EX-99.1 2 a05-8555_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

 

News

 

 

Media Contact

 

Robert Grupp

 

610-738-6402

 

rgrupp@cephalon.com

 

 

 

Investor Contact

 

Chip Merritt

 

610-738-6376

 

cmerritt@cephalon.com

 

For Immediate Release

 

Cephalon Reports Continued Strong Earnings Growth

 

Earnings Exceed Top End of Guidance;

 

 Sales Increase 27 Percent;

 

Cephalon Reiterates 2005 Total Sales and Earnings Guidance

 

Frazer, PA – May 3, 2005 – Cephalon, Inc. [Nasdaq: CEPH]  today reported first quarter 2005 revenue of $280 million, a 30 percent increase over the first quarter of 2004.  Diluted earnings per share for the first quarter 2005 were $0.44.  Excluding amortization expense, diluted adjusted earnings per share were $0.59, a 44 percent increase over the comparable figure of $0.41 in the first quarter of 2004.

 

Sales totaled $266.6 million, compared with first quarter 2004 sales of $210.4 million, a 27 percent increase.  All three lead products continued to post solid growth versus the first quarter of 2004.  Sales of PROVIGIL® (modafinil) Tablets [C-IV] increased 6 percent to $100.1 million; sales of ACTIQ® (oral transmucosal fentanyl citrate) [C-II] increased 45 percent to $101.9 million; and sales of GABITRIL® (tigabine hydrochloride) Tablets were $26.4 million, a 16 percent increase. Sales of other products increased 66 percent to $38.2 million, primarily as a result of recent acquisitions.

 

PROVIGIL, ACTIQ, and GABITRIL each experienced double digit prescription growth in the United States versus the first quarter of 2004, with aggregate prescription growth of 23 percent for these three products.

 

—more—

 

SOURCE:  Cephalon, Inc. • 41 Moores Road • Frazer, PA  19355 • (610) 344-0200 • Fax (610) 344-0065

 


 

“We were extremely pleased to submit our NUVIGIL™ filing during the quarter, marking the second of four NDAs that we plan to file by the first quarter of 2006,”  said Frank Baldino, Jr., Ph.D., Chairman and CEO.  “Our current product portfolio, and the success of these four new product opportunities, should enable us to double our total revenue by 2008.”

 

Cephalon is reiterating its guidance for 2005 sales of $1.2-1.25 billion, while changing the product mix as follows: PROVIGIL sales remain at $550-600 million, ACTIQ sales remain at $390-420 million, GABITRIL sales decrease $30 million to $80-90 million and other sales increase $30 million to $140-155 million. The increase in guidance for other sales revenue is largely attributed to the exceptional performance of the company's European organization, including their acquisition of a new product. Cephalon’s 2005 guidance for diluted adjusted earnings per share remains at $2.80-2.95.

 

Cephalon remains on track to meet its financial objectives for the first half of the year, and is introducing second quarter 2005 guidance for sales of $280-290 million and diluted adjusted earnings per share of $0.55-0.60.

 

Cephalon’s management will discuss the company’s first quarter 2005 performance in a conference call with investors beginning at 5 p.m. (EDT) on Tuesday, May 3, 2005.  To participate in the conference call, dial 913-981-5572 and refer to conference code number 7329124. Investors can listen to the call live by logging on to the company’s website at www.cephalon.com and clicking on “Investor Relations,” then “Webcast.”  The conference call will be archived and available to investors for one week after the call.

 

Cephalon, Inc.

 

Cephalon currently employs approximately 2,400 people in the United States and Europe. U.S. sites include the company’s headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota. Cephalon’s 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 http://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 our ability to file four NDAs by the first quarter of 2006, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for our products, including our ability to double our total revenue by 2008, yearly

 

2


 

and quarterly sales and earnings guidance for 2005, 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 Net Income,” “Basic Adjusted Income per Common Share,” “Diluted Adjusted Income Per Common Share,” and “Diluted Adjusted Earnings Per Share Guidance” amounts that 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)

(Unaudited)

 

 

 

Three Months Ended
March 31, 2005

 

Three Months Ended
March 31, 2004

 

 

 

GAAP

 

Adjustments

 

“Adjusted”

 

GAAP

 

Adjustments

 

“Adjusted”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

266,609

 

 

 

$

266,609

 

$

210,391

 

 

 

$

210,391

 

Other revenues

 

13,372

 

 

 

13,372

 

4,591

 

 

 

4,591

 

 

 

279,981

 

—

 

279,981

 

214,982

 

—

 

214,982

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

41,114

 

 

 

41,114

 

25,977

 

 

 

25,977

 

Research and development

 

80,766

 

 

 

80,766

 

56,482

 

 

 

56,482

 

Selling, general and administrative

 

98,229

 

 

 

98,229

 

82,502

 

4,214

(4)

86,716

 

Depreciation and amortization

 

18,650

 

(13,330

)(1)

5,320

 

11,497

 

(8,360

)(1)

3,137

 

 

 

238,759

 

(13,330

)

225,429

 

176,458

 

(4,146

)

172,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

41,222

 

13,330

 

54,552

 

38,524

 

4,146

 

42,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income and Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

4,859

 

 

 

4,859

 

3,246

 

 

 

3,246

 

Interest expense

 

(5,551

)

 

 

(5,551

)

(5,890

)

 

 

(5,890

)

Charge on early extinguishment of debt

 

—

 

 

 

—

 

(961

)

961

(3)

—

 

Other income (expense), net

 

1,335

 

 

 

1,335

 

(466

)

 

 

(466

)

 

 

643

 

0

 

643

 

(4,071

)

961

 

(3,110

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

41,865

 

13,330

 

55,195

 

34,453

 

5,107

 

39,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(15,203

)

(3,712

)(2)

(18,915

)

(12,742

)

(2,068

)(2)

(14,810

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

26,662

 

$

9,618

 

$

36,280

 

$

21,711

 

$

3,039

 

$

24,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per common share *

 

$

0.46

 

 

 

$

0.63

 

$

0.38

 

 

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share *

 

$

0.44

 

 

 

$

0.59

 

$

0.36

 

 

 

$

0.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

57,994

 

 

 

57,994

 

55,905

 

 

 

55,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding-assuming dilution

 

65,065

 

 

 

65,071

 

65,006

 

 

 

65,006

 

 

* Prior period EPS shown is restated for adoption of guidance from EITF 03-6 and EITF 04-8.

 

Cephalon, Inc. and Subsidiaries

 

Notes to Reconciliation of GAAP Net Income to “Adjusted” Net Income

Three Months Ended March 31, 2005 and March 31, 2004

 

(1)

 

To exclude the ongoing amortization of acquired intangible assets including technology, trademark and marketing rights acquired from Group Lafon and CIMA LABS INC., Gabitril marketing rights, Actiq marketing rights, and product marketing rights acquired in conjunction with our Novartis collaboration.

 

 

 

(2)

 

To reflect the tax effect of adjustments at the applicable tax rates.

 

 

 

(3)

 

To exclude the charge on early extinguishment of debt in 2004 related to the repurchase of $10 million of our 3.875% Convertible Subordinated Notes in March 2004.

 

 

 

(4)

 

To exclude the gain resulting from the cancellation of postretirement health care benefits for current employees at Cephalon France.

 


 

Cephalon, Inc. and Subsidiaries

 

Consolidated Sales Detail

(Amounts in Thousands)

(Unaudited)

 

 

 

Three Months Ended

 

%

 

 

 

March 31,

 

Increase

 

 

 

2005

 

2004

 

(Decrease)

 

 

 

United States

 

Europe

 

Total

 

United States

 

Europe

 

Total

 

United States

 

Europe

 

Total

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provigil

 

$

92,149

 

$

7,981

 

$

100,130

 

$

87,931

 

$

6,622

 

$

94,553

 

5

%

21

%

6

%

Actiq

 

98,868

 

3,057

 

101,925

 

68,659

 

1,497

 

70,156

 

44

%

104

%

45

%

Gabitril

 

24,701

 

1,689

 

26,390

 

21,034

 

1,677

 

22,711

 

17

%

1

%

16

%

Other

 

9,194

 

28,970

 

38,164

 

—

 

22,971

 

22,971

 

—

 

26

%

66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

224,912

 

$

41,697

 

$

266,609

 

$

177,624

 

$

32,767

 

$

210,391

 

27

%

27

%

27

%

 


 

Cephalon, Inc. and Subsidiaries

 

Consolidated Balance Sheets

(Amounts in Thousands)

(Unaudited)

 

 

 

March 31,

 

* December 31,

 

 

 

2005

 

2004

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

590,262

 

$

574,244

 

Investments

 

219,773

 

217,432

 

Receivables, net

 

205,447

 

208,225

 

Inventory, net

 

95,381

 

86,629

 

Deferred tax asset

 

46,771

 

47,118

 

Other current assets

 

54,857

 

39,915

 

Total current assets

 

1,212,491

 

1,173,563

 

 

 

 

 

 

 

Property and equipment, net

 

255,644

 

244,834

 

Goodwill

 

369,534

 

372,534

 

Other intangible assets, net

 

431,200

 

449,402

 

Debt issuance costs, net

 

23,372

 

25,401

 

Deferred tax asset, net

 

152,533

 

163,620

 

Other assets

 

22,187

 

22,549

 

 

 

$

2,466,961

 

$

2,451,903

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current portion of long-term debt

 

$

5,655

 

$

5,114

 

Accounts payable

 

53,816

 

52,488

 

Accrued expenses

 

172,981

 

169,568

 

Current portion of deferred revenues

 

1,277

 

868

 

Total current liabilities

 

233,729

 

228,038

 

 

 

 

 

 

 

Long-term debt

 

1,282,652

 

1,284,410

 

Deferred revenues

 

1,169

 

1,769

 

Deferred tax liabilities

 

92,702

 

94,100

 

Other liabilities

 

14,168

 

13,542

 

Total liabilities

 

1,624,420

 

1,621,859

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Common stock, $0.01 par value

 

580

 

580

 

Additional paid-in capital

 

1,174,035

 

1,172,499

 

Treasury stock, at cost

 

(14,860

)

(14,860

)

Accumulated deficit

 

(368,456

)

(395,118

)

Accumulated other comprehensive income

 

51,242

 

66,943

 

Total stockholders’ equity

 

842,541

 

830,044

 

 

 

$

2,466,961

 

$

2,451,903

 

 

* Certain reclassifications of prior period amounts have been made to conform with the current year presentation.

 


 

Cephalon, Inc. and Subsidiaries

 

Consolidated Statements of Cash Flows

(Amounts in Thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2005

 

2004

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

26,662

 

$

21,711

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

Deferred income tax expense

 

14,677

 

2,269

 

Tax benefit from exercise of stock options

 

652

 

2,270

 

Depreciation and amortization

 

26,586

 

12,239

 

Amortization of debt issuance costs

 

2,138

 

2,209

 

Stock-based compensation expense

 

2,543

 

1,247

 

Non-cash charge on early extinguishment of debt

 

—

 

961

 

Pension curtailment

 

—

 

(4,214

)

Loss on disposals of property and equipment

 

—

 

430

 

Increase (decrease) in cash due to changes in assets and liabilities, net of effect from acquisition:

 

 

 

 

 

Receivables

 

60

 

(19,221

)

Inventory

 

(11,164

)

(4,189

)

Other assets

 

(21,914

)

(4,907

)

Accounts payable, accrued expenses and deferred revenues

 

6,486

 

(1,902

)

Other liabilities

 

(564

)

479

 

 

 

 

 

 

 

Net cash provided by operating activities

 

46,162

 

9,382

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property and equipment

 

(24,164

)

(9,188

)

Acquisition of intangible assets

 

(384

)

(240

)

Sales and (purchases) of investments, net

 

(3,924

)

(14,009

)

 

 

 

 

 

 

Net cash used for investing activities

 

(28,472

)

(23,437

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from exercises of common stock options

 

1,341

 

5,377

 

Principal proceeds (payments on and retirements) of long-term debt

 

119

 

(10,986

)

 

 

 

 

 

 

Net cash provided by (used for) financing activities

 

1,460

 

(5,609

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(3,132

)

(2,798

)

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

16,018

 

(22,462

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

574,244

 

1,115,699

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

590,262

 

$

1,093,237

 

 


 

Cephalon, Inc. and Subsidiaries

 

Reconciliation of Projected GAAP Diluted Earnings per Share

to Diluted Adjusted Earnings Per Share Guidance

(Unaudited)

 

 

 

Three Months

 

Twelve Months

 

 

 

Ended

 

Ended

 

 

 

June 30,

 

December 31,

 

 

 

2005

 

2005

 

 

 

 

 

 

 

Projected GAAP diluted earnings per share

 

$0.42 - $0.47

 

$2.27 - $2.42

 

 

 

 

 

 

 

Amortization of current intangibles

 

$

0.20

 

$

0.82

 

Tax benefit on adjustments

 

$

(0.07

)

$

(0.29

)

 

 

 

 

 

 

Diluted adjusted earnings per share guidance

 

$0.55 - $0.60

 

$2.80 - $2.95