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) May 7, 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 – Cephalon, Inc. Reports First Quarter 2003 Financial Results

ITEM 9. REGULATION FD DISCLOSURE.

In accordance with guidance from the Securities and Exchange Commission in Release number 33-8216, the information furnished under this Item 9 (“Regulation FD Disclosure”) is intended to be furnished under Item 12 (“Results of Operations and Financial Condition”). The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

On May 7, 2003, Cephalon, Inc. issued a press release announcing certain financial results for the first quarter ended March 31, 2003 and updating certain financial guidance for the year 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” and “Adjusted Net Income” for each of the first quarter of 2003 and 2002. Both Adjusted EBITDA and Adjusted Net Income 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 Adjusted EBITDA or Adjusted Net Income 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 income income and expense, (gain) 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 and ability to service its future debt requirements and meet working capital requirements. 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.

As used in the press release, 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.

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: May 7, 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 – Cephalon, Inc. Reports First Quarter 2003 Financial Results

Exhibit 99.1

	News
Contact: Chip Merritt
610-738-6376
For Immediate Release	cmerritt@Cephalon.com

Cephalon, Inc. Reports First Quarter 2003 Financial Results

Quarterly Earnings Exceed Guidance;

ACTIQ Sales Lead Revenue Growth;

Cephalon Reiterates Full Year 2003 Sales and Earnings Guidance;

Cephalon Introduces Second Quarter 2003 Sales and Earnings Guidance

West Chester, PA – May 7, 2003 – Cephalon, Inc. (Nasdaq: CEPH) today reported results for the first quarter of 2003, which included total revenue of $144.7 million, product sales of $137.6 million, and diluted earnings per share of $0.21.

Product sales of $137.6 million for the first quarter of 2003 increased by 44 percent compared to $95.8 million in the first quarter of 2002. Sales of PROVIGIL® (modafinil) Tablets [C-IV] were $55.8 million, a 19 percent increase over the first quarter of 2002. Sales of ACTIQ® (oral transmucosal fentanyl citrate) [C-II] were $46.2 million, a 139 percent increase over the first quarter 2002, and sales of GABITRIL® (tiagabine hydrochloride) were $12.7 million, a 25 percent increase over the first quarter 2002. In addition, Cephalon reported other product sales of $22.9 million.

Prescriptions of PROVIGIL for the first quarter were approximately 308,000, a 35 percent increase over the first quarter of 2002. Prescriptions of ACTIQ were approximately 63,000, an 89 percent increase over the first quarter of 2002, and prescriptions of GABITRIL were approximately 143,000, an 82 percent increase over the first quarter of 2002.

“Prescriptions continued to grow significantly on a year over year basis. However, we believe that the moderation of this growth during the first quarter of 2003 was the result of the expansion and complete realignment of our sales force which pressured prescription trends during the quarter,” said Frank Baldino Jr., Ph.D., Chairman and CEO of Cephalon. “This expansion is now complete, and we are well positioned to meet our previously stated guidance in 2003.”

-- more --

Cephalon is reiterating full year 2003 product sales guidance of $650-$660 million and diluted earnings per share guidance of approximately $1.50 after taxes. This guidance includes a full tax provision of 38 percent. The company introduced second quarter 2003 guidance for product sales of $155 million and diluted earnings per share of $0.30.

Cephalon’s management will discuss the company’s first quarter 2003 results with analysts and investors during a conference call beginning at 5 p.m. U.S. EDT on Wednesday, May 7, 2003. To participate in the conference call, dial 913-981-5519 and refer to Conference Code Number 372476. 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.

The financial results attached to this press release include “Adjusted Net Income” and “Adjusted EBITDA” amounts, both of 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 March 31,
	2003			2002
Revenues:
Product sales	$	137,593		$	95,803
Other revenues	7,104			15,698
	144,697			111,501
Costs and Expenses:
Cost of product sales	20,538			13,845
Research and development	33,656			29,823
Selling, general and administrative	54,606			40,284
Depreciation and amortization	10,641			8,293
	119,441			92,245

Income from operations	25,256			19,256

Other Income and Expense:
Interest income	2,594			2,870
Interest expense	(8,536		)	(11,498		)
Charge on early extinguishment of debt	—			(7,142		)
Other income (expense), net	424			(838		)

Income (loss) before income taxes	19,738			2,648

Income tax expense	(7,500		)	(1,985		)

Income before cumulative effect of changing inventory costing method	12,238			663

Cumulative effect of changing inventory costing method from FIFO to LIFO	—			(3,534		)

Income (loss) applicable to common shares	$	12,238		$	(2,871	)

Basic income (loss) per common share:
Income per common share excluding cumulative effect of changing inventory method	$	0.22		$	0.01
Cumulative effect of changing inventory costing method	—			(0.06		)
	$	0.22		$	(0.05	)
Diluted income (loss) per common share:
Income per common share excluding cumulative effect of changing inventory method	$	0.21		$	0.01
Cumulative effect of changing inventory costing method	—			(0.06		)
	$	0.21		$	(0.05	)

Weighted average number of common shares outstanding	55,452			54,963

Weighted average number of common shares outstanding-assuming dilution	57,090			57,304

OTHER DATA:

Reconciliation of Income (Loss) Applicable to Common Shares to Adjusted Net Income:

Income (loss) applicable to common shares	$	12,238		$	(2,871	)

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	$	12,238		$	14,286

Basic adjusted net income per common share	$	0.22		$	0.26

Diluted adjusted net income per common share	$	0.21		$	0.25

Weighted average number of common shares outstanding	55,452			54,963

Weighted average number of common shares outstanding - assuming dilution	57,090			57,304

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

	Three Months Ended March 31,
	2003		2002

Reconciliation of Income from Operations to Adjusted EBITDA:

Income from operations	$	25,256	$	19,256

Depreciation and amortization	10,641		8,293

Adjusted EBITDA *	$	35,897	$	27,549

*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.

Cephalon, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in Thousands)

	March 31, 2003		December 31, 2002
Assets	(Unaudited)

Cash, cash equivalents and investments	$	546,754	$	582,688

Receivables, net	89,473		83,130

Inventory, net	60,924		54,299

Other current assets	18,741		9,793

Property and equipment, net	95,104		90,066

Goodwill	298,769		298,769

Other intangible assets, net	345,226		351,719

Deferred tax asset, including current portion, net	171,611		170,072

Other assets	82,369		48,554

	$	1,708,971	$	1,689,090

Liabilities and stockholders’ equity

Accounts payable and accrued expenses	$	103,974	$	103,533

Deferred revenue, including current portion	2,666		2,680

Debt, including current portion	875,965		876,299

Deferred tax liabilities	53,232		52,666

Other liabilities	13,530		11,327

Stockholders’ equity	659,604		642,585

	$	1,708,971	$	1,689,090

News