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`http://ir.valeant.com/news-releases/2016/03-21-2016-125936508?ncid=tx...
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`Initiates Search for New CEO; J. Michael Pearson to Remain as CEO Until Successor is
`Named
`
`William A. Ackman Joins Board of Directors; Katharine B. Stevenson Steps Down from
`Board
`
`Ad Hoc Committee Review of Accounting and Financial Reporting Matters Nearing
`Completion
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`Valeant Plans Restatement Based on Previously Announced Misstatements
`
`Valeant Explains Circumstances that Resulted in Delay in the Filing of 10-K
`
`LAVAL, Quebec, March 21, 2016 /PRNewswire/ -- Valeant Pharmaceuticals International, Inc.
`(NYSE: VRX) (TSX: VRX) today announced that it has initiated a search for a new chief executive
`officer, appointed William A. Ackman to its board of directors, and provided an update on certain
`accounting and financial reporting matters.
`
`CEO Search
`
`Valeant today announced that the board has initiated a search to identify a candidate to succeed
`J. Michael Pearson as chief executive officer. Mr. Pearson will continue to serve as CEO and a
`director until his replacement is appointed.
`
`Robert Ingram, chairman of the board, stated, "While the past few months have been difficult,
`Valeant has a collection of leading brands, valuable franchises and great people, and I am
`confident that the company will be able to rebuild its reputation and thrive under new leadership.
`We thank Mike for his dedicated service to Valeant and for agreeing to stay on until we conclude
`our search. As a colleague and a friend he will be missed, and we wish him the best for the
`future."
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`ACRUX DDS PTY LTD. et al.
`
`EXHIBIT 1556
`
`IPR Petition for
`
`U.S. Patent No. 7,214,506
`
`
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`"It's been a privilege to lead Valeant for the past eight years," said J. Michael Pearson, chief
`executive officer. "While I regret the controversies that have adversely impacted our business
`over the past several months, I know that Valeant is a strong and resilient company, and I am
`committed to doing everything I can to ensure a smooth transition to new leadership."
`
`Changes to Board of Directors
`
`Valeant today announced that William A. Ackman, CEO of Pershing Square Capital Management,
`L.P., will join its board of directors, effective immediately. Mr. Ackman, whose firm has a 9.0%
`stake in Valeant, will join Pershing Square's Vice Chairman, Stephen Fraidin, on the board. As
`the maximum size of Valeant's board currently is fixed at 14 directors, Katharine B. Stevenson
`voluntarily resigned from the Board to create a vacancy to permit Mr. Ackman's appointment.
`The Board requested that former chief financial officer Howard Schiller tender his resignation as
`a director, but Mr. Schiller has not done so.
`
`Robert Ingram, chairman of the board said, "We look forward to Bill Ackman's perspective and
`contributions as a new member of our board and one of Valeant's largest shareholders. The
`Board thanks our valued colleague, Kate, for her service on our Board and for voluntarily offering
`to step down in order to allow Bill Ackman to join the Board."
`
`William A. Ackman, CEO of Pershing Square, said, "I am looking forward to working with the
`board to identify new leadership for Valeant. The company's large scale and dominant franchises
`in eye care, dermatology, GI, and other therapeutic areas coupled with its extraordinarily low
`valuation present a spectacular opportunity for a world-class health care executive. On behalf of
`all shareholders, we are extremely appreciative of Valeant employees' hard work and
`commitment during this challenging time for the company."
`
`Accounting and Financial Reporting Update
`
`As previously disclosed, on February 22, 2016, based on the work of an ad hoc committee of the
`Board (the "Ad Hoc Committee") established to review allegations regarding the company's
`relationship with Philidor and related matters, as well as additional work and analysis by the
`company, the company preliminarily determined that approximately $58 million in net revenue
`relating to sales to Philidor in the second half of 2014 should not have been recognized upon
`delivery of product to Philidor.
`
`Management of the company, the Audit and Risk Committee (the "Committee") and the Board
`have concluded that the company's audited financial statements for the year ended, and
`unaudited financial statements for the quarter ended, December 31, 2014 included in the
`company's Annual Report on Form 10-K and the unaudited financial statements included in the
`company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 should no
`longer be relied upon due to the misstatements described in the company's Form 8-K filed today.
`In addition, due to the fact that the first quarter 2015 results are included within the financial
`results for the six-month period included in the Quarterly Report on Form 10-Q for the period
`ended June 30, 2015 and the financial results for the nine-month period included in the Quarterly
`Report on Form 10-Q for the period ended September 30, 2015, management, the Committee
`and the Board have concluded that the financial statements for such six-month and nine-month
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`periods reflected in those Quarterly Reports should no longer be relied upon.
`
`The company is in the process of restating the affected financial statements and the restated
`financial statements will be included in the company's Annual Report on Form 10-K for the year
`ended December 31, 2015, which the company intends to file with the Securities and Exchange
`Commission and the Canadian Securities Regulators on or before April 29, 2016. The company
`believes that after giving effect to the restatement, it will have remained in compliance with all of
`the financial maintenance covenants in its credit facility at the end of each affected quarterly
`period.
`
`Robert Ingram, chairman of the board and chair of the Ad Hoc Committee stated, "Over the past
`five months, the Ad Hoc Committee has worked closely with our independent advisors to conduct
`a comprehensive review of Philidor and related matters. While the Ad Hoc Committee is still
`reviewing certain accounting related items, and has identified certain concerns related to those
`items with respect to the tone of the organization, it has not identified any additional items
`affecting the financial statements to date."
`
`Impact of Misstatements
`
`As described in the company's Form 8-K filed today, the company has identified misstatements
`to date that would reduce previously reported fiscal year 2014 revenue by approximately $58
`million, net income attributable to Valeant by approximately $33 million, and basic and diluted
`earnings per share by $.09. A substantial part of the earnings impact of these misstatements will
`reverse in the first quarter of 2015. The company has identified misstatements in the first
`quarter of 2015, consisting primarily of the reversing effect on earnings of the 2014
`misstatements, which would reduce revenue by approximately $21 million (timing of recognition
`of managed care rebates), increase net income attributable to Valeant by approximately $24
`million and increase basic and diluted earnings per share by $.07. These adjustments are
`preliminary, unaudited and subject to change.
`
`We refer you to the company's Form 8-K filed today for a more detailed description of the
`restatement.
`
`Assessment of Disclosure Controls and Procedures and Internal Controls Over Financial
`Reporting
`
`As a result of the restatement, management is continuing to assess the company's disclosure
`controls and procedures and internal control over financial reporting. Management, in
`consultation with the committee, has concluded that one or more material weaknesses exist in
`the company's internal control over financial reporting and that, as a result, internal control over
`financial reporting and disclosure controls and procedures were not effective as of December 31,
`2014 and disclosure controls and procedures were not effective as of March 31, 2015 and the
`subsequent interim periods in 2015 and that internal control over financial reporting and
`disclosure controls and procedures will not be effective at December 31, 2015.
`
`The improper conduct of the company's former Chief Financial Officer and former Corporate
`Controller, which resulted in the provision of incorrect information to the Committee and the
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`company's auditors, contributed to the misstatement of results. In addition, as part of this
`assessment of internal control over financial reporting, the company has determined that the
`tone at the top of the organization and the performance-based environment at the company,
`where challenging targets were set and achieving those targets was a key performance
`expectation, may have been contributing factors resulting in the company's improper revenue
`recognition.
`
`In connection with the Ad Hoc Committee's work to date, certain remediation actions have been
`recommended and are being implemented by the company, including placing the company's
`former Corporate Controller on administrative leave. The board and the talent and compensation
`committee, based on recommendations of the Ad Hoc Committee, have determined that the
`deficient control environment, among other things, would impact executive compensation
`decisions with respect to 2015 compensation for certain members of senior management. The
`company is in the process of implementing additional remedial measures.
`
`Circumstances that Resulted in Delay in the Filing of 10-K
`
`Valeant announced on October 30, 2015 that the Ad Hoc Committee appointed former Deputy
`Attorney General of the United States, Mark Filip of Kirkland & Ellis LLP, to advise the committee
`in its review. Over the past five months, Mr. Filip and his colleagues at Kirkland & Ellis have
`conducted more than 70 interviews and reviewed over one million documents as part of their
`comprehensive review to assist the Ad Hoc Committee. In addition to certain Philidor-related
`accounting matters, the Ad Hoc Committee determined that certain other accounting issues
`required review. That additional work, along with the administrative leave of our former
`Corporate Controller, has led to the delayed filing of Valeant's 10-K.
`
`J. Michael Pearson, CEO of Valeant, said, "While we regret the circumstances that have resulted
`in the delay of our 10-K filing, we are committed to filing the 10-K on or before April 29, 2016."
`
`Covenant Highlights
`
`Bond indentures:
`
`As discussed on its March 15, 2016 preliminary earnings call, Valeant could receive a notice of
`default under its bond indentures as a result of the delay in filing its Form 10-K for the year
`ended December 31, 2015.
`
`If such notice is received, Valeant has 60 days from the receipt of the notice to file its 10-K,
`which will cure the default in all respects. The notice does not result in the acceleration of any of
`Valeant's indebtedness.
`
`Credit agreement:
`
`If Valeant does not file its Form 10-K by March 30, 2016, there will be a default under the credit
`facility. The company will have 30 days, or until April 29, to cure this default by filing its Form
`10-K.
`
`Valeant expects to file its Form 10-K and become current on its financial filings by April 29, 2016
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`(within the curing period) but to be prudent, the company also announced that it intends to seek
`a waiver from the lenders under its credit facility. The waiver that the company is seeking will
`include a request to extend the deadline to file its Form 10-K for December 31, 2015 and the
`deadline to file its Form 10-Q for the quarter ended March 31, 2016.
`
`Robert L. Rosiello, Valeant's Chief Financial Officer, said, "I appreciate the dedication and effort
`of our finance staff, who are working diligently to complete and file our 10-K."
`
`Delay in Canadian Annual Filings
`
`Valeant announced today that it anticipates a delay in filing its audited annual financial
`statements for the year ended December 31, 2015, the related management's discussion and
`analysis, certificates of its CEO and CFO and its 2015 Form 10-K (collectively, the "Canadian
`Required Filings") with Canadian securities regulators until after the March 30, 2016 filing
`deadline. The company is working diligently and intends to make the Canadian Required Filings
`on or before April 29, 2016.
`
`In connection with this anticipated delay, the company will apply for a customary management
`cease trade order (the "MCTO") relating to the trading in securities of the company by the
`company's CEO and CFO and each other member of the company's board of directors from the
`Autorité des marchés financiers, the company's principal regulator in Canada. If granted, the
`MCTO should not affect the ability of other shareholders to trade in the securities of the
`company.
`
`If the MCTO is granted, the company intends to comply with the provisions of the alternative
`information guidelines set out in Canadian National Policy 12-203 Cease Trade Orders for
`Continuous Disclosure Defaults ("NP 12-203") by providing bi-weekly updates by way of news
`release until the Canadian Required Filings have been made.
`
`Mr. William A. Ackman
`
`Mr. Ackman is the founder and Chief Executive Officer of Pershing Square Capital Management.
`Mr. Ackman currently serves as a member of the board of Canadian Pacific Railway Limited,
`chairman of the board of The Howard Hughes Corporation, a trustee of the Pershing Square
`Foundation, a member of the Board of Trustees at The Rockefeller University and a member of
`the Board of Dean's Advisors of the Harvard Business School. Mr. Ackman holds an M.B.A. from
`Harvard Business School and a Bachelor of Arts magna cum laude from Harvard College.
`
`About Valeant
`
`Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty
`pharmaceutical company that develops, manufactures and markets a broad range of
`pharmaceutical products primarily in the areas of dermatology, gastrointestinal disorder, eye
`health, neurology and branded generics. More information about Valeant can be found at
`www.valeant.com.
`
`Forward-looking Statements
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`This press release may contain forward-looking statements, including, but not limited to,
`statements regarding Valeant's Board of Directors. Forward-looking statements may generally
`be identified by the use of the words "anticipates," "expects," "intends," "plans," "should,"
`"could," "would," "may," "will," "believes," "estimates," "potential," "target," or "continue" and
`variations or similar expressions. 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, risks and uncertainties discussed in the
`company's most recent annual or quarterly report and detailed from time to time in Valeant's
`other filings with the Securities and Exchange Commission and the Canadian Securities
`Administrators, which factors are incorporated herein by reference. In addition, as the Ad Hoc
`Committee has not concluded its work, there remains a possibility that additional accounting
`adjustments may be identified that further impact prior periods and additional remediation
`actions may be recommended. Readers are cautioned not to place undue reliance on any of
`these forward-looking statements. These forward-looking statements speak only as of the date
`hereof. Valeant undertakes no obligation to update any of these forward-looking statements to
`reflect events or circumstances after the date of this press release or to reflect actual outcomes,
`unless required by law.
`
`Logo - http://photos.prnewswire.com/prnh/20101025/LA87217LOGO
`
`To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases
`/valeant-announces-ceo-succession-plan-and-changes-to-board-of-directors-provides-
`accounting-and-financial-reporting-update-300238719.html
`
`SOURCE Valeant Pharmaceuticals International, Inc.
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