EXHIBIT 99.1
News
Contacts:
Media:
Robert Grupp
610.738.6402
rgrupp@cephalon.com
Investors:
Robert (Chip) Merritt
610.738.6376
cmerritt@cephalon.com
For Immediate Release
Cephalon Third-Quarter Earnings More Than Double
Quarterly Earnings Exceed Guidance
Company Again Increases 2006 Guidance and Introduces 2007 Guidance
Frazer, Pa. — November 2, 2006 — Cephalon, Inc. (Nasdaq: CEPH) today reported third-quarter 2006 revenues of $482.3 million, a 56 percent increase compared with third-quarter 2005 revenues of $309.5 million. Adjusted sales for the quarter of $457.2 million exceeded guidance of $425 — 440 million, driven largely by strong sales of PROVIGIL® (modafinil) Tablets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II]. Basic income per common share for the quarter was $1.58. Excluding amortization expense and certain other items, basic adjusted income per common share was $1.78, a 125 percent increase over the comparable figure of $0.79 in the third quarter of 2005 and exceeding the high end of the guidance range by $0.43.
“We are pleased to report an exceptionally strong third quarter with earnings more than double the third quarter last year led by continued growth in our CNS and pain franchises,” said Frank Baldino Jr., Ph.D., Chairman and CEO. “With the continued growth of PROVIGIL, the successful launch of FENTORA, the anticipated approval of NUVIGIL™ and our development of a market for VIVITROL, we are well positioned for strong future growth,” Baldino added.
During the quarter, central nervous system (CNS) franchise adjusted sales increased 40 percent to $212.1 million and pain franchise adjusted sales increased 81 percent to $181.7 million. Adjusted sales of other products were $63.4 million.
Based on these strong results, the company is increasing its guidance for 2006 total adjusted sales from $1.525 — 1.575 billion to $1.660 — 1.675 billion, and basic adjusted income per common share from $4.10 — 4.30 per share to $5.10 — 5.20 per share.
— more —
SOURCE: Cephalon, Inc. l 41 Moores Road l Frazer, PA 19355 l (610) 344-0200 l Fax (610) 344-0065
Adjusted sales and basic adjusted income per common share guidance for the full-year 2006 and 2007 is reconciled below and is subject to the assumptions set forth therein.
Cephalon is introducing 2007 sales guidance of $1.675 — 1.725 billion. This includes CNS franchise sales of $900 — 925 million, pain franchise sales of $375 — 400 million and other product sales of $375 — 400 million. SG&A and R&D guidance for 2007 are $680 — 710 million and $310 — 330 million, respectively.
The company also is introducing adjusted net income guidance for 2007 of $279 — 285 million. Cephalon is introducing 2007 basic adjusted income per common share guidance of $4.50 — 4.60.
Cephalon’s management will discuss the company’s third-quarter 2006 performance in a conference call with investors beginning at 5:00 p.m. U.S. EST on Thursday, November 2, 2006. To participate in the conference call, dial +877-707-9632 or +785-830-1914 and refer to conference code number 6913304. Investors can listen to the call live by logging on to the company’s website at www.cephalon.com and clicking on “Newsroom,” then “Webcast.” The conference call will be archived and available to investors for one week after the call.
Cephalon, Inc.
Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products in four core therapeutic areas: central nervous system, pain, oncology and addiction. 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’s European headquarters are located in Maisons-Alfort, France.
The company currently offers several products in the United States: PROVIGIL®, ACTIQ®, FENTORA® (fentanyl buccal tablet) [C-II], GABITRIL®(tiagabine hydrochloride), TRISENOX® (arsenic trioxide injection), VIVITROL® (naltrexone for extended-release injectable suspension) and numerous 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; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; guidance for adjusted sales, adjusted net income and basic adjusted income per common share for the third quarter and full-year 2006; and guidance for sales, adjusted net income, SG&A, R&D and basic adjusted income per common share for full-year 2007; and other statements regarding matters that are not historical facts, including the Company’s progress in executing its long-term diversification strategy and the opportunities presented therein and the outlook for strong growth in the future. 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
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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 Sales,” “Adjusted Net Income (Loss),” “Basic Adjusted Income (Loss) per Common Share,” “Diluted Adjusted Income (Loss) Per Common Share,” “Adjusted Sales Guidance,” “Basic Adjusted Income per Common Share Guidance,” and “Adjusted Net Income 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.
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CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | Three Months Ended | | Three Months Ended | |
| | September 30, 2006 | | September 30, 2005 | |
| | GAAP | | Adjustments | | “Adjusted” | | GAAP | | Adjustments | | “Adjusted” | |
REVENUES: | | | | | | | | | | | | | |
Sales | | $ | 470,513 | | $ | (13,273 | )(1) | $ | 457,240 | | $ | 294,371 | | | | $ | 294,371 | |
Other revenues | | 11,820 | | | | 11,820 | | 15,165 | | | | 15,165 | |
| | 482,333 | | (13,273 | ) | 469,060 | | 309,536 | | $ | — | | 309,536 | |
COSTS AND EXPENSES: | | | | | | | | | | | | | |
Cost of sales | | 62,356 | | | | 62,356 | | 37,629 | | | | 37,629 | |
Research and development | | 81,012 | | (3,368 | )(2) | 77,644 | | 91,934 | | | | 91,934 | |
Selling, general and administrative | | 157,490 | | (5,368 | )(3) | 152,122 | | 103,253 | | | | 103,253 | |
Depreciation and amortization | | 29,849 | | (20,804 | )(4) | 9,045 | | 22,346 | | (15,451 | )(4) | 6,895 | |
Acquired in-process research and development | | — | | — | | — | | 5,500 | | (5,500 | )(6) | — | |
| | 330,707 | | (29,540 | ) | 301,167 | | 260,662 | | (20,951 | ) | 239,711 | |
| | | | | | | | | | | | | |
INCOME FROM OPERATIONS | | 151,626 | | 16,267 | | 167,893 | | 48,874 | | 20,951 | | 69,825 | |
| | | | | | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | | | | | |
Interest income | | 7,046 | | | | 7,046 | | 7,247 | | | | 7,247 | |
Interest expense | | (4,749 | ) | | | (4,749 | ) | (7,494 | ) | | | (7,494 | ) |
Gain on early extinguishment of debt | | — | | | | — | | 2,085 | | (2,085 | )(7) | — | |
Other income (expense), net | | 895 | | | | 895 | | (38 | ) | | | (38 | ) |
| | 3,192 | | — | | 3,192 | | 1,800 | | (2,085 | ) | (285 | ) |
| | | | | | | | | | | | | |
INCOME BEFORE INCOME TAXES | | 154,818 | | 16,267 | | 171,085 | | 50,674 | | 18,866 | | 69,540 | |
| | | | | | | | | | | | | |
INCOME TAX EXPENSE | | 59,077 | | 4,102 | (5) | 63,179 | | 21,331 | | 2,105 | (5) | 23,436 | |
| | | | | | | | | | | | | |
NET INCOME | | $ | 95,741 | | $ | 12,165 | | $ | 107,906 | | $ | 29,343 | | $ | 16,761 | | $ | 46,104 | |
| | | | | | | | | | | | | |
BASIC INCOME PER COMMON SHARE | | $ | 1.58 | | | | $ | 1.78 | | $ | 0.51 | | | | $ | 0.79 | |
| | | | | | | | | | | | | |
DILUTED INCOME PER COMMON SHARE | | $ | 1.43 | | | | $ | 1.61 | | $ | 0.50 | | | | $ | 0.78 | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 60,762 | | | | 60,762 | | 58,064 | | | | 58,064 | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 67,072 | | | | 67,072 | | 59,398 | | | | 59,408 | |
CEPHALON, INC. AND SUBSIDIARIES
Notes to Reconciliation of GAAP Net Income to “Adjusted” Net Income
Three Months Ended September 30, 2006 and September 30, 2005
(1) To exclude the U.S. Department of Defense (“DoD”) Tricare program reversal as a result of the September 2006 ruling.
(2) To exclude charges related to the net impact of the adoption of the new stock compensation accounting rules (representing half of the total stock option compensation expense recorded based on the employees’ compensation allocation).
(3) To exclude charges associated with the settlement of the PROVIGIL patent litigation with Carlsbad Technology, Inc. in August 2006 ($2.0 million) and the net impact of the adoption of the new stock compensation accounting rules ($3.4 million, representing half of the total stock option compensation expense recorded based on the employees’ compensation allocation).
(4) To exclude the on-going amortization of acquired intangible assets.
(5) 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 and other changes in liabilities.
(6) To exclude in-process research and development charges.
(7) To exclude the gain on early extinguishment of debt related to the repurchase of $511.7 million of our 2.5% convertible subordinated notes due December 2006.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | Nine Months Ended | | Nine Months Ended | |
| | September 30, 2006 | | September 30, 2005 | |
| | GAAP | | Adjustments | | “Adjusted” | | GAAP | | Adjustments | | “Adjusted” | |
REVENUES: | | | | | | | | | | | | | |
Sales | | $ | 1,246,825 | | $ | (13,273 | )(1) | $ | 1,233,552 | | $ | 833,588 | | | | $ | 833,588 | |
Other revenues | | 32,562 | | | | 32,562 | | 41,900 | | | | 41,900 | |
| | 1,279,387 | | (13,273 | ) | 1,266,114 | | 875,488 | | $ | — | | 875,488 | |
COSTS AND EXPENSES: | | | | | | | | | | | | | |
Cost of sales | | 189,848 | | (8,610 | )(2) | 181,238 | | 114,093 | | | | 114,093 | |
Research and development | | 279,765 | | (56,554 | )(3) | 223,211 | | 255,591 | | | | 255,591 | |
Selling, general and administrative | | 460,068 | | (21,541 | )(4) | 438,527 | | 302,904 | | | | 302,904 | |
Depreciation and amortization | | 85,989 | | (60,765 | )(5) | 25,224 | | 61,151 | | (42,178 | )(5) | 18,973 | |
Impairment charge | | 12,417 | | (12,417 | )(6) | — | | — | | | | — | |
Acquired in-process research and development | | — | | — | | — | | 295,615 | | (295,615 | )(9) | — | |
| | 1,028,087 | | (159,887 | ) | 868,200 | | 1,029,354 | | (337,793 | ) | 691,561 | |
| | | | | | | | | | | | | |
INCOME (LOSS) FROM OPERATIONS | | 251,300 | | 146,614 | | 397,914 | | (153,866 | ) | 337,793 | | 183,927 | |
| | | | | | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | | | | | |
Interest income | | 16,736 | | | | 16,736 | | 19,559 | | | | 19,559 | |
Interest expense | | (13,523 | ) | | | (13,523 | ) | (19,311 | ) | | | (19,311 | ) |
Write-off of deferred debt issuance costs | | (13,105 | ) | 13,105 | (7) | — | | — | | | | — | |
Gain on early extinguishment of debt | | — | | | | — | | 2,085 | | (2,085 | )(10) | — | |
Other income (expense), net | | (116 | ) | | | (116 | ) | 1,983 | | | | 1,983 | |
| | (10,008 | ) | 13,105 | | 3,097 | | 4,316 | | (2,085 | ) | 2,231 | |
| | | | | | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | 241,292 | | 159,719 | | 401,011 | | (149,550 | ) | 335,708 | | 186,158 | |
| | | | | | | | | | | | | |
INCOME TAX EXPENSE | | 91,567 | | 52,847 | (8) | 144,414 | | 43,477 | | 18,278 | (8) | 61,755 | |
| | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | 149,725 | | $ | 106,872 | | $ | 256,597 | | $ | (193,027 | ) | $ | 317,430 | | $ | 124,403 | |
| | | | | | | | | | | | | |
BASIC INCOME (LOSS) PER COMMON SHARE | | $ | 2.48 | | | | $ | 4.25 | | $ | (3.33 | ) | | | $ | 2.14 | |
| | | | | | | | | | | | | |
DILUTED INCOME (LOSS) PER COMMON SHARE | | $ | 2.17 | | | | $ | 3.72 | | $ | (3.33 | ) | | | $ | 2.04 | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 60,415 | | | | 60,415 | | 58,035 | | | | 58,035 | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 68,921 | | | | 68,921 | | 58,035 | | | | 63,149 | |
CEPHALON, INC. AND SUBSIDIARIES
Notes to Reconciliation of GAAP Net Income (Loss) to “Adjusted” Net Income
Nine Months Ended September 30, 2006 and September 30, 2005
(1) To exclude the DoD Tricare program reversal as a result of the September 2006 ruling.
(2) To exclude the reserve for SPARLON capitalized inventory costs.
(3) To exclude charges related to payments for several product development collaborations ($45.0 million) and the net impact of the adoption of the new stock compensation accounting rules ($11.6 million, representing half of the total stock option compensation expense recorded based on the employees’ compensation allocation).
(4) To exclude charges associated with the settlement of the PROVIGIL patent litigation ($6.0 million), employee severance costs associated with the European integration and restructuring ($4.0 million) and the net impact of the adoption of the new stock compensation accounting rules ($11.6 million, representing half of the total stock option compensation expense recorded based on the employees’ compensation allocation).
(5) To exclude the on-going amortization of acquired intangible assets.
(6) To exclude charges related to the impairment of an intangible asset.
(7) To exclude the write-off of deferred debt issuance costs related to the Zero Coupon convertible subordinated notes.
(8) 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 and other changes in liabilities.
(9) To exclude in-process research and development charges related to the acquisition of Salmedix ($130.1 million), VIVITROL ($160.0 million) and other ($5.5 million).
(10) To exclude the gain on early extinguishment of debt related to the repurchase of $511.7 million of our 2.5% convertible subordinated notes due December 2006.
CEPHALON, INC. AND SUBSIDIARIES
“ADJUSTED” CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
| | Three Months Ended | | % | |
| | September 30, | | Increase | |
| | 2006 | | 2005 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 186,568 | | $ | 11,081 | | $ | 197,649 | | $ | 126,387 | | $ | 8,103 | | $ | 134,490 | | 48 | % | 37 | % | 47 | % |
GABITRIL | | 13,729 | | 723 | | 14,452 | | 15,178 | | 1,333 | | 16,511 | | (10 | )% | (46 | )% | (12 | )% |
CNS Disorders | | 200,297 | | 11,804 | | 212,101 | | 141,565 | | 9,436 | | 151,001 | | 41 | % | 25 | % | 40 | % |
| | | | | | | | | | | | | | | | | | | |
Pain | | 174,147 | | 7,585 | | 181,732 | | 95,485 | | 4,759 | | 100,244 | | 82 | % | 59 | % | 81 | % |
| | | | | | | | | | | | | | | | | | | |
Other | | 13,292 | | 50,115 | | 63,407 | | 15,575 | | 27,551 | | 43,126 | | (15 | )% | 82 | % | 47 | % |
| | | | | | | | | | | | | | | | | | | |
| | $ | 387,736 | | $ | 69,504 | | $ | 457,240 | | $ | 252,625 | | $ | 41,746 | | $ | 294,371 | | 53 | % | 66 | % | 55 | % |
| | Nine Months Ended | | % | |
| | September 30, | | Increase | |
| | 2006 | | 2005 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 494,047 | | $ | 29,219 | | $ | 523,266 | | $ | 338,529 | | $ | 26,009 | | $ | 364,538 | | 46 | % | 12 | % | 44 | % |
GABITRIL | | 41,291 | | 3,510 | | 44,801 | | 54,023 | | 4,562 | | 58,585 | | (24 | )% | (23 | )% | (24 | )% |
CNS Disorders | | 535,338 | | 32,729 | | 568,067 | | 392,552 | | 30,571 | | 423,123 | | 36 | % | 7 | % | 34 | % |
| | | | | | | | | | | | | | | | | | | |
Pain | | 452,175 | | 19,213 | | 471,388 | | 282,105 | | 11,904 | | 294,009 | | 60 | % | 61 | % | 60 | % |
| | | | | | | | | | | | | | | | | | | |
Other | | 41,661 | | 152,436 | | 194,097 | | 36,319 | | 80,137 | | 116,456 | | 15 | % | 90 | % | 67 | % |
| | | | | | | | | | | | | | | | | | | |
| | $ | 1,029,174 | | $ | 204,378 | | $ | 1,233,552 | | $ | 710,976 | | $ | 122,612 | | $ | 833,588 | | 45 | % | 67 | % | 48 | % |
NOTE: Amounts exclude the impact of the DoD Tricare program reversal of $13.3 million which reduced GAAP U.S. sales of PROVIGIL, GABITRIL and ACTIQ (Pain) by $6.9 million, $0.9 million and $5.5 million, respectively, for both the three and nine months ended September 30, 2006.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| | September 30, | | December 31, | |
| | 2006 | | 2005 | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 630,363 | | $ | 205,060 | |
Investments | | 37,619 | | 279,030 | |
Receivables, net | | 234,675 | | 199,086 | |
Inventory, net | | 164,664 | | 137,886 | |
Deferred tax assets, net | | 170,131 | | 187,436 | |
Other current assets | | 43,937 | | 40,339 | |
Total current assets | | 1,281,389 | | 1,048,837 | |
| | | | | |
PROPERTY AND EQUIPMENT, net | | 391,846 | | 323,830 | |
GOODWILL | | 472,152 | | 471,051 | |
INTANGIBLE ASSETS, net | | 799,756 | | 742,874 | |
DEFERRED TAX ASSETS, net | | 164,919 | | 200,629 | |
OTHER ASSETS | | 17,498 | | 31,985 | |
| | $ | 3,127,560 | | $ | 2,819,206 | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Current portion of long-term debt | | $ | 933,494 | | $ | 933,160 | |
Accounts payable | | 63,492 | | 53,699 | |
Accrued expenses | | 245,011 | | 291,744 | |
Total current liabilities | | 1,241,997 | | 1,278,603 | |
| | | | | |
LONG-TERM DEBT | | 762,404 | | 763,097 | |
DEFERRED TAX LIABILITIES, net | | 87,228 | | 110,703 | |
OTHER LIABILITIES | | 58,764 | | 54,632 | |
Total liabilities | | 2,150,393 | | 2,207,035 | |
| | | | | |
STOCKHOLDERS’ EQUITY: | | | | | |
Common stock, $0.01 par value | | 608 | | 584 | |
Additional paid-in capital | | 1,333,340 | | 1,166,166 | |
Treasury stock, at cost | | (17,558 | ) | (17,125 | ) |
Accumulated deficit | | (420,347 | ) | (570,072 | ) |
Accumulated other comprehensive income | | 81,124 | | 32,618 | |
Total stockholders’ equity | | 977,167 | | 612,171 | |
| | $ | 3,127,560 | | $ | 2,819,206 | |
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Nine Months Ended | |
| | September 30, | |
| | 2006 | | 2005 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net income (loss) | | $ | 149,725 | | $ | (193,027 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
Deferred income tax expense | | 64,112 | | 27,931 | |
Tax benefit from stock-based compensation | | — | | 3,956 | |
Depreciation and amortization | | 94,828 | | 70,966 | |
Amortization of debt issuance costs | | 387 | | 6,521 | |
Write-off of debt issuance costs associated with Zero Coupon convertible subordinated notes | | 13,105 | | — | |
Stock-based compensation expense | | 32,436 | | 7,631 | |
Non-cash gain on early extinguishment of debt | | — | | (4,549 | ) |
Loss on disposals of property and equipment | | 2,368 | | 949 | |
Impairment charge | | 12,417 | | — | |
Acquired in-process research and development | | — | | 130,615 | |
Changes in operating assets and liabilities, net of effect from acquisitions: | | | | | |
Receivables | | (30,818 | ) | 43,347 | |
Inventory | | (22,837 | ) | (37,084 | ) |
Other assets | | (5,133 | ) | 910 | |
Accounts payable, accrued expenses and deferred revenues | | (45,820 | ) | 21,671 | |
Other liabilities | | (13,580 | ) | (11,428 | ) |
Net cash provided by operating activities | | 251,190 | | 68,409 | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Purchases of property and equipment | | (97,122 | ) | (63,951 | ) |
Acquisition of Salmedix, net of cash acquired | | — | | (130,733 | ) |
Acquisition of TRISENOX | | — | | (69,722 | ) |
Acquisition of intangible assets | | (115,000 | ) | (2,652 | ) |
Sales and (purchases) of investments, net | | 242,660 | | (14,113 | ) |
Net cash provided by (used for) investing activities | | 30,538 | | (281,171 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
Proceeds from exercises of common stock options | | 112,794 | | 2,247 | |
Windfall tax benefits from stock-based compensation | | 21,912 | | — | |
Acquisition of treasury stock | | (433 | ) | (32 | ) |
Payments on and retirements of long-term debt | | (2,528 | ) | (501,958 | ) |
Net proceeds from issuance of convertible subordinated notes | | — | | 891,949 | |
Proceeds from sale of warrants | | — | | 217,071 | |
Purchase of convertible note hedge | | — | | (382,261 | ) |
Net cash provided by financing activities | | 131,745 | | 227,016 | |
| | | | | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | 11,830 | | (3,222 | ) |
| | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | 425,303 | | 11,032 | |
| | | | | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | 205,060 | | 574,244 | |
| | | | | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 630,363 | | $ | 585,276 | |
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of Projected GAAP Basic Income per Common Share
to Basic Adjusted Income Per Common Share Guidance
(Unaudited)
| | Twelve Months | | Twelve Months | |
| | Ended | | Ended | |
| | December 31, | | December 31, | |
| | 2006 | | 2007 | |
| | | | | | | | | | | | | |
Projected GAAP basic income per common share excluding the impact of
SFAS 123(R) (Current methodology) | | $ | 3.19 | | — | | $ | 3.29 | | $ | 3.34 | | — | | $ | 3.44 | |
| | | | | | | | | | | | | |
DoD Tricare program reversal | | $ | (0.22 | ) | — | | $ | (0.22 | ) | $ | — | | — | | $ | — | |
Reserve for SPARLON capitalized inventory costs | | $ | 0.14 | | — | | $ | 0.14 | | $ | — | | — | | $ | — | |
Product development collaborations | | $ | 0.74 | | — | | $ | 0.74 | | $ | — | | — | | $ | — | |
PROVIGIL patent litigation settlement costs | | $ | 0.10 | | — | | $ | 0.10 | | $ | — | | — | | $ | — | |
European integration and restructuring charges | | $ | 0.07 | | — | | $ | 0.07 | | $ | — | | — | | $ | — | |
Impact of SFAS 123(R) | | $ | 0.51 | | — | | $ | 0.51 | | $ | 0.48 | | — | | $ | 0.48 | |
Amortization of current intangibles | | $ | 1.34 | | — | | $ | 1.34 | | $ | 1.33 | | — | | $ | 1.33 | |
Impairment charge | | $ | 0.20 | | — | | $ | 0.20 | | $ | — | | — | | $ | — | |
Write-off of deferred debt issuance costs | | $ | 0.21 | | — | | $ | 0.21 | | $ | — | | — | | $ | — | |
Tax effect of pre-tax adjustments at the applicable tax rates and certain other
tax related adjustments | | $ | (1.18 | ) | — | | $ | (1.18 | ) | $ | (0.65 | ) | — | | $ | (0.65 | ) |
| | | | | | | | | | | | | |
Basic adjusted income per common share guidance excluding the impact of
SFAS 123(R) (Current methodology) | | $ | 5.10 | | — | | $ | 5.20 | | $ | 4.50 | | — | | $ | 4.60 | |
| | | | | | | | | | | | | |
Reversal of impact of SFAS 123(R) | | $ | (0.51 | ) | — | | $ | (0.51 | ) | $ | (0.48 | ) | — | | $ | (0.48 | ) |
Reversal of tax effect of impact of SFAS 123(R) | | 0.19 | | — | | 0.19 | | 0.18 | | — | | 0.18 | |
| | | | | | | | | | | | | |
Basic adjusted income per common share guidance including the impact of
SFAS 123(R) (2007 methodology) | | $ | 4.78 | | — | | $ | 4.88 | | $ | 4.20 | | — | | $ | 4.30 | |
The Company’s guidance is being issued based on certain assumptions including:
· Adjusted effective tax rate of 36 percent for each of 2006 and 2007; and
· Weighted average number of common shares outstanding of 61.0 million and 62.0 million shares for the twelve months ended December 31, 2006 and 2007, respectively.
