EX-99.1 2 a09-30855_4ex99d1.htm EX-99.1

Exhibit 99.1

 

For Immediate Release

 

Cephalon Net Sales Increase 9% and Net Cash from Operations

Surpasses $200 Million in the Third Quarter 2009

 

Adjusted Net Income Surpasses Guidance

 

NUVIGIL Launch Exceeds Expectations

 

Frazer, Pa. — October 27, 2009 — Cephalon, Inc. (Nasdaq: CEPH) today reported third quarter 2009 net sales of $535.2 million, a 9 percent increase compared to net sales of $489.7 million for the third quarter 2008.  Basic income per common share for the quarter was $1.38.  Excluding amortization expense and certain other items, basic adjusted income per common share for the quarter was $1.70, an increase of 25 percent over the comparable figure of $1.36 for the same period in 2008.  Adjusted net income for the third quarter of 2009 was $126.7 million, a 36 percent increase over the comparable $92.9 million for the third quarter of 2008.  This exceeded the company’s adjusted net income guidance range of $108 to $116 million.

 

Central nervous system (CNS) franchise net sales were $291.9 million during the quarter, a 7 percent increase compared to the same period last year.  Pain franchise reported net sales of $116.3 million, a 1 percent decrease versus third quarter 2008.  Oncology franchise net sales were $83.1 million, a 58 percent increase over the same period last year due to strong sales of TREANDA® (bendamustine hydrochloride) of $54.5 million.

 

During the quarter Cephalon recorded net cash provided by operating activities of $203.6 million bringing the year-to-date cash flow from operations to $517.1 million.

 

“The exceptional launch of NUVIGIL was the highlight of the quarter” said Frank Baldino, Jr., Ph.D., Chairman and CEO.  “In addition, we have assembled the deepest and most diverse pipeline in our history with a variety of small molecules and biologics being studied for pain, oncology, and inflammatory diseases.  We look forward to developing this diverse pipeline with the goal of creating important new medicines for patients.”

 

The company is updating its guidance for 2009.  Total net sales guidance is now $2.125-$2.175 billion. This includes CNS franchise net sales of $1.150-$1.170 billion, pain franchise net sales of $480-$500 million, oncology franchise net sales of $315-$335 million, and other product net sales of $160-$175 million. Full year R&D and SG&A expense guidance is now $400-$415 million and $800-$815 million, respectively.  Adjusted net income guidance remains unchanged at $457-$464 million.  Basic adjusted income per common share guidance also remains unchanged at $6.30-$6.40.

 

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

 


 

Cephalon is introducing 2010 net sales guidance of $2.325 - $2.400 billion. This includes CNS franchise net sales of $1.180 — $1.220 billion, pain franchise net sales of $535 - $570 million, oncology franchise net sales of $400 - $430 million, and other product net sales of $200 - $220 million. R&D and SG&A guidance for 2010 are $470 - $490 million and $840 - $860 million, respectively.

 

The company also is introducing adjusted net income for 2010 of $495 - $510 million. This represents growth of approximately 9 percent over our 2009 guidance.  Cephalon is introducing 2010 adjusted net income per common share guidance of $6.50 - $6.70.

 

Basic adjusted income per common share for both the full-year 2009 and full-year 2010 is reconciled below and is subject to the assumptions set forth therein.  References in this press release to basic income per common share, basic adjusted income per common share, basic adjusted income per common share guidance, adjusted net income, adjusted net income guidance, adjusted net income per common share, adjusted net income per common share guidance refers to those metrics on an “attributable to Cephalon” basis and does not include any income or losses attributable to noncontrolling interests.

 

Cephalon’s management will discuss the company’s third quarter 2009 performance in a conference call with investors beginning at 5:00 p.m. U.S. EDT today.  To participate in the conference call, dial +1-785-830-1926 and refer to conference code number 8349052. Investors can listen to the call live by logging on to the company’s website at www.cephalon.com and clicking on “Investors” then “Webcast.”  The conference call will be archived and available to investors for one week after the call.

 

About Cephalon, Inc.

 

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of many unique products in four core therapeutic areas: central nervous system, inflammatory diseases, pain and oncology. A member of the Fortune 1000 and the S&P 500 Index, Cephalon currently employs approximately 3,000 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 has a growing presence in Europe, the Middle East and Africa.  The Cephalon European headquarters and pre-clinical development center are located in Maisons-Alfort, France, just outside of Paris.  Key business units are located in England, Ireland, France, Germany, Italy, Spain, the Netherlands for the Benelux countries, and Poland for Eastern and Central European countries.  Cephalon Europe markets more than 30 products in four areas: central nervous system, pain, primary care and oncology.

 

The company’s proprietary products in the United States include: AMRIX® (cyclobenzaprine hydrochloride extended-release capsules), TREANDA® for Injection,

 

2


 

FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride), NUVIGIL® (armodafinil) Tablets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II].  The company also markets numerous products internationally. 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; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; net sales, adjusted net income and basic adjusted income per common share guidance for the full-year 2009 and full-year 2010 and SG&A and R&D guidance for the full-year 2009 and full-year 2010; 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,” “Adjusted Net Income Guidance,” “Basic Adjusted Income per Common Share Guidance,” and “Diluted Adjusted Income Per Common Share,” 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.

 

Source: Cephalon, Inc.

 

Contacts:

 

Media:

Investors:

Sheryl Williams

Robert (Chip) Merritt

610-738-6493

610-738-6376

swilliam@cephalon.com

cmerritt@cephalon.com

 

3


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2009

 

As adjusted
2008*

 

2009

 

As adjusted
2008*

 

REVENUES:

 

 

 

 

 

 

 

 

 

Net sales

 

$

535,223

 

$

489,664

 

$

1,588,610

 

$

1,408,603

 

Other revenues

 

14,189

 

8,818

 

28,583

 

25,813

 

 

 

549,412

 

498,482

 

1,617,193

 

1,434,416

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Cost of sales

 

90,456

 

121,477

 

293,633

 

312,711

 

Research and development

 

99,157

 

88,325

 

304,266

 

250,169

 

Selling, general and administrative

 

194,068

 

222,948

 

618,314

 

631,832

 

Restructuring charges

 

1,062

 

1,497

 

3,944

 

6,973

 

Settlement reserve

 

—

 

7,450

 

—

 

7,450

 

Acquired in-process research and development

 

6,000

 

—

 

46,118

 

10,000

 

 

 

390,743

 

441,697

 

1,266,275

 

1,219,135

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

158,669

 

56,785

 

350,918

 

215,281

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income

 

1,821

 

4,002

 

3,455

 

15,515

 

Interest expense

 

(26,495

)

(19,013

)

(63,213

)

(62,080

)

Other income (expense), net

 

3,775

 

(2,284

)

42,418

 

1,488

 

 

 

(20,899

)

(17,295

)

(17,340

)

(45,077

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

137,770

 

39,490

 

333,578

 

170,204

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT)

 

42,673

 

(66,108

)

122,659

 

(17,727

)

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

95,097

 

105,598

 

210,919

 

187,931

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

7,625

 

—

 

35,150

 

—

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

102,722

 

$

105,598

 

$

246,069

 

$

187,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.38

 

$

1.55

 

$

3.44

 

$

2.77

 

 

 

 

 

 

 

 

 

 

 

DILUTED INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.31

 

$

1.34

 

$

3.17

 

$

2.49

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO CEPHALON, INC.

 

74,647

 

68,118

 

71,541

 

67,855

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION ATTRIBUTABLE TO CEPHALON, INC.

 

78,431

 

78,920

 

77,552

 

75,580

 

 

*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

102,722

 

$

105,598

 

 

 

 

 

 

 

Cost of sales adjustments

 

21,968

(1)

54,569

(1)

Research and development adjustments

 

1,318

(2)

259

(2)

Selling, general and administrative adjustments

 

635

(3)

27,169

(3)

Restructuring charges

 

1,062

(4)

1,497

(4)

Settlement reserve

 

—

(5)

7,450

(5)

Interest expense adjustment

 

16,959

(6)

13,932

(6)

Other (income) expense adjustment

 

(484

)(7)

—

(7)

In-process research and development adjustments

 

6,000

(8)

—

(8)

Income tax adjustment

 

(23,475

)(9)

(117,569

)(9)

 

 

23,983

 

(12,693

)

 

 

 

 

 

 

ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

126,705

 

$

92,905

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

1.70

 

$

1.36

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

1.62

 

$

1.18

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

74,647

 

68,118

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

78,431

 

78,920

 

 

Notes to Reconciliation of GAAP Net Income to Adjusted Net Income

 

(1)   To exclude the on-going amortization of acquired intangible assets ($26.4M in 2009; $24.0M in 2008), accelerated depreciation related to restructuring ($5.0M in 2009; $4.5M in 2008) and the reserve for modafinil purchase commitments in excess of estimated requirements ($26.0M in 2008), offset by the gain recognized in connection with an agreement to reduce our excess modafinil purchase commitments ($9.5M in 2009).

 

(2)   To exclude accelerated depreciation related to restructuring ($0.3M in 2009 and 2008) and charges related to payment for research and development collaboration ($1.0M in 2009).

 

(3)   To exclude charges related to the acquisition of Arana Therapeutics Limited ($0.6M in 2009) and charges related to the estimated termination payments due to Takeda Pharmaceuticals North America, Inc. ($27.2M)..

 

(4)   To exclude costs related to the CIMA restructuring.

 

(5)   In 2008, to exclude charges related to the settlement of investigations by the Offices of the Attorney General of Connecticut and Massachusetts and estimated relator attorney fees.

 

(6)   In 2009, to exclude non-cash interest expense associated with our convertible debt ($17.0M in 2009; $10.2M in 2008) and accrued interest related to the agreement in principle reached with the U.S. Attorney's Office in Philadelphia ($3.7M in 2008).

 

(7)   In 2009, to exclude foreign exchange gains on Australian Dollar acquisition funds related to the acquisition of Arana Therapeutics Limited.

 

(8)   To exclude charges incurred in exchange for license rights to certain of XOMA Ltd.’s proprietary antibody library materials.

 

(9)   To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments primarily related to the tax benefits for the settlement with the U.S. Attorney's Office ($13.8M in 2009; $84.5M in 2008), for which the related expense was recorded in 2007 and for the states of Connecticut and Massachusetts, for which the related expense was recorded in the third quarter of 2008.

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

246,069

 

$

187,931

 

 

 

 

 

 

 

Cost of sales adjustments

 

78,146

(1)

111,349

(1)

Research and development adjustments

 

4,404

(2)

8,013

(2)

Selling, general and administrative adjustments

 

14,379

(3)

30,124

(3)

Restructuring charges

 

3,944

(4)

6,973

(4)

Settlement reserve

 

—

 

7,450

(5)

Interest expense adjustment

 

40,459

(6)

47,633

(6)

Other (income) expense adjustment

 

(40,011

)(7)

—

 

In-process research and development adjustments

 

46,118

(8)

10,000

(8)

Adjustment to noncontrolling interest

 

(819

)(9)

—

 

Income tax adjustment

 

(54,192

)(10)

(156,513

)(10)

 

 

92,428

 

65,029

 

 

 

 

 

 

 

ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

338,497

 

$

252,960

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

4.73

 

$

3.73

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

4.36

 

$

3.35

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

71,541

 

67,855

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

77,552

 

75,580

 

 


 

 

Notes to Reconciliation of GAAP Net Income to Adjusted Net Income

 

(1)       To exclude the on-going amortization of acquired intangible assets ($70.6M in 2009; $77.0M in 2008)  and accelerated depreciation related to restructuring ($14.0M in 2009; $8.3M in 2008) and the reserve for modafinil purchase commitments in excess of estimated requirements ($3.0M in 2009; $26.0M in 2008), offset by the gain recognized in connection with an agreement to reduce our excess modafinil purchase commitments ($9.5M in 2009).

 

(2)       To exclude accelerated depreciation related to restructuring ($0.9M in 2009; $0.3M in 2008), charges related to payments for several research and development collaborations ($2.0M in 2009; $6.0M in 2008), charges related to our transaction with Arana Therapeutics Limited ($1.5M in 2009) and other charges ($1.8M in 2008) related to employee severance costs.

 

(3)       In 2009, to exclude charges related to the acquisition of Arana Therapeutics Limited ($7.8M) and charges related to our settlement with Takeda ($6.5M) which resolves our remaining contractual arrangements.  In 2008, to exclude charges related to employee severance costs ($3.0M) and charges related to the estimated termination payments due to Takeda Pharmaceuticals North America, Inc. ($27.2M).

 

(4)       To exclude costs related to the CIMA restructuring.

 

(5)       To exclude charges related to the settlement of investigations by the Offices of the Attorney General of Connecticut and Massachusetts and estimated relator attorney fees.

 

(6)       To exclude non-cash interest expense associated with our convertible debt ($40.5M in 2009; $36.3M in 2008) and accrued interest related to the agreement in principle reached with the U.S. Attorney’s Office in Philadelphia ($11.3M in 2008).

 

(7)       In 2009, to exclude the following gains and losses related to the acquisition of Arana Therapeutics Limited:

· $6.6M gain on pre-bid Arana holdings;

· $2.8M loss on contingent consideration (90% ownership incentive payment);

· $10.0M gain on the excess of net assets over consideration;

· $19.0M gains on foreign exchange derivative instruments;

· $5.6M foreign exchange gain on Australian Dollar acquisition funds; and

· $1.6M dividend income related to our initial purchase of Arana shares.

 

(8)       To exclude charges related to the deconsolidation of Acusphere ($9.3M), the acquisition of worldwide license rights related to LUPUZOR from ImmuPharma ($30.0M), license rights for bendamustine hydrochloride in China and Hong Kong ($0.8M) and license rights to certain of XOMA Ltd.’s proprietary antibody library materials ($6.0M) in 2009 and the license of Acusphere HDDS technology for use in oncology therapeutics in 2008.

 

(9)       In 2009 to exclude the portion of non-cash charges related to our acquisition of Arana Therapeutics Limited that are reflected in adjustments (7) above but do not affect net income because they are attributed to noncontrolling interests.

 

(10)     To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments primarily related to the tax benefits for the settlement with the U.S. Attorney’s Office ($13.8M in 2009; $84.5M in 2008), for which the related expense was recorded in 2007 and for the states of Connecticut and Massachusetts, for which the related expense was recorded in the third quarter of 2008.

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED SALES DETAIL

(In thousands)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

%
Increase

 

 

 

2009

 

2008

 

(Decrease)

 

 

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

241,301

 

$

16,693

 

$

257,994

 

$

241,366

 

$

17,793

 

$

259,159

 

—

%

(6

)%

—

%

NUVIGIL

 

20,991

 

—

 

20,991

 

—

 

—

 

—

 

—

 

—

 

—

 

GABITRIL

 

11,560

 

1,340

 

12,900

 

12,176

 

2,337

 

14,513

 

(5

)

(43

)

(11

)

CNS

 

273,852

 

18,033

 

291,885

 

253,542

 

20,130

 

273,672

 

8

 

(10

)

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

19,578

 

13,663

 

33,241

 

21,392

 

14,401

 

35,793

 

(8

)

(5

)

(7

)

Generic OTFC

 

19,332

 

—

 

19,332

 

19,569

 

—

 

19,569

 

(1

)

—

 

(1

)

FENTORA

 

35,779

 

1,201

 

36,980

 

41,330

 

—

 

41,330

 

(13

)

—

 

(11

)

AMRIX

 

26,703

 

—

 

26,703

 

20,512

 

—

 

20,512

 

30

 

—

 

30

 

Pain

 

101,392

 

14,864

 

116,256

 

102,803

 

14,401

 

117,204

 

(1

)

3

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

54,532

 

—

 

54,532

 

24,551

 

—

 

24,551

 

122

 

—

 

122

 

Other

 

4,010

 

24,526

 

28,536

 

4,691

 

23,195

 

27,886

 

(15

)

6

 

2

 

Oncology

 

58,542

 

24,526

 

83,068

 

29,242

 

23,195

 

52,437

 

100

 

6

 

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

6,632

 

37,382

 

44,014

 

11,351

 

35,000

 

46,351

 

(42

)

7

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

440,418

 

$

94,805

 

$

535,223

 

$

396,938

 

$

92,726

 

$

489,664

 

11

%

2

%

9

%

 

 

 

Nine Months Ended
September 30,

 

%
Increase

 

 

 

2009

 

2008

 

(Decrease)

 

 

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

726,313

 

$

47,111

 

$

773,424

 

$

658,777

 

$

48,428

 

$

707,205

 

10

%

(3

)%

9

%

NUVIGIL

 

37,777

 

—

 

37,777

 

—

 

—

 

—

 

—

 

—

 

—

 

GABITRIL

 

37,058

 

3,871

 

40,929

 

37,614

 

6,669

 

44,283

 

(1

)

(42

)

(8

)

CNS

 

801,148

 

50,982

 

852,130

 

696,391

 

55,097

 

751,488

 

15

 

(7

)

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

71,148

 

38,122

 

109,270

 

96,960

 

40,734

 

137,694

 

(27

)

(6

)

(21

)

Generic OTFC

 

66,834

 

—

 

66,834

 

75,845

 

—

 

75,845

 

(12

)

—

 

(12

)

FENTORA

 

99,686

 

2,438

 

102,124

 

116,637

 

—

 

116,637

 

(15

)

—

 

(12

)

AMRIX

 

83,807

 

—

 

83,807

 

47,399

 

—

 

47,399

 

77

 

—

 

77

 

Pain

 

321,475

 

40,560

 

362,035

 

336,841

 

40,734

 

377,575

 

(5

)

—

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

160,549

 

—

 

160,549

 

38,932

 

—

 

38,932

 

312

 

—

 

312

 

Other

 

13,529

 

67,726

 

81,255

 

14,259

 

70,837

 

85,096

 

(5

)

(4

)

(5

)

Oncology

 

174,078

 

67,726

 

241,804

 

53,191

 

70,837

 

124,028

 

227

 

(4

)

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

26,167

 

106,474

 

132,641

 

37,995

 

117,517

 

155,512

 

(31

)

(9

)

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,322,868

 

$

265,742

 

$

1,588,610

 

$

1,124,418

 

$

284,185

 

$

1,408,603

 

18

%

(6

)%

13

%

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

September 30,
2009

 

As adjusted
December 31,
2008*

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

1,453,814

 

$

524,459

 

Short term investments

 

131,403

 

—

 

Receivables, net

 

329,330

 

409,580

 

Inventory, net

 

240,349

 

117,297

 

Deferred tax assets, net

 

255,136

 

224,066

 

Other current assets

 

67,104

 

54,120

 

Total current assets

 

2,477,136

 

1,329,522

 

 

 

 

 

 

 

INVESTMENTS

 

17,333

 

8,081

 

PROPERTY AND EQUIPMENT, net

 

459,381

 

467,449

 

GOODWILL

 

570,417

 

445,332

 

INTANGIBLE ASSETS, net

 

1,080,791

 

607,332

 

DEFERRED TAX ASSETS, net

 

1,224

 

46,074

 

DEBT ISSUANCE COSTS

 

20,112

 

11,838

 

OTHER ASSETS

 

32,313

 

167,314

 

 

 

$

4,658,707

 

$

3,082,942

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current portion of long-term debt, net

 

$

810,081

 

$

781,618

 

Accounts payable

 

94,982

 

87,079

 

Accrued expenses

 

408,752

 

304,415

 

Total current liabilities

 

1,313,815

 

1,173,112

 

 

 

 

 

 

 

LONG-TERM DEBT

 

357,555

 

3,692

 

DEFERRED TAX LIABILITIES, net

 

197,333

 

77,932

 

OTHER LIABILITIES

 

144,877

 

163,123

 

Total liabilities

 

2,013,580

 

1,417,859

 

 

 

 

 

 

 

REDEEMABLE EQUITY

 

217,861

 

248,403

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

Cephalon Stockholders’ Equity

 

 

 

 

 

Common stock, $0.01 par value

 

776

 

717

 

Additional paid-in capital

 

2,505,552

 

2,095,324

 

Treasury stock, at cost

 

(201,734

)

(201,705

)

Accumulated deficit

 

(275,217

)

(521,286

)

Accumulated other comprehensive income

 

114,146

 

43,630

 

Total Cephalon stockholders’ equity

 

2,143,523

 

1,416,680

 

Noncontrolling Interest

 

283,743

 

—

 

Total equity

 

2,427,266

 

1,416,680

 

 

 

$

4,658,707

 

$

3,082,942

 

 

*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2009

 

As adjusted
2008*

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

210,919

 

$

187,931

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

136,403

 

128,772

 

Deferred income tax benefit

 

(40,182

)

(22,761

)

Stock-based compensation expense

 

36,710

 

32,543

 

Amortization of debt discount and debt issuance costs

 

41,273

 

36,383

 

Gain on foreign exchange contracts

 

(26,754

)

—

 

Gain on acquisition of Arana

 

(10,008

)

—

 

Loss on disposals of property and equipment

 

—

 

2,740

 

Impairment charges

 

—

 

1,164

 

Acquired in-process research and development from Acusphere deconsolidation

 

8,366

 

—

 

Shortfall tax benefits from stock-based compensation

 

(38

)

(451

)

Other

 

(5,041

)

(396

)

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

94,204

 

(74,258

)

Inventory

 

(7,060

)

(14,557

)

Other assets

 

32,206

 

(99,008

)

Accounts payable, accrued expenses and deferred revenues

 

89,192

 

34,526

 

Other liabilities

 

(43,059

)

70,149

 

Net cash provided by operating activities

 

517,131

 

282,777

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property and equipment

 

(43,647

)

(55,689

)

Acquisition of intangible assets

 

—

 

(25,575

)

Cash balance from consolidation of variable interest entity

 

52,563

 

—

 

Investment in Ception

 

(75,000

)

—

 

Acquisition of Arana, net of cash acquired

 

(232,527

)

—

 

Purchases of investments

 

(9,292

)

(6,242

)

Proceeds from foreign exchange contracts

 

26,754

 

—

 

Sales and maturities of available-for-sale investments

 

5,074

 

7,596

 

Net cash used for investing activities

 

(276,075

)

(79,910

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from sale of common stock

 

288,000

 

—

 

Proceeds from exercises of common stock options

 

6,701

 

37,185

 

Windfall tax benefits from stock-based compensation

 

1,259

 

4,592

 

Acquisition of treasury stock

 

(29

)

(24

)

Payments on and retirements of long-term debt

 

(11,246

)

(216,093

)

Net proceeds from issuance of convertible subordinated notes

 

484,719

 

—

 

Proceeds from sale of warrants

 

37,640

 

—

 

Purchase of convertible note hedge

 

(121,040

)

—

 

Net cash provided by (used for) financing activities

 

686,004

 

(174,340

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

2,295

 

(601

)

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

929,355

 

27,926

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

524,459

 

818,669

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

1,453,814

 

$

846,595

 

 

*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of Projected GAAP Basic Income per Common Share

to Basic Adjusted Income Per Common Share Guidance

(Unaudited)

 

 

 

Twelve Months Ended
December 31, 2009

 

Twelve Months Ended
December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected GAAP basic income per common share

 

$

4.69

 

—

 

$

4.79

 

$

4.95

 

—

 

$

5.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of current intangibles

 

$

1.34

 

—

 

$

1.34

 

$

1.20

 

—

 

$

1.20

 

Accelerated depreciation adjustment- CIMA

 

$

0.09

 

—

 

$

0.09

 

$

0.08

 

—

 

$

0.08

 

Accelerated depreciation adjustment- Mitry-Mory

 

$

0.18

 

—

 

$

0.18

 

$

0.09

 

—

 

$

0.09

 

Research and development adjustments

 

$

0.05

 

—

 

$

0.05

 

$

—

 

—

 

$

—

 

Selling, general and administrative adjustments

 

$

0.20

 

—

 

$

0.20

 

$

—

 

—

 

$

—

 

Cost of goods sold adjustments

 

$

(0.09

)

—

 

$

(0.09

)

$

—

 

—

 

$

—

 

Restructuring adjustments

 

$

0.07

 

—

 

$

0.07

 

$

0.08

 

—

 

$

0.08

 

Acquired in-process research and development adjustments

 

$

0.64

 

—

 

$

0.64

 

$

—

 

—

 

$

—

 

Other income (expense) adjustments

 

$

(0.56

)

—

 

$

(0.56

)

$

—

 

—

 

$

—

 

Interest expense adjustments

 

$

0.80

 

—

 

$

0.80

 

$

0.86

 

—

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of pre-tax adjustments at the applicable tax rates

 

$

(1.11

)

—

 

$

(1.11

)

$

(0.76

)

—

 

$

(0.76

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted income per common share guidance

 

$

6.30

 

—

 

$

6.40

 

$

6.50

 

—

 

$

6.70

 

 

The company’s guidance is being issued based on certain assumptions including:

 

· Adjusted effective tax rate of approximately 34.0 percent in 2009 and 33.0 percent in 2010; and

· Weighted average number of common shares outstanding of 72.5 and 76.2 million shares for the twelve months ended December 31, 2009 and 2010, respectively.