8-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) August 4, 2003

Cephalon, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-19119	23-2484489
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

145 Brandywine Parkway West Chester, Pennsylvania	19380
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code (610) 344-0200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a)

Financial Statements of Business Acquired: Not applicable



(b)

Pro Forma Financial Information: Not applicable



(c)

Exhibits

Number	Description
99.1	Press Release dated August 4, 2003—Cephalon, Inc. Reports Second Quarter 2003 Financial Results

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

        The information under this caption is furnished by Cephalon, Inc. (the "Company") in accordance with Securities Exchange Commission Release No. 33-8216. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

        On August 4, 2003, Cephalon, Inc. issued a press release announcing certain financial results for the second quarter ended June 30, 2003 and updating certain financial guidance for the quarter ending September 30, 2003 and for the year ending December 31, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

        In the attached press release, Cephalon discloses "Adjusted EBITDA," "Adjusted Net Income" and "Adjusted Diluted Earnings Per Share Guidance" for certain periods, all of which are considered "non-GAAP financial measures" under Securities and Exchange Commission rules. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. Management does not intend the presentation of non-GAAP financial measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

        As used in the press release, Adjusted EBITDA represents income from operations less depreciation and amortization. As such, this measure also excludes interest income and expense, charge on early extinguishment of debt, foreign currency exchange, income tax expense, and cumulative effect of changing inventory costing method. Cephalon's calculation of Adjusted EBITDA may or may not be consistent with the calculation of this measure by other companies in the same industry. However, management believes that Adjusted EBITDA is a useful adjunct to net income and other measurements under GAAP because it is a meaningful measure of a company's performance. Adjusted EBITDA is a management tool used by Cephalon to monitor its financial performance. Management also believes that it provides useful insight into the underlying results of operations for the Company, and facilitates comparison between Cephalon and other companies.

        Adjusted Net Income represents income (loss) applicable to common shares less certain charges. Management believes that the presentation of Adjusted Net Income is useful to investors because it provides a useful means of evaluating the Company's operating performance and results from period to period on a comparable basis not otherwise apparent on a GAAP basis, since many one-time or infrequent charges that do not affect the Company's operations do not meet the strict GAAP definition of unusual non-recurring items. Furthermore, in preparing operating plans and forecasts, management relies, in part, on trends in the Company's historical results, exclusive of these items, and provides its forecasts to investors on this basis.

        Adjusted Diluted Earnings Per Share Guidance represents our projected GAAP diluted earnings per share for the three months ended September 30, 2003 and for the twelve months ended December 31, 2003, as adjusted for certain charges. Management believes that the presentation of Adjusted Diluted Earnings Per Share Guidance is meaningful to investors because it provides investors

with a means of evaluating the Company's previously issued diluted earnings per share guidance in light of significant known or expected one-time or infrequent charges that do not affect the Company's operations. In addition, in assessing the Company's performance against its previously issued guidance, management excludes these items when assessing actual performance compared to guidance.

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.

	CEPHALON, INC.
Date: August 4, 2003	By:	/s/  J. KEVIN BUCHI J. Kevin Buchi Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated August 4, 2003—Cephalon, Inc. Reports Second Quarter 2003 Financial Results

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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

SIGNATURES
EXHIBIT INDEX

EX-99.1

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Exhibit 99.1

News

Contact: Chip Merritt
610-738-6376
cmerritt@Cephalon.com

For Immediate Release

Cephalon, Inc. Reports Second Quarter 2003 Financial Results

Quarterly Earnings Per Share Increase 24 Percent;

Product Sales Increase 47 Percent;

Cephalon Reiterates Full Year 2003 Sales and Earnings Guidance

West Chester, PA—August 4, 2003—Cephalon, Inc. (Nasdaq: CEPH) today reported results for the second quarter of 2003, which included total revenue of $168.8 million, product sales of $160.3 million, and diluted earnings per share of $0.31. This compares with total revenue of $120.7 million, product sales of $108.8 million, and diluted earnings per share of $0.25 in the second quarter of 2002.

        Sales of PROVIGIL® (modafinil) Tablets [C-IV] were $69.5 million, a 40 percent increase over the second quarter of 2002. Sales of ACTIQ® (oral transmucosal fentanyl citrate) [C-II] were $52.7 million, an 85 percent increase over the second quarter 2002, and sales of GABITRIL® (tiagabine hydrochloride) were $14.6 million, a 44 percent increase over the second quarter 2002. In addition, Cephalon reported other product sales of $23.5 million.

        Prescriptions of PROVIGIL for the second quarter were approximately 344,000, a 30 percent increase over the second quarter of 2002. Prescriptions of ACTIQ were approximately 74,000, a 76 percent increase over the second quarter of 2002, and prescriptions of GABITRIL were approximately 163,000, a 64 percent increase over the second quarter of 2002.

        "Our strong financial performance will drive continued growth in our business," said Frank Baldino Jr., Ph.D., Chairman and CEO of Cephalon. "Clinical programs are underway to develop both the R-isomer of modafinil as well as our proprietary ADHD formulation of PROVIGIL. We have also initiated a comprehensive clinical program for GABITRIL, a product whose full utility we are only beginning to realize. These efforts will continue to drive our growth through 2006 and beyond."

        In July, Cephalon completed its previously announced cash redemption of $174 million of 5¹/4 percent convertible debt and repurchased $12 million of 3⁷/8 percent convertible debt. These retirements will result in a third quarter pre-tax charge of $9.8 million. Excluding this charge, Cephalon's 2003 product sales guidance remains $650-$660 million and adjusted diluted earnings per share guidance remains $1.50 after taxes. The company's third quarter 2003 guidance for product sales is $175 million and for adjusted diluted earnings per share, excluding the charge resulting from the early extinguishment of debt, is $0.40. The adjusted diluted earnings per share guidance amounts include a tax provision of 36 percent.

        Cephalon's management will discuss the company's second quarter 2003 results with analysts and investors during a conference call beginning at 5 p.m. U.S. EDT on Monday, August 4, 2003. To participate in the conference call, dial 913-981-5517 and refer to Conference Code Number 422503. Individual investors are encouraged to log onto the investor relations section of www.cephalon.com and click on the webcast link to access the live call.

Cephalon, Inc.

        Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products to treat sleep and neurological disorders, cancer and pain.

        Cephalon currently employs approximately 1,300 people in the United States and Europe. U.S. sites include the company's headquarters in West Chester, Pennsylvania, and offices and manufacturing facilities in Salt Lake City, Utah. Cephalon's major European offices are located in Guildford, England, Martinsried, Germany, and Maisons-Alfort, France.

        The company currently markets three proprietary products in the United States: PROVIGIL, GABITRIL, and ACTIQ and more than 20 products internationally. Further information about Cephalon and full prescribing information on its U.S. products is available at www.cephalon.com or by calling 1-800-896-5855.

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, development of potential pharmaceutical products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, sales and earnings guidance, and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. Cephalon's performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

This press release and/or the financial results attached to this press release include "Adjusted EBITDA", "Adjusted Net Income", and "Adjusted Diluted Earnings Per Share Guidance" amounts which are considered "non-GAAP financial measures" under SEC rules. As required, we have provided reconciliations of these measures. Additional required information is located in the Form 8-K furnished to the SEC in connection with this press release.

# # #

Cephalon, Inc. and Subsidiaries
Consolidated Statement of Operations
(Amounts in Thousands, Except per Share)
(Unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2003			2002			2003			2002
Revenues:
	Product sales	$	160,275		$	108,767		$	297,868		$	204,570
	Other revenues		8,552			11,960			15,656			27,658
			168,827			120,727			313,524			232,228
Costs and Expenses:
	Cost of product sales		22,161			15,472			42,699			29,317
	Research and development		39,139			31,401			72,795			61,224
	Selling, general and administrative		65,546			44,911			120,152			85,195
	Depreciation and amortization		10,926			8,042			21,567			16,335
			137,772			99,826			257,213			192,071
Income from operations			31,055			20,901			56,311			40,157
Other Income and Expense:
	Interest income		2,581			3,770			5,175			6,640
	Interest expense		(7,820	)		(9,782	)		(16,356	)		(21,280	)
	Charge on early extinguishment of debt		—			—			—			(7,142	)
	Other income (expense), net		1,887			(460	)		2,311			(1,298	)
Income before income taxes			27,703			14,429			47,441			17,077
Income tax expense			(9,580	)		—			(17,080	)		(1,985	)
Income before cumulative effect of changing inventory costing method			18,123			14,429			30,361			15,092
Cumulative effect of changing inventory costing method from FIFO to LIFO			—			—			—			(3,534	)
Income applicable to common shares		$	18,123		$	14,429		$	30,361		$	11,558
Basic income per common share:
	Income per common share excluding cumulative effect of changing inventory method	$	0.33		$	0.26		$	0.55		$	0.27
	Cumulative effect of changing inventory costing method		—			—			—			(0.06	)
		$	0.33		$	0.26		$	0.55		$	0.21
Diluted income per common share:
	Income per common share excluding cumulative effect of changing inventory method	$	0.31		$	0.25		$	0.53		$	0.26
	Cumulative effect of changing inventory costing method		—			—			—			(0.06	)
		$	0.31		$	0.25		$	0.53		$	0.20
Weighted average number of common shares outstanding			55,504			55,071			55,478			55,017
Weighted average number of common shares outstanding-assuming dilution			64,435			57,033			57,062			57,161

OTHER DATA:
Reconciliation of Income Applicable to Common Shares to Adjusted Net Income:
Income applicable to common shares		$	18,123	$	14,429	$	30,361	$	11,558
Certain charges:
	CNS joint venture (a)		—		—		—		6,481
	Charge on early extinguishment of debt		—		—		—		7,142
	Cumulative effect of changing inventory costing method		—		—		—		3,534
Adjusted Net Income		$	18,123	$	14,429	$	30,361	$	28,715
Basic adjusted net income per common share		$	0.33	$	0.26	$	0.55	$	0.52
Diluted adjusted net income per common share		$	0.31	$	0.25	$	0.53	$	0.50
Weighted average number of common shares outstanding			55,504		55,071		55,478		55,017
Weighted average number of common shares outstanding — assuming dilution			64,435		57,033		57,062		57,161

(a)

Includes $3,508,000 from selling, general and administrative expense and $2,973,000 from other expense.

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
Reconciliation of Income from Operations to Adjusted EBITDA:
Income from operations	$	31,055	$	20,901	$	56,311	$	40,157
Depreciation and amortization		10,926		8,042		21,567		16,335
Adjusted EBITDA *	$	41,981	$	28,943	$	77,878	$	56,492

*

Adjusted EBITDA is defined as income from operations less depreciation and amortization, and therefore, by definition, also excludes interest income and expense, charge on early extinguishment of debt, foreign currency exchange, income tax expense, and cumulative effect of changing inventory costing method.

	Three Months Ended September 30, 2003		Twelve Months Ended December 31, 2003
Reconciliation of Projected GAAP Diluted Earnings per Share to Adjusted Diluted Earnings per Share Guidance:
Projected GAAP diluted earnings per share	$	0.30	$	1.40
Charge on early extinguishment of debt, net of taxes		0.10		0.10
Adjusted diluted earnings per share guidance	$	0.40	$	1.50

Cephalon, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in Thousands)

		June 30, 2003		December 31, 2002
		(Unaudited)
Assets
	Cash, cash equivalents and investments	$	1,212,617	$	582,688
	Receivables, net		101,327		83,130
	Inventory, net		62,388		54,299
	Other current assets		12,502		9,793
	Property and equipment, net		101,747		90,066
	Goodwill		298,769		298,769
	Other intangible assets, net		339,294		351,719
	Debt issuance costs, net		43,038		21,406
	Deferred tax asset, including current portion, net		254,169		170,072
	Other assets		61,844		27,148
		$	2,487,695	$	1,689,090
Liabilities and stockholders' equity
	Accounts payable and accrued expenses	$	102,585	$	103,533
	Deferred revenue, including current portion		2,520		2,680
	Debt, including current portion		1,617,771		876,299
	Deferred tax liabilities		51,284		52,666
	Other liabilities		13,183		11,327
	Stockholders' equity		700,352		642,585
		$	2,487,695	$	1,689,090

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Exhibit 99.1