UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) August 12, 2004
Cephalon, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware | | 000-19119 | | 23-2484489 | |
(State or Other Jurisdiction
of Incorporation) | | (Commission
File Number) | | (IRS Employer
Identification No.) | |
| | | | | |
145 Brandywine Parkway
West Chester, Pennsylvania | | | | 19380 | |
(Address of Principal Executive Offices) | | | | (Zip Code) | |
Registrant’s telephone number, including area code (610) 344-0200
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
The following Form 8-K/A (Amendment No. 2) is being filed to provide supplemental pro forma condensed consolidated statement of operations for the nine months ended September 30, 2004 as if the merger of CIMA LABS INC. into Cephalon, Inc. had occurred as of January 1, 2003. This Form 8-K/A does not amend or restate any information previously filed on the associated Form 8-K filed on August 16, 2004 or Form 8-K/A filed on October 22, 2004.
Item 9.01 Financial Statements
The following additional unaudited pro forma condensed consolidated financial information listed below and included herein supplements the financial information previously filed with the Registrant’s Form 8-K/A filed on October 22, 2004:
• Pro forma condensed consolidated statement of operations for the nine months ended September 30, 2004; and
• Notes to pro forma condensed consolidated statement of operations for the nine months ended September 30, 2004.
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(b) Pro forma Financial Information
On August 12, 2004, Cephalon, Inc. (“Cephalon”) completed its previously announced acquisition (the “Acquisition”) of all of the outstanding shares of capital stock of CIMA LABS INC., a Delaware corporation (“CIMA”). The Acquisition will be recorded using the purchase method of accounting and, accordingly, the purchase price will be allocated to the tangible and intangible assets acquired and liabilities assumed on the basis of their fair values on the acquisition date, as determined by management using third party valuation expertise, where necessary.
The following unaudited pro forma combined financial information was derived from the historical consolidated financial statements of Cephalon and CIMA. The unaudited pro forma consolidated statements of income for the nine months September 30, 2004 is presented as if the merger had occurred on January 1, 2003. Financial information presented for CIMA covers the period from January 1, 2004 through August 12, 2004. Financial information for CIMA subsequent to August 12, 2004 is included in the financial information for Cephalon, Inc.
The unaudited pro forma condensed consolidated financial statements reflect pro forma adjustments that are based upon available information and certain assumptions that management believes are reasonable. The unaudited pro forma condensed consolidated financial statements do not purport to represent Cephalon’s results of operations or financial position that would have resulted had the transactions, to which pro forma effects are given, been consummated as of the date or for the periods indicated. The pro forma condensed consolidated financial statements reflect preliminary estimates of the allocation of the purchase price for the Acquisition that may be adjusted.
There were no material differences between the accounting policies of Cephalon and CIMA. Certain historical amounts of CIMA, such as depreciation expense, have been reclassified to conform to the pro forma presentation. No adjustments were necessary to eliminate intercompany transactions and balances in the unaudited pro forma condensed consolidated statements, as there were no intercompany transactions or balances between Cephalon and CIMA.
The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical financial statements of Cephalon contained in its 2003 Annual Report and the historical financial statements of CIMA filed on Form 8-K/A on October 22, 2004.
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CEPHALON, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2004
(in thousands, except share data)
| | | | | | Pro Forma | | | | Pro Forma | |
| | Cephalon, Inc. | | CIMA LABS INC. | | Adjustments | | Note 1 | | Consolidated | |
| | | | | | | | | | | |
REVENUES: | | | | | | | | | | | |
Sales | | $ | 698,975 | | $ | 19,728 | | $ | — | | | | $ | 718,703 | |
Other revenues | | 17,451 | | 15,237 | | — | | | | 32,688 | |
| | 716,426 | | 34,965 | | — | | | | 751,391 | |
| | | | | | | | | | | |
COSTS AND EXPENSES: | | | | | | | | | | | |
Cost of sales | | 89,599 | | 15,588 | | — | | | | 105,187 | |
Research and development | | 198,208 | | 13,975 | | (482 | ) | (a) | | 211,701 | |
Selling, general and administrative | | 243,908 | | 5,365 | | — | | | | 249,273 | |
Depreciation and amortization | | 36,927 | | 1,361 | | 5,612 | | (b) | | 43,900 | |
Merger-related expenses | | — | | 31,062 | | (29,039 | ) | (c) | | 2,023 | |
Impairment charge | | 30,071 | | — | | — | | | | 30,071 | |
Acquired in-process research and development | | 185,700 | | — | | — | | | | 185,700 | |
| | 784,413 | | 67,351 | | (23,909 | ) | | | 827,855 | |
| | | | | | | | | | | |
INCOME (LOSS) FROM OPERATIONS | | (67,987 | ) | (32,386 | ) | (23,909 | ) | | | (76,464 | ) |
| | | | | | | | | | | |
OTHER INCOME AND EXPENSE | | | | | | | | | | | |
Interest income | | 11,639 | | 1,387 | | (4,820 | ) | (d) | | 8,206 | |
Interest expense | | (16,888 | ) | — | | — | | | | (16,888 | ) |
Debt exchange expense | | (28,230 | ) | — | | — | | | | (28,230 | ) |
Charge on early extinguishment of debt | | (2,313 | ) | — | | — | | | | (2,313 | ) |
Other income (expense), net | | (2,444 | ) | 24 | | — | | | | (2,420 | ) |
| | (38,236 | ) | 1,411 | | (4,820 | ) | | | (41,645 | ) |
| | | | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | (106,223 | ) | (30,975 | ) | 19,039 | | | | (118,109 | ) |
| | | | | | | | | | | |
INCOME TAX EXPENSE | | (45,695 | ) | 5,569 | | (7,540 | ) | (e) | | (47,666 | ) |
| | | | | | | | | | | |
NET INCOME (LOSS) | | $ | (151,918 | ) | $ | (25,406 | ) | $ | 11,549 | | | | $ | (165,775 | ) |
| | | | | | | | | | | |
BASIC LOSS PER COMMON SHARE | | $ | (2.71 | ) | | | | | | | $ | (2.96 | ) |
| | | | | | | | | | | |
DILUTED LOSS PER COMMON SHARE | | $ | (2.71 | ) | | | | | | | $ | (2.96 | ) |
| | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 56,065 | | | | | | | | 56,065 | |
| | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 56,065 | | | | | | | | 56,065 | |
See accompanying notes to unaudited consolidated financial information.
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
1. Pro forma Adjustments
The following adjustments were applied to Cephalon’s historical financial statements and those of CIMA to arrive at the pro forma consolidated financial information.
(a) Adjustment to eliminate write off of patents and trademarks recorded as a nonrecurring charge directly attributable to the acquisition.
(b) To record the amortization of intangible assets acquired.
(c) Adjustment to eliminate charges associated with the acquisition of CIMA by Cephalon recorded as a nonrecurring charge directly attributable to the acquisition.
(d) To record the reduction of interest income related to the estimated $514.1 million cash payments for the purchase of CIMA using an average annual interest rate of 1.5% for the period ended August 12, 2004.
(e) To record the tax benefit related to the lower interest income and higher amortization expense at Cephalon’s consolidated marginal tax rate in the United States of 39.5% for the period ended August 12, 2004.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CEPHALON, INC. |
| | |
| | |
Date: January 28, 2005 | By: | /s/ J. KEVIN BUCHI | |
| | J. Kevin Buchi |
| | Senior Vice President & Chief Financial Officer |
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