EX-99.1 2 a10-3609_1ex99d1.htm EX-99.1

Exhibit 99.1

 

For Immediate Release

 

Cephalon Reports Record Sales and

Adjusted Net Income for 2009

 

Sales Exceed $2 Billion, Increasing for Tenth Year in a Row

 

2010 Guidance Increased

 

Cash From Operations Totals $681 Million

 

Frazer, Pa. — February 11, 2009 — Cephalon, Inc. (Nasdaq: CEPH) today reported 2009 net sales of $2.152 billion, an 11 percent increase compared to net sales of $1.943 billion for 2008.  Basic income per common share for the year was $4.74.  Excluding amortization expense and certain other items, adjusted net income for full year 2009 was $469 million, a 28 percent increase over the previous year.  This exceeded the company’s adjusted net income guidance range of $457 to $464 million for 2009. Basic adjusted income per common share for the year was $6.48 in 2009 and $5.39 in 2008.

 

Central nervous system (CNS) franchise net sales were $1.155 billion during the year, a 10 percent increase compared to 2008.  Pain franchise reported net sales of $485.1 million, a 3 percent decrease versus last year.  Oncology franchise net sales were $335.9 million, an 81 percent increase over 2008 due to strong net sales of TREANDA® (bendamustine hydrochloride) of $222.1 million.  Sales of other products were $176.0 million compared to $207.6 million for 2008 due to unfavorable exchange rates partially offset by volume increases.

 

During the fourth quarter 2009 Cephalon recorded net cash provided by operating activities of $164 million bringing the year-to-date cash flow from operations to $681 million.

 

“2009 was a year of extraordinary innovation and growth,” said Frank Baldino, Jr., Ph.D., Chairman and CEO.  “For the year we reported positive clinical study results on several of our drug candidates, advanced five new compounds into man and continued to acquire promising assets.  We continue our steadfast commitment to patients while building an enduring, diversified business for our shareholders.”

 

The company is introducing new guidance for 2010, which assumes that the Mepha acquisition closes on April 1st.  Total sales guidance for 2010 is $2.610-$2.690 billion. This includes CNS franchise sales of $1.180 -$1.220 billion, pain franchise sales of $495-$530 million, oncology franchise sales of $440-$470 million, and other product sales of $470-$490 million. Full year R&D and SG&A expense guidance is $480-$500 million and $960-$980

 

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

 


 

million, respectively.  Adjusted net income guidance is $518-$533 million.  Basic adjusted income per common share guidance is $6.80-$7.00 assuming 76.2 million basic shares outstanding.

 

Cephalon is introducing first quarter 2010 sales guidance of $575 - $595 million, adjusted net income guidance of $121 - $128 million and basic adjusted income per common share guidance of $1.60 - $1.70 assuming 75.5 million basic shares outstanding.

 

Basic adjusted income per common share for both the first quarter 2010 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 full year 2009 performance in a conference call with investors beginning at 5:00 p.m. U.S. EST today.  To participate in the conference call, dial +1-913-312-0705 and refer to conference code number 2954672. 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, 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

 

2


 

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; sales, adjusted net income and basic adjusted income per common share guidance for the first quarter and full-year 2010 and SG&A and R&D guidance for the first quarter 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

 

Year Ended

 

 

 

December 31,

 

December 31,

 

 

 

2009

 

As adjusted
2008*

 

2009

 

As adjusted
2008*

 

REVENUES:

 

 

 

 

 

 

 

 

 

Net sales

 

$

562,938

 

$

534,861

 

$

2,151,548

 

$

1,943,464

 

Other revenues

 

12,177

 

5,277

 

40,760

 

31,090

 

 

 

575,115

 

540,138

 

2,192,308

 

1,974,554

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Cost of sales

 

105,204

 

99,523

 

398,837

 

412,234

 

Research and development

 

91,165

 

112,039

 

395,431

 

362,208

 

Selling, general and administrative

 

203,738

 

209,037

 

822,052

 

840,873

 

Settlement reserve

 

—

 

—

 

—

 

7,450

 

Restructuring charges

 

9,881

 

1,442

 

13,825

 

8,415

 

Impairment charge

 

182,080

 

99,719

 

182,080

 

99,719

 

Acquired in-process research and development

 

—

 

31,955

 

46,118

 

41,955

 

Loss on sale of equipment

 

—

 

17,178

 

—

 

17,178

 

 

 

592,068

 

570,893

 

1,858,343

 

1,790,032

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

(16,953

)

(30,755

)

333,965

 

184,522

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income

 

1,808

 

1,386

 

5,263

 

16,901

 

Interest expense

 

(27,123

)

(13,153

)

(90,336

)

(75,233

)

Other income (expense), net

 

(1,903

)

6,388

 

40,515

 

7,880

 

 

 

(27,218

)

(5,379

)

(44,558

)

(50,452

)

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

(44,171

)

(36,134

)

289,407

 

134,070

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT)

 

(43,979

)

(20,092

)

78,680

 

(37,819

)

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

(192

)

(16,042

)

210,727

 

171,889

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

96,750

 

21,073

 

131,900

 

21,073

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

96,558

 

$

5,031

 

$

342,627

 

$

192,962

 

 

 

 

 

 

 

 

 

 

 

BASIC INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.29

 

$

0.07

 

$

4.74

 

$

2.84

 

 

 

 

 

 

 

 

 

 

 

DILUTED INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.23

 

$

0.06

 

$

4.41

 

$

2.54

 

 

 

 

 

 

 

 

 

 

 

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

 

74,720

 

68,505

 

72,342

 

68,018

 

 

 

 

 

 

 

 

 

 

 

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

 

78,508

 

77,823

 

77,733

 

76,097

 

 

*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

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

96,558

 

$

5,031

 

 

 

 

 

 

 

Cost of sales adjustments

 

34,875

(1)

27,804

(1)

Research and development adjustments

 

343

(2)

255

(2)

Selling, general and administrative adjustments

 

232

(3)

13,215

(3)

Restructuring charges

 

9,881

(4)

1,442

(4)

Acquired in-process research and development

 

—

 

15,000

(5)

Interest expense adjustment

 

17,307

(6)

10,357

(6)

Impairment charges

 

7,080

(7)

90,445

(7)

Loss on sale of equipment

 

—

 

17,178

(8)

Income taxes

 

(35,787

)(9)

(78,720

)(9)

Noncontrolling interest:

 

 

 

 

 

Impairment charge

 

175,000

(10)

9,274

(10)

Acquired in-process research and development

 

—

 

16,955

(10)

Less amount attributable to noncontrolling interest

 

(100,765

)(10)

(14,567

)(10)

Impairment charge tax benefit

 

(74,235

)(10)

—

 

 

 

 

 

 

 

Total adjustments to GAAP net income attributable to Cephalon, Inc.

 

33,931

 

108,638

 

 

 

 

 

 

 

ADJUSTED NET INCOME

 

$

130,489

 

$

113,669

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

1.75

 

$

1.66

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

1.66

 

$

1.46

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

74,720

 

68,505

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

78,508

 

77,823

 

 

Notes to Reconciliation of GAAP Net Income to Adjusted Net Income

 

(1)          To exclude the on-going amortization of acquired intangible assets ($26.9M in 2009; $23.7M in 2008), accelerated depreciation related to restructuring ($5.0M in 2009; $4.1M in 2008), and reserve for modafinil purchase commitments in excess of requirements ($3.0M in 2009)

 

(2)          To exclude accelerated depreciation related to restructuring ($0.3M in 2009; $0.2M in 2008).

 

(3)          In 2009, to exclude charges related to the acquisition of Arana Therapeutics Limited.  In 2008, to exclude charges related to the termination payments due to Takeda Pharmaceuticals North America, Inc. ($1.0M) and charges related to the termination payment due to Alkermes ($11.0M) and related severance ($1.2M).

 

(4)          To exclude costs related to worldwide restructuring efforts ($9.9M in 2009; $1.4M in 2008).

 

(5)          To exclude charges related to the acquisition of license rights to LUPUZOR from ImmuPharma PLC ($15.0M).

 

(6)          To exclude non-cash interest expense associated with our convertible debt ($17.3M in 2009; $10.4M in 2008).

 

(7)          In 2009, to exclude the impairment of our investment in SymBio Pharmaceuticals Limited ($7.0M).  In 2008, to exclude the impairment of the VIVITROL intangible assets ($90.4M).

 

(8)          To exclude the loss on sale of equipment related to the VIVITROL termination.

 

(9)          To reflect the tax effect of pre-tax adjustments at the applicable tax rates and certain other tax adjustments primarily related to changes in valuation allowances, other changes in tax assets and liabilities.

 

(10)    In 2009, to exclude the impairment of the Ception product rights ($175.0M) and the associated impact on the net loss attributable to noncontrolling interest ($100.8M) and income taxes ($74.2M).  In 2008, to exclude the charges related to the impairment of Acusphere fixed assets ($9.3M), the acquisition of licensed technology from Acusphere ($17.0M) and the impact on the net loss attributable to noncontrolling interest ($14.6M).

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income

(In thousands, except per share data)

(Unaudited)

 

 

 

Year Ended

 

 

 

December 31

 

 

 

2009

 

2008

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

342,627

 

$

192,962

 

 

 

 

 

 

 

Adjustments attributable to Cephalon, Inc.:

 

 

 

 

 

Cost of sales adjustments

 

113,021

(1)

139,153

(1)

Research and development adjustments

 

4,747

(2)

8,268

(2)

Selling, general and administrative adjustments

 

14,611

(3)

43,339

(3)

Settlement reserve

 

—

 

7,450

(4)

Restructuring expense

 

13,825

(5)

8,415

(5)

Acquired in-process research and development

 

46,118

(6)

25,000

(6)

Interest expense adjustment

 

57,766

(7)

57,990

(7)

Impairment charge

 

7,080

(8)

90,445

(8)

Other income (expense) adjustment

 

(40,011

)(9)

—

 

Loss on sale of equipment

 

—

 

17,178

(10)

Income taxes

 

(89,979

)(11)

(235,233

)(11)

Noncontrolling interest:

 

 

 

 

 

Impairment charge

 

175,000

(12)

9,274

(12)

Acquired in-process research and development

 

—

 

16,955

(12)

Less amount attributable to noncontrolling interest

 

(101,584

)(12)

(14,567

)(12)

Impairment charge tax benefit

 

(74,235

)(12)

—

 

 

 

 

 

 

 

Total adjustments to GAAP net income attributable to Cephalon, Inc.

 

126,359

 

173,667

 

 

 

 

 

 

 

ADJUSTED NET INCOME

 

$

468,986

 

$

366,629

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

6.48

 

$

5.39

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

6.03

 

$

4.82

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

72,342

 

68,018

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

77,733

 

76,097

 

 


 

Notes to Reconciliation of GAAP Net Income to Adjusted Net Income

 

(1)          To exclude the on-going amortization of acquired intangible assets ($97.5M in 2009; $100.7M in 2008), accelerated depreciation related to restructuring ($19.0M in 2009; $12.4M in 2008) and the reserve for modafinil purchase commitments in excess of estimated requirements ($6.0M 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 ($1.3M in 2009; $0.5M 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 ($8.1M) 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), charges related to estimated termination payments due to Takeda Pharmaceuticals North America, Inc. ($28.2M) and charges related to the termination payment due to Alkermes ($11.0M) and related severance ($1.2M).

 

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

 

(5)          To exclude costs related to worldwide restructuring efforts ($13.8M in 2009; $8.4M in 2008).

 

(6)          In 2009, 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 2008, to exclude charges related to the acquisition of license rights to LUPUZOR from ImmuPharma PLC ($15.0M).

 

(7)          To exclude non-cash interest expense associated with our convertible debt ($57.8M in 2009; $46.7M in 2008) and the accrued interest related to the agreement in principle reached with the U.S. Attorney’s Office in Philadelphia ($11.3M in 2008).

 

(8)          In 2009, to exclude the impairment of our investment in SymBio Pharmaceuticals Limited ($7.0M).  In 2008, to exclude the impairment of the VIVITROL intangible assets ($90.4M).

 

(9)          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.

 

(10)    To exclude the loss on sale of equipment related to the VIVITROL termination.

 

(11)    To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments, 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.

 

(12)    In 2009, to exclude the impairment of the Ception product rights ($175.0M) and the associated impact on the net loss attributable noncontrolling interest ($100.8M) and income taxes ($74.2M).  Also in 2009, to exclude the portion of non-cash charges related to our acquisition of Arana Therapeutics Limited that are reflected in adjustments (9) above but do not affect net income because they are attributed to noncontrolling interests ($0.8M). In 2008, to exclude charges related to the impairment of Acusphere fixed assets ($9.3M), the acquisition of licensed technology from Acusphere ($17.0M) and the impact on the net loss attributable to noncontrolling interest ($14.6M).

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED SALES DETAIL

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

%

 

 

 

December 31

 

Increase

 

 

 

2009

 

2008

 

(Decrease)

 

 

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

234,757

 

$

16,507

 

$

251,264

 

$

266,209

 

$

15,004

 

$

281,213

 

(12

)

10

 

(11

)

NUVIGIL

 

35,614

 

—

 

35,614

 

—

 

—

 

—

 

—

 

—

 

—

 

GABITRIL

 

14,042

 

1,515

 

15,557

 

14,827

 

1,587

 

16,414

 

(5

)

(5

)

(5

)

CNS

 

284,413

 

18,022

 

302,435

 

281,036

 

16,591

 

297,627

 

1

 

9

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

18,726

 

18,949

 

37,675

 

22,646

 

16,181

 

38,827

 

(17

)

17

 

(3

)

Generic OTFC

 

16,198

 

—

 

16,198

 

19,915

 

—

 

19,915

 

(19

)

—

 

(19

)

FENTORA

 

36,877

 

1,676

 

38,553

 

38,609

 

—

 

38,609

 

(4

)

—

 

(0

)

AMRIX

 

30,628

 

—

 

30,628

 

26,242

 

—

 

26,242

 

17

 

—

 

17

 

Pain

 

102,429

 

20,625

 

123,054

 

107,412

 

16,181

 

123,593

 

(5

)

27

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

61,563

 

—

 

61,563

 

36,200

 

—

 

36,200

 

70

 

—

 

70

 

Other Oncology

 

4,752

 

27,744

 

32,496

 

4,307

 

21,082

 

25,389

 

10

 

32

 

28

 

Oncology

 

66,315

 

27,744

 

94,059

 

40,507

 

21,082

 

61,589

 

64

 

32

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

6,814

 

36,576

 

43,390

 

11,672

 

40,380

 

52,052

 

(42

)

(9

)

(17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

459,971

 

$

102,967

 

$

562,938

 

$

440,627

 

$

94,234

 

$

534,861

 

4

 

9

 

5

 

 

 

 

Year Ended

 

%

 

 

 

December 31

 

Increase

 

 

 

2009

 

2008

 

(Decrease)

 

 

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

961,070

 

$

63,618

 

$

1,024,688

 

$

924,986

 

$

63,432

 

$

988,418

 

4

 

—

 

4

 

NUVIGIL

 

73,391

 

—

 

73,391

 

—

 

—

 

—

 

—

 

—

 

—

 

GABITRIL

 

51,100

 

5,386

 

56,486

 

52,441

 

8,256

 

60,697

 

(3

)

(35

)

(7

)

CNS

 

1,085,561

 

69,004

 

1,154,565

 

977,427

 

71,688

 

1,049,115

 

11

 

(4

)

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

75,418

 

71,527

 

146,945

 

105,351

 

71,170

 

176,521

 

(28

)

1

 

(17

)

Generic OTFC

 

83,032

 

—

 

83,032

 

95,760

 

—

 

95,760

 

(13

)

—

 

(13

)

FENTORA

 

136,563

 

4,114

 

140,677

 

155,246

 

—

 

155,246

 

(12

)

—

 

(9

)

AMRIX

 

114,435

 

—

 

114,435

 

73,641

 

—

 

73,641

 

55

 

—

 

55

 

Pain

 

409,448

 

75,641

 

485,089

 

429,998

 

71,170

 

501,168

 

(5

)

6

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

222,112

 

—

 

222,112

 

75,132

 

—

 

75,132

 

196

 

—

 

196

 

Other Oncology

 

18,281

 

95,470

 

113,751

 

18,566

 

91,919

 

110,485

 

(2

)

4

 

3

 

Oncology

 

240,393

 

95,470

 

335,863

 

93,698

 

91,919

 

185,617

 

157

 

4

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

32,981

 

143,050

 

176,031

 

49,667

 

157,897

 

207,564

 

(34

)

(9

)

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,768,383

 

$

383,165

 

$

2,151,548

 

$

1,550,790

 

$

392,674

 

$

1,943,464

 

14

 

(2

)

11

 

 


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

December 31,
2009

 

As adjusted
December 31,
2008*

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

1,647,635

 

$

524,459

 

Receivables, net

 

376,076

 

409,580

 

Inventory, net

 

240,576

 

117,297

 

Deferred tax assets, net

 

243,246

 

224,066

 

Other current assets

 

58,423

 

54,120

 

Total current assets

 

2,565,956

 

1,329,522

 

 

 

 

 

 

 

INVESTMENTS

 

12,427

 

8,081

 

PROPERTY AND EQUIPMENT, net

 

451,879

 

467,449

 

GOODWILL

 

590,284

 

445,332

 

INTANGIBLE ASSETS, net

 

981,857

 

607,332

 

DEFERRED TAX ASSETS, net

 

237

 

46,074

 

DEBT ISSUANCE COSTS

 

18,862

 

11,838

 

OTHER ASSETS

 

36,593

 

167,314

 

 

 

$

4,658,095

 

$

3,082,942

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current portion of long-term debt, net

 

$

818,925

 

$

781,618

 

Accounts payable

 

88,829

 

87,079

 

Accrued expenses

 

430,209

 

304,415

 

Total current liabilities

 

1,337,963

 

1,173,112

 

 

 

 

 

 

 

LONG-TERM DEBT

 

363,696

 

3,692

 

DEFERRED TAX LIABILITIES, net

 

159,328

 

77,932

 

OTHER LIABILITIES

 

111,728

 

163,123

 

Total liabilities

 

1,972,715

 

1,417,859

 

 

 

 

 

 

 

REDEEMABLE EQUITY

 

207,307

 

248,403

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

Cephalon Stockholders’ Equity

 

 

 

 

 

Common stock, $0.01 par value

 

780

 

717

 

Additional paid-in capital

 

2,534,070

 

2,095,324

 

Treasury stock, at cost

 

(208,427

)

(201,705

)

Accumulated deficit

 

(178,659

)

(521,286

)

Accumulated other comprehensive income

 

114,194

 

43,630

 

 

 

 

 

 

 

Total Cephalon stockholders’ equity

 

2,261,958

 

1,416,680

 

Noncontrolling Interest

 

216,115

 

—

 

Total equity

 

2,478,073

 

1,416,680

 

 

 

$

4,658,095

 

$

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)

 

 

 

Year Ended
December 31,

 

 

 

2009

 

As adjusted
2008*

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

210,727

 

$

171,889

 

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

 

 

 

 

 

Depreciation and amortization

 

186,192

 

172,457

 

Deferred income tax benefit

 

(84,155

)

(68,043

)

Stock-based compensation expense

 

50,410

 

43,975

 

Amortization of debt discount and debt issuance costs

 

59,145

 

46,740

 

Gain on foreign exchange contracts

 

(26,754

)

—

 

Gain on acquisition of Arana

 

(10,008

)

—

 

Loss on disposals of property and equipment

 

—

 

17,178

 

Impairment charges

 

182,080

 

99,719

 

Acquired in-process research and development from Acusphere deconsolidation

 

8,366

 

—

 

Acquired in-process research and development

 

—

 

16,955

 

Shortfall tax benefits from stock-based compensation

 

(38

)

(511

)

Other

 

(3,503

)

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

81,022

 

(144,975

)

Inventory

 

(8,604

)

(37,397

)

Other assets

 

(14,348

)

11,792

 

Accounts payable and accrued expenses

 

99,013

 

(376,232

)

Other liabilities

 

(48,194

)

44,576

 

Net cash provided by (used for) operating activities

 

681,351

 

(1,877

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property and equipment

 

(60,927

)

(75,871

)

Acquisition of intangible assets

 

(53,324

)

(25,825

)

Cash balance from consolidation of variable interest entities

 

53,706

 

1,654

 

Investment in Ception

 

(75,000

)

(25,000

)

Investment in BDC

 

(30,000

)

—

 

Purchases of investments

 

(11,797

)

(6,692

)

Acquisition of Arana, net of cash acquired

 

(232,527

)

—

 

Proceeds from sale of property and equipment

 

—

 

16,000

 

Purchases of investments

 

—

 

—

 

Proceeds from foreign exchange contracts

 

26,754

 

—

 

Sales and maturities of available-for-sale investments

 

125,026

 

7,596

 

Net cash used for investing activities

 

(258,089

)

(108,138

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from sale of common stock

 

288,000

 

—

 

Proceeds from exercises of common stock options

 

10,211

 

43,962

 

Windfall tax benefits from stock-based compensation

 

2,017

 

7,834

 

Acquisition of treasury stock

 

(6,722

)

(6,947

)

Payments on and retirements of long-term debt

 

(13,412

)

(217,743

)

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

 

681,413

 

(172,894

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

18,501

 

(11,301

)

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

1,123,176

 

(294,210

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

524,459

 

818,669

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

1,647,635

 

$

524,459

 

 

*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)

 

 

 

Three Months Ended
March 31, 2010

 

Twelve Months Ended
December 31, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected GAAP basic income per common share

 

$

1.18

 

—

 

$

1.28

 

$

5.24

 

—

 

$

5.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of current intangibles

 

0.34

 

—

 

0.34

 

1.27

 

—

 

1.27

 

Accelerated depreciation adjustment- CIMA

 

0.02

 

—

 

0.02

 

0.08

 

—

 

0.08

 

Accelerated depreciation adjustment- Mitry-Mory

 

0.05

 

—

 

0.05

 

0.10

 

—

 

0.10

 

Restructuring adjustments

 

0.01

 

—

 

0.01

 

0.06

 

—

 

0.06

 

Interest expense adjustments

 

0.23

 

—

 

0.23

 

0.86

 

—

 

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(0.23

)

—

 

(0.23

)

(0.81

)

—

 

(0.81

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted income per common share guidance

 

$

1.60

 

—

 

$

1.70

 

$

6.80

 

—

 

$

7.00

 

 

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

 

· Adjusted effective tax rate of approximately 35 and 34 percent for the three months ended March 31, 2010 and the twelve months ended December 31, 2010, respectively; and

· Weighted average number of common shares outstanding of 75.5 million and 76.2 million shares for the three months ended March 31, 2010 and the twelve months ended December 31, 2010, respectively.

· Completion of the Mepha AG transaction and its accretive effect on basic adjusted income per common share is included from the estimated closing date of April 1, 2010 based on currently available financial data. Amounts do not include the effect of US GAAP purchase accounting adjustments related to our acquisition of Mepha AG as such amounts are not estimable at this time.