stock options and RSUs		80,798
Reverse share-based compensation in connection with the replacement options and RSUs recognized by Valeant subsequent to the Merger		(41,547	)
Total	$	20,365

The share-based compensation adjustment has been allocated to the cost of goods sold, research and development, and selling, general and administrative in the following percentages: 2%, 2%, 96%, respectively, which is consistent with Old Valeant’s historical allocation.

(h) To eliminate acquisition-related transaction costs and restructuring charges incurred by Valeant and Old Valeant in connection with the Merger as they do not have a continuing impact on Valeant’s financial results.

(i) Valeant’s cost of sales for the year ended December 31, 2010 includes the fair value adjustment related to inventory acquired as part of the Biovail-Valeant Merger. Given the sale of the acquired inventory is expected to occur within the first year subsequent to the Merger, there is no continuing impact of the acquired inventory adjustment on Valeant’s operating results, and as such, the inventory fair value adjustment recognized for the year ended December 31, 2010 and for the nine months ended September 30, 2011 has been reversed for purposes of the unaudited pro forma condensed combined statement of income.

7. Pro Forma Adjustments in connection with the Acquisition of Ortho

This note should be read in conjunction with Note 1. Description of Transaction; Note 2. Basis of Presentation; Note 4. Fair Value of Consideration Transferred; and Note 5. Assets Acquired and the Related Deferred Taxes. The following summarizes the pro forma adjustments in connection with the acquisition of Ortho to give effect to the acquisition as if it had occurred on January 1, 2010 for purposes of the pro forma condensed combined statements of income and on September 30, 2011 for purposes of the pro forma condensed combined balance sheet:

(A) To reclassify amortization expense from cost of goods sold to conform to Valeant’s financial statement presentation.

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(B) To record an estimate of intangible asset amortization as follows:

(In thousands)	Year Ended December 31, 2010			Nine Months Ended September 30, 2011
Reclassification of amortization expense to conform to Valeant presentation	$	867		$	650
Eliminate Ortho’s historical intangible asset amortization expense		(867	)		(650	)
Estimated amortization expense of acquired finite-lived intangibles:
Product brands (estimated to be $333,599 over weighted average of 9 years)		39,081			29,311
Total	$	39,081		$	29,311

(C) To record an additional provision for income taxes on the operating results of Ortho at the estimated effective tax rate of 4%. Ortho was not a standalone tax paying entity prior to the acquisition and therefore, the adjustment reflects the incremental taxes Valeant would have incurred on the pre-tax income of Ortho, net of the pro forma adjustments. No tax effect is recorded on the allocation of interest expense (see Note (D)) due to the cumulative tax losses incurred by Valeant do not the support the recognition of such tax benefits.

(D) To record an allocation of the interest expense on the $2 billion senior secured credit facilities obtained by Valeant on October 20, 2011, of which a portion of the proceeds was used to fund the acquisition of Ortho.

The senior secured credit facilities consist of a $275 million revolving credit facility, including a sublimit for the issuance of standby and commercial letters of credit and a sublimit for swing line loans (the “Revolving Credit Facility”), and a $1.725 billion senior secured term loan A facility (the “Term Loan A Facility”), which includes a $500 million delayed draw term loan facility (the “Delayed Draw Facility” and, together with the Revolving Credit Facility and the Term Loan A Facility, the “Senior Secured Credit Facilities”). The Revolving Credit Facility matures on April 20, 2016 and does not amortize. The Term Loan A Facility matures on April 20, 2016 and amortizes quarterly commencing March 31, 2012 at an initial annual rate of 5.0%. The amortization schedule under the Term Loan A Facility will increase to 10.0% annually commencing March 31, 2013 and 20% annually commencing March 31, 2014, payable in quarterly installments.

Borrowings under the Senior Secured Credit Facilities bear interest at a rate per annum equal to, at Valeant’s option, either (a) a base rate determined by reference to the higher of (1) the rate of interest quoted in the print edition of The Wall Street Journal, Money Rates Section, as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty largest banks) and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBO rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus an applicable margin. The initial applicable margin for borrowings under the senior secured credit facilities is 1.75% with respect to base rate borrowings and 2.75% with respect to LIBO rate borrowings. Interest rates are subject to increase or decrease quarterly based on leverage ratios.

The effective interest rate for the Senior Secured Credit Facilities is 3.3%. A 100 basis-point change in interest rate could increase or decrease interest expense for the year ended December 31, 2010 and for the nine months ended September 30, 2011 by $3.2 million and $2.4 million, respectively.

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(E) To eliminate acquisition-related transaction costs incurred by Valeant in connection with the acquisition of Ortho for the nine months ended September 30, 2011 as they do not have a continuing impact on Valeant’s financial results.

(F) To adjust acquired inventory to an estimate of fair value. Subsequent to the acquisition, Valeant’s cost of sales will reflect the increased valuation of Ortho’s inventory as the acquired inventory is sold which is expected to occur within the first year post-acquisition. There is no continuing impact of the acquired inventory adjustment on the combined operating results, and as such, it is not included in the unaudited pro forma condensed combined statement of income.

(G) To adjust intangible assets (including IPR&D intangibles) to an estimate of fair value, as follows:

(In thousands)
Eliminate Ortho’s historical intangible assets	$	(6,237	)
Estimated fair value of intangible assets acquired		337,917
Total	$	331,680

(H) To adjust property, plant and equipment to an estimate of fair value.

(I) To record goodwill arising from the acquisition.

(J) To record an estimate of deferred tax liabilities on assets acquired.

(K) To record a portion of the $2 billion Senior Secured Credit Facilities obtained by Valeant on October 21, 2011 that was used to fund the acquisition of Ortho.

(L) To record the cash impact of the acquisition of Ortho, including financing and transaction costs, as follows:

(In thousands)
Cash consideration transferred	$	(346,109	)
Proceeds from senior secured credit facilities (see Note (K))		323,535
Acquisition-related transaction costs (see Note (M))		(3,811	)
Total	$	(26,385	)

(M) To record acquisition-related costs incurred in connection with the acquisition of Ortho that has not been reflected in the historical financial statements of Valeant. The amount is recorded as a reduction to cash and cash equivalents and an increase to accumulated deficit.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

These unaudited pro forma condensed combined financial statements may be deemed to be forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the words “believe,” “expect,” “anticipate,” “intend,” “estimate” and similar expressions. Such statements may include, but are not limited to, statements about the benefits of the acquisition between Valeant and

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Ortho, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. These forward-looking statements are based largely on management’s expectations and are subject to a number of risks and uncertainties. Actual results could differ materially from these forward-looking statements. Neither Valeant nor Ortho undertake any obligation to update publicly or revise any forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the possibility that the expected synergies from the acquisition of Valeant and Ortho will not be realized within the expected time period, due to, among other things, the impact of pharmaceutical industry regulation and pending legislation that could affect the pharmaceutical industry; the risk that the businesses will not be integrated successfully; disruption from the acquisition making it more difficult to maintain business and operational relationships; the possibility that the acquisition does not close, including, but not limited to, due to the failure to satisfy the closing conditions; Valeant’s and Ortho’s ability to accurately predict future market conditions; dependence on the effectiveness of Valeant’s and Ortho’s patents and other protections for innovative products; the risk of new and changing regulation and health policies in the U.S. and internationally and the exposure to litigation and/or regulatory actions. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Valeant’s 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2011, (http://www.sec.gov).

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