EX-99.1 3 a04-2212_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

News

 

Investor Contact: Chip Merritt

610-738-6376

 cmerritt@cephalon.com

 

Media Contact: Robert W. Grupp

610-738-6402

rgrupp@cephalon.com

 

For immediate release:

 

Cephalon, Inc. Reports Record Financial Results for 2003

 

Annual Sales and Earnings Exceed Expectations;

 

Annual Sales Increase 47 Percent;

 

Cephalon Reiterates 2004 Sales and Earnings Guidance;

 

Cephalon Introduces First Quarter 2004 Sales and Earnings Guidance

 

West Chester, PA – February 12, 2004 – Cephalon, Inc. (Nasdaq: CEPH) today reported 2003 revenue of $714.8 million and diluted earnings per share of $1.44, which includes a $9.8 million pre-tax charge related to the early retirement of debt that was recorded in the third quarter.  Excluding this charge, adjusted diluted earnings per share for 2003 were $1.54, exceeding the company’s guidance of $1.52 per share.  These results compare with revenue of $506.9 million and adjusted diluted earnings per share of $1.26 in 2002.

 

Sales in 2003 totaled $685.3 million, compared to $465.9 million in 2002.  Sales of PROVIGIL® (modafinil) Tablets [C-IV] increased 40 percent over 2002 to $290.5 million.  Sales of ACTIQ® (oral transmucosal fentanyl citrate) [C-II] increased 87 percent to $237.5 million, and sales of GABITRIL® (tiagabine hydrochloride) increased 31 percent to $63.7 million.  In addition, Cephalon reported other product sales of $93.6 million in 2003.

 

Robust prescribing activity for the company’s three key products continued in 2003.  Total prescriptions for ACTIQ, GABITRIL, and PROVIGIL in the United States increased 42 percent over 2002 and exceeded 2.4 million prescriptions.

 

For the fourth quarter of 2003, the company reported total revenue of $211.2 million, sales of $202.5 million, and diluted earnings per share of $0.52.

 

—more—

 

 

SOURCE:  Cephalon, Inc. - 145 Brandywine Parkway - West Chester, PA  19380-4245 - (610) 344-0200 - Fax (610) 344-0981

 

 

“2003 was another outstanding year for Cephalon.  We delivered another year of record sales and earnings and we achieved critical manufacturing, clinical, and regulatory milestones necessary for future growth,” said Frank Baldino Jr., Ph.D., Chairman and CEO of Cephalon.  “These accomplishments position us for a transformational year in 2004.”

 

PROVIGIL is the first prescription medicine ever approved by the FDA for treatment of excessive sleepiness associated with obstructive sleep apnea/hypopnea syndrome and shift work sleep disorder. These disorders afflict millions of Americans.  Cephalon’s newly expanded sales force now will expand its reach to call on thousands of primary care physicians for the first time in an effort to educate physicians about appropriate diagnosis and treatment of these patients.

 

Cephalon anticipates conducting an unprecedented number of significant clinical studies in 2004 to augment its successful franchises with new products and expanded labels.  Specifically, the company expects to conduct the following studies:

 

•                  R-modafinil, for treatment of excessive sleepiness;

•                  Modafinil for treatment of attention deficit hyperactivity disorder (ADHD);

•                  A sugar-free formulation of ACTIQ for management of breakthrough cancer pain;

•                  GABITRIL for treatment of anxiety and insomnia;

•                  CEP-1347 for treatment of Parkinson’s Disease; and

•                  OraVescent® fentanyl for pain management (pending closure of the CIMA LABS INC. transaction).

 

Cephalon is reiterating 2004 sales guidance of $900-$950 million; this includes PROVIGIL sales of $375-$425 million, ACTIQ sales of $325-$375 million, GABITRIL sales of $80-$90 million, other products sales of $80-$90 million, and 2004 diluted earnings per share guidance of approximately $2.00, a 30 percent increase over adjusted diluted earnings per share in 2003.

 

The company is introducing first quarter sales guidance of $210-$215 million and diluted earnings per share guidance of $0.28, a 33 percent increase over the diluted earnings per share in the first quarter of 2003.  Consistent with prior years, the company expects continued sales growth to yield greater earnings per share as 2004 progresses.  2004 guidance excludes the impact of closing the CIMA LABS INC. transaction.

 

Cephalon’s management will discuss the company’s 2003 results with analysts and investors during a conference call beginning at 5 p.m. U.S. EST on Thursday, February 12, 2004. To participate in the conference call, dial 913-981-5518 and refer to Conference Code Number 708177. 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.

 

2


 

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 1,600 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, ACTIQ and more than 20 products internationally. 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, including certain planned clinical studies in 2004,  interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, sales and earnings guidance, including the anticipated quarterly trend of such guidance in 2004, 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”, “Basic Adjusted Net Income per Common Share”, “Diluted Adjusted Net Income Per Common Share”, and “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.

 

# # #

 

3

 

Cephalon, Inc. and Subsidiaries

 

Consolidated Statement of Operations

(Amounts in Thousands, Except per Share)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Sales

 

$

202,505

 

$

139,009

 

$

685,250

 

$

465,943

 

Other revenues

 

8,735

 

5,297

 

29,557

 

40,954

 

 

 

211,240

 

144,306

 

714,807

 

506,897

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

27,092

 

25,418

 

92,375

 

74,237

 

Research and development

 

52,941

 

36,327

 

170,277

 

128,276

 

Selling, general and administrative

 

68,348

 

42,372

 

252,033

 

172,782

 

Depreciation and amortization

 

11,515

 

10,407

 

44,073

 

35,457

 

 

 

159,896

 

114,524

 

558,758

 

410,752

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

51,344

 

29,782

 

156,049

 

96,145

 

 

 

 

 

 

 

 

 

 

 

Other Income and Expense:

 

 

 

 

 

 

 

 

 

Interest income

 

3,161

 

3,515

 

11,298

 

14,095

 

Interest expense

 

(6,331

)

(8,809

)

(28,905

)

(38,215

)

Charge on early extinguishment of debt

 

—

 

—

 

(9,816

)

(7,142

)

Other income (expense), net

 

(101

)

(608

)

1,688

 

(2,450

)

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

48,073

 

23,880

 

130,314

 

62,433

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit, net

 

(16,848

)

116,114

 

(46,456

)

112,629

 

 

 

 

 

 

 

 

 

 

 

Income before cumulative effect of changing inventory costing method

 

31,225

 

139,994

 

83,858

 

175,062

 

 

 

 

 

 

 

 

 

 

 

Cumulative effect of changing inventory costing method from FIFO to LIFO

 

—

 

—

 

—

 

(3,534

)

 

 

 

 

 

 

 

 

 

 

Income applicable to common shares

 

$

31,225

 

$

139,994

 

$

83,858

 

$

171,528

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share:

 

 

 

 

 

 

 

 

 

Income per common share excluding cumulative effect of changing inventory method

 

$

0.56

 

$

2.53

 

$

1.51

 

$

3.17

 

Cumulative effect of changing inventory costing method

 

—

 

—

 

—

 

(0.06

)

 

 

$

0.56

 

$

2.53

 

$

1.51

 

$

3.11

 

Diluted income per common share:

 

 

 

 

 

 

 

 

 

Income per common share excluding cumulative effect of changing inventory method

 

$

0.52

 

$

2.13

 

$

1.44

 

$

2.84

 

Cumulative effect of changing inventory costing method

 

—

 

—

 

—

 

(0.05

)

 

 

$

0.52

 

$

2.13

 

$

1.44

 

$

2.79

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

55,706

 

55,250

 

55,560

 

55,104

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding-assuming dilution

 

64,766

 

67,619

 

64,072

 

67,442

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income Applicable to Common Shares to Adjusted Net Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income applicable to common shares

 

$

31,225

 

$

139,994

 

$

83,858

 

$

171,528

 

 

 

 

 

 

 

 

 

 

 

Certain charges:

 

 

 

 

 

 

 

 

 

Deferred tax valuation adjustment

 

—

 

(116,720

)

—

 

(116,720

)

CNS joint venture (a)

 

—

 

—

 

—

 

6,481

 

Charge on early extinguishment of debt, net of tax

 

—

 

—

 

6,282

 

7,142

 

Cumulative effect of changing inventory costing method

 

—

 

—

 

—

 

3,534

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

31,225

 

$

23,274

 

$

90,140

 

$

71,965

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted net income per common share

 

$

0.56

 

$

0.42

 

$

1.62

 

$

1.31

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted net income per common share

 

$

0.52

 

$

0.41

 

$

1.54

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

55,706

 

55,250

 

55,560

 

55,104

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - assuming dilution

 

64,766

 

56,957

 

64,072

 

56,976

 

 

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

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income from Operations to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

51,344

 

$

29,782

 

$

156,049

 

$

96,145

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

11,515

 

10,407

 

44,073

 

35,457

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA *

 

$

62,859

 

$

40,189

 

$

200,122

 

$

131,602

 

 

* 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

 

Sales Detail

(Amounts in Thousands)

 

 

 

Three Months Ended
December 31,

 

%
Increase

 

Year Ended
December 31,

 

%
Increase

 

 

 

2003

 

2002

 

(Decrease)

 

2003

 

2002

 

(Decrease)

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Provigil

 

$

85,408

 

$

57,838

 

48

%

$

290,465

 

$

207,204

 

40

%

Actiq

 

73,151

 

43,923

 

67

%

237,467

 

126,725

 

87

%

Gabitril

 

19,226

 

15,055

 

28

%

63,699

 

48,760

 

31

%

Other

 

24,720

 

22,193

 

11

%

93,619

 

83,254

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

202,505

 

$

139,009

 

46

%

$

685,250

 

$

465,943

 

47

%

 

 

Condensed Consolidated Balance Sheets

(Amounts in Thousands)

 

 

 

December 31,
2003

 

December 31,
2002

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and investments

 

$

1,155,163

 

$

582,688

 

 

 

 

 

 

 

Receivables, net

 

86,348

 

83,130

 

 

 

 

 

 

 

Inventory, net

 

61,249

 

54,299

 

 

 

 

 

 

 

Other current assets

 

9,198

 

9,793

 

 

 

 

 

 

 

Property and equipment, net

 

126,442

 

90,066

 

 

 

 

 

 

 

Goodwill

 

298,769

 

298,769

 

 

 

 

 

 

 

Other intangible assets, net

 

326,445

 

351,719

 

 

 

 

 

 

 

Debt issuance costs, net

 

35,250

 

21,406

 

 

 

 

 

 

 

Deferred tax asset, including current portion, net

 

226,478

 

170,072

 

 

 

 

 

 

 

Other assets

 

56,314

 

27,148

 

 

 

 

 

 

 

 

 

$

2,381,656

 

$

1,689,090

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

127,629

 

$

103,533

 

 

 

 

 

 

 

Deferred revenue, including current portion

 

2,158

 

2,680

 

 

 

 

 

 

 

Debt, including current portion

 

1,419,054

 

876,299

 

 

 

 

 

 

 

Deferred tax liabilities

 

45,665

 

52,666

 

 

 

 

 

 

 

Other liabilities

 

16,780

 

11,327

 

 

 

 

 

 

 

Stockholders’ equity

 

770,370

 

642,585

 

 

 

 

 

 

 

 

 

$

2,381,656

 

$

1,689,090