Exhibit 99.1
| | News |
| | |
| | Contacts: |
| | Media: |
| | Sheryl Williams |
| | 610.738.6493 |
| | swilliam@cephalon.com |
| | |
| | Investors: |
| | Robert (Chip) Merritt |
| | 610.738.6376 |
| | cmerritt@cephalon.com |
For immediate release
Cephalon’s New Product Launches Pace Record 2008 Sales
Company Exceeds Sales and Earnings Guidance
Company Reiterates 2009 Earnings Guidance and
Introduces Q1 2009 Guidance
Frazer, Pa. — February 12, 2009 — Cephalon, Inc. (Nasdaq: CEPH) today reported 2008 sales of $1.943 billion, compared to sales of $1.727 billion for 2007, exceeding the company’s previously issued guidance. Basic income per common share for the full year 2008 was $3.27. Excluding amortization expense and certain other items, basic adjusted income per common share for the full year was $5.39, compared to $4.60 for 2007 and exceeds the high end of the company’s earnings guidance range of $5.20 to $5.30.
Central nervous system (CNS) franchise sales for 2008 increased 15 percent compared to 2007 to $1.049 billion. Pain franchise sales declined to $501.2 million from $512.6 million in 2007 due primarily to generic competition for ACTIQ® (oral transmucosal fentanyl citrate) [C-II]. AMRIX® (cyclobenzaprine hydrochloride extended-release capsules) sales continued to ramp up with an increase of 28 percent over the third quarter of 2008. Oncology sales were $185.6 million, an increase of 100 percent over 2007 driven by the launch of TREANDA® (bendamustine hydrochloride) for Injection. Sales of other products were $207.6 million compared to $212.4 million for 2007.
“The growth of AMRIX and the launch of TREANDA helped 2008 sales achieve a new record for the company,” said Frank Baldino, Jr., Ph.D., Chairman and CEO. “As pleased as I am with our performance in 2008, I am even more excited about our new opportunities in the
SOURCE: Cephalon, Inc. · 41 Moores Road · Frazer, PA 19355 · (610) 344-0200 Fax (610) 344-0065
field of inflammatory diseases. Recently we announced a number of deals including the worldwide license for the drug candidate LUPUZORTM, for the treatment of systemic lupus erythematosus and the option to acquire Ception Therapeutics including its drug candidate reslizumab for eosinophilic esophagitis. Our ability to move quickly when opportunities present themselves coupled with our internal pipeline positions Cephalon favorably for future growth.”
The company is reiterating its guidance for 2009 total sales of $2.175 — $2.225 billion, adjusted net income of $452 — $459 million and its basic adjusted income per common share guidance of $6.50 — $6.60.
Cephalon is introducing first quarter 2009 sales guidance of $510 — $530 million, adjusted net income guidance of $89.7 — $96.6 million and basic adjusted income per common share guidance of $1.30 — $1.40.
Basic adjusted income per common share guidance for both the first quarter 2009 and full-year 2009 is reconciled below and is subject to the assumptions set forth therein.
Cephalon’s management will discuss the company’s fourth quarter and full year 2008 performance in a conference call with investors beginning at 5:00 p.m. U.S. EST on Thursday, February 12, 2009. To participate in the conference call, dial +1-913-661-9178 and refer to conference code number 9540364. Investors can listen to the call live by logging on to the company’s website at www.cephalon.com and clicking on “Investor Information,” 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 three core therapeutic areas: central nervous system, 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. The company’s European headquarters are located in Maisons-Alfort, France.
The company’s proprietary products in the United States include: AMRIX, TREANDA, 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. 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.
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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 our opportunities in the field of inflammatory disease, current or potential drivers for our future growth, 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 and earnings guidance, 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.
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CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | Three Months Ended | | Year Ended | |
| | December 31, | | December 31, | |
| | 2008(a), (b) | | As adjusted
2007(b) | | 2008(a), (b) | | As adjusted
2007(b) | |
REVENUES: | | | | | | | | | |
Sales | | $ | 534,861 | | $ | 439,497 | | $ | 1,943,464 | | $ | 1,727,299 | |
Other revenues | | 5,277 | | 10,474 | | 31,090 | | 45,339 | |
| | 540,138 | | 449,971 | | 1,974,554 | | 1,772,638 | |
COSTS AND EXPENSES: | | | | | | | | | |
Cost of sales | | 99,523 | | 93,721 | | 412,234 | | 345,691 | |
Research and development | | 112,039 | | 95,037 | | 362,208 | | 369,115 | |
Selling, general and administrative | | 209,041 | | 207,837 | | 840,873 | | 735,799 | |
Settlement reserve | | — | | — | | 7,450 | | 425,000 | |
Restructuring charge | | 1,442 | | — | | 8,415 | | — | |
Impairment charge | | 99,719 | | — | | 99,719 | | — | |
Acquired in-process research and development | | 31,955 | | — | | 41,955 | | — | |
Loss on sale of equipment | | 17,178 | | — | | 17,178 | | 1,022 | |
| | 570,897 | | 396,595 | | 1,790,032 | | 1,876,627 | |
| | | | | | | | | |
INCOME (LOSS) FROM OPERATIONS | | (30,759 | ) | 53,376 | | 184,522 | | (103,989 | ) |
| | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | |
Interest income | | 1,386 | | 9,331 | | 16,901 | | 32,816 | |
Interest expense | | (2,796 | ) | (4,561 | ) | (28,493 | ) | (19,833 | ) |
Gain on extinguishment of debt | | — | | — | | — | | 5,319 | |
Gain on sale of investment | | — | | — | | — | | 5,791 | |
Other income (expense), net | | 6,392 | | 2,884 | | 7,880 | | 7,653 | |
| | 4,982 | | 7,654 | | (3,712 | ) | 31,746 | |
| | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST | | (25,777 | ) | 61,030 | | 180,810 | | (72,243 | ) |
| | | | | | | | | |
INCOME TAX EXPENSE (BENEFIT) | | (16,290 | ) | 19,269 | | (20,665 | ) | 121,882 | |
| | | | | | | | | |
NET INCOME (LOSS) BEFORE MINORITY INTEREST | | (9,487 | ) | 41,761 | | 201,475 | | (194,125 | ) |
| | | | | | | | | |
NET LOSS ATTRIBUTABLE TO MINORITY INTEREST | | 21,073 | | — | | 21,073 | | — | |
| | | | | | | | | |
NET INCOME (LOSS) | | $ | 11,586 | | $ | 41,761 | | $ | 222,548 | | $ | (194,125 | ) |
| | | | | | | | | |
BASIC INCOME (LOSS) PER COMMON SHARE | | $ | 0.17 | | $ | 0.62 | | $ | 3.27 | | $ | (2.91 | ) |
| | | | | | | | | |
DILUTED INCOME (LOSS) PER COMMON SHARE | | $ | 0.15 | | $ | 0.53 | | $ | 2.92 | | $ | (2.91 | ) |
| | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 68,505 | | 67,187 | | 68,018 | | 66,597 | |
| | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 77,823 | | 78,734 | | 76,097 | | 66,597 | |
(a) We have included the operating results for Acusphere in our consolidated statements of operations beginning on November 3, 2008 because Acusphere is considered a variable interest entity to which we are the primary beneficiary. However, we do not have an equity interest in Acusphere and, therefore, we have allocated the losses attributable to the minority interest in Acusphere to minority interest. For 2008, the losses allocated to the minority interest have been limited to the value of the minority interest recorded as of November 3, 2008 but will not be limited starting January 1, 2009. For the year ended December 31, 2008, a total of $21.1 million of net losses were allocated to the minority interest and $11.7 million of net losses exceeded the minority interest value.
(b) Effective October 1, 2008, we changed our method of accounting for inventories previously valued using the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method and adjusted our results for all of the periods presented.
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, | |
| | 2008 | | As adjusted
2007* | |
| | | | | |
GAAP NET INCOME | | $ | 11,586 | | $ | 41,761 | |
| | | | | |
Cost of sales adjustments | | 27,804 | (1) | 26,306 | (1) |
Research and development adjustments | | 255 | (2) | 2,000 | (2) |
Selling, general and administrative adjustments | | 13,215 | (3) | 11,191 | (3) |
Restructuring charges | | 1,442 | (4) | — | |
Acquired in-process research and development | | 31,955 | (5) | — | |
Impairment charges | | 99,719 | (6) | — | |
Minority interest | | (14,567 | )(7) | — | |
Loss on sale of equipment | | 17,178 | (8) | — | |
Income taxes | | (74,918 | )(9) | (18,149 | )(9) |
| | 102,083 | | 21,348 | |
| | | | | |
ADJUSTED NET INCOME | | $ | 113,669 | | $ | 63,109 | |
| | | | | |
BASIC ADJUSTED INCOME PER COMMON SHARE | | $ | 1.66 | | $ | 0.94 | |
| | | | | |
DILUTED ADJUSTED INCOME PER COMMON SHARE | | $ | 1.46 | | $ | 0.80 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 68,505 | | 67,187 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 77,823 | | 78,734 | |
| | | | | | | | | |
* As adjusted for the retrospective application of a change in accounting method for inventory from LIFO to FIFO.
Notes to Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income
(1) | To exclude the on-going amortization of acquired intangible assets ($23.7 million in 2008; $26.3 million in 2007), accelerated depreciation related to the CIMA LABS restructuring ($1.6 million in 2008), and accelerated depreciation related to the proposed divestiture at the Mitry-Mory facility ($2.5 million in 2008). |
| |
(2) | To exclude charges related to payments for research and development collaborations ($2.0 million in 2007) and accelerated depreciation related to the proposed divestiture at the Mitry-Mory facility ($0.2 million in 2008). |
| |
(3) | To exclude charges related to certain employee severance costs ($7.2 million in 2007), charges related to the termination payments due to Takeda Pharmaceuticals North America, Inc. ($1.0 million in 2008), charges related to the termination payment due to Alkermes ($11.0 million in 2008) and related severance ($1.2 million in 2008), and a significant one-time charitable contribution ($4.0 million in 2007). |
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(4) | To exclude costs related to the CIMA LABS restructuring announced in January 2008. |
| |
(5) | To exclude charges related to the acquisition of licensed technology from Acusphere ($17.0 million) and license rights to LUPUZOR from ImmuPharma PLC ($15.0 million). |
| |
(6) | To exclude the impairment of the VIVITROL intangible assets ($90.4 million) and charges related to the impairment of Acusphere fixed assets ($9.3 million). |
| |
(7) | To exclude the portion of non-cash charges related to our agreement with Acusphere that are reflected in adjustments (5) and (6) above but do not affect net income because they are attributed to minority interests. |
| |
(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 and other changes in tax assets and liabilities. |
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 | |
| | 2008 | | As adjusted
2007* | |
| | | | | |
GAAP NET INCOME (LOSS) | | $ | 222,548 | | $ | (194,125 | ) |
| | | | | |
Cost of sales adjustments | | 139,153 | (1) | 90,542 | (1) |
Research and development adjustments | | 8,268 | (2) | 43,500 | (2) |
Selling, general and administrative adjustments | | 43,339 | (3) | 11,191 | (3) |
Settlement reserve | | 7,450 | (4) | 425,000 | (4) |
Gain on sale of investment | | — | (5) | (5,791 | )(5) |
Gain on extinguishment of debt | | — | (6) | (5,319 | )(6) |
Interest expense adjustment | | 11,250 | (7) | — | |
Restructuring expense | | 8,415 | (8) | — | |
Acquired in-process research and development | | 41,955 | (9) | — | |
Impairment charge | | 99,719 | (10) | — | |
Minority interest | | (14,567 | )(11) | — | |
Loss on sale of equipment | | 17,178 | (12) | — | |
Income taxes | | (218,080 | )(13) | (58,608 | )(13) |
| | 144,080 | | 500,515 | |
| | | | | |
ADJUSTED NET INCOME | | $ | 366,628 | | $ | 306,390 | |
| | | | | |
BASIC ADJUSTED INCOME PER COMMON SHARE | | $ | 5.39 | | $ | 4.60 | |
| | | | | |
DILUTED ADJUSTED INCOME PER COMMON SHARE | | $ | 4.82 | | $ | 3.89 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 68,018 | | 66,597 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 76,097 | | 78,684 | |
* As adjusted for the retrospective application of a change in accounting method for inventory from LIFO to FIFO.
Notes to Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income
(1) | To exclude the on-going amortization of acquired intangible assets ($100.7 million in 2008; $90.5 million in 2007), accelerated depreciation related to the CIMA LABS restructuring ($7.0 million in 2008), accelerated depreciation related to the proposed divestiture at the Mitry-Mory facility ($5.4 million in 2008), and the write-off of purchase commitments in excess of estimated requirements ($26.0 million in 2008). |
| |
(2) | To exclude charges related to payments for research and development collaborations ($6.0 million in 2008; $28.5 million in 2007), other charges related to employee severance costs ($1.8 million in 2008), and accelerated depreciation related to the proposed divestiture at the Mitry-Mory facility ($0.5 million in 2008). In 2007, we also excluded the recognition of a milestone ($15.0 million) related to the FDA’s acceptance of our NDA filing for TREANDA. |
| |
(3) | To exclude charges related to certain employee severance costs ($3.0 million in 2008; $7.2 million in 2007), charges related to the termination payments due to Takeda Pharmaceuticals North America, Inc. ($28.2 million in 2008), charges related to the termination payment due to Alkermes ($11.0 million in 2008) and related severance ($1.2 million in 2008), and a significant one-time charitable contribution ($4.0 million in 2007). |
| |
(4) | In 2008, to exclude charges related to the settlement of investigations by the Offices of the Attorney General of Connecticut and Massachusetts and relator attorney fees. In 2007, to exclude the reserve related to the terms of the agreement in principle reached with the U.S. Attorney’s Office. |
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(5) | To exclude the pre-tax gain related to the sale of certain investments. |
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(6) | To exclude the forgiveness of a mortgage loan by the Pennsylvania Industrial Development Board. |
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(7) | To exclude the accrued interest related to the settlement reached with the U.S. Attorney’s Office. |
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(8) | To exclude costs related to the CIMA LABS restructuring announced in January 2008. |
| |
(9) | To exclude charges related to the acquisition of licensed technology from Acusphere ($27.0 million) and license rights to LUPUZOR from ImmuPharma PLC ($15.0 million). |
| |
(10) | To exclude the impairment of the VIVITROL intangible assets ($90.4 million) and charges related to the impairment of Acusphere fixed assets ($9.3 million) . |
| |
(11) | To exclude the portion of non-cash charges related to our agreement with Acusphere that are reflected in adjustments (9) and (10) above but do not affect net income because they are attributed to minority interests. |
| |
(12) | To exclude the loss on sale of equipment related to the VIVITROL termination. |
| |
(13) | 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, the settlement of the investigations by the U.S. Attorney's Office and other changes in tax assets and liabilities. The 2008 amount includes $82.3 million of tax benefits for the settlement with the U.S. Attorney's Office, for which the related expense was recorded in 2007. |
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
| | Three Months Ended | | % | |
| | December 31 | | Increase | |
| | 2008 | | 2007 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 266,209 | | $ | 15,004 | | $ | 281,213 | | $ | 208,245 | | $ | 11,237 | | $ | 219,482 | | 28 | | 34 | | 28 | |
GABITRIL | | 14,827 | | 1,587 | | 16,414 | | 10,828 | | 400 | | 11,228 | | 37 | | 297 | | 46 | |
CNS | | 281,036 | | 16,591 | | 297,627 | | 219,073 | | 11,637 | | 230,710 | | 28 | | 43 | | 29 | |
| | | | | | | | | | | | | | | | | | | |
ACTIQ | | 26,020 | | 12,807 | | 38,827 | | 42,310 | | 12,027 | | 54,337 | | (39 | ) | 6 | | (29 | ) |
Generic OTFC | | 19,915 | | — | | 19,915 | | 31,471 | | — | | 31,471 | | (37 | ) | — | | (37 | ) |
FENTORA | | 38,609 | | — | | 38,609 | | 33,912 | | — | | 33,912 | | 14 | | — | | 14 | |
AMRIX | | 26,242 | | — | | 26,242 | | 8,401 | | — | | 8,401 | | 212 | | — | | 212 | |
Pain | | 110,786 | | 12,807 | | 123,593 | | 116,094 | | 12,027 | | 128,121 | | (5 | ) | 6 | | (4 | ) |
| | | | | | | | | | | | | | | | | | | |
TREANDA | | 36,200 | | — | | 36,200 | | — | | — | | — | | — | | — | | — | |
Other Oncology | | 4,307 | | 21,082 | | 25,389 | | 3,517 | | 19,671 | | 23,188 | | 22 | | 7 | | 9 | |
Oncology | | 40,507 | | 21,082 | | 61,589 | | 3,517 | | 19,671 | | 23,188 | | 1052 | | 7 | | 166 | |
| | | | | | | | | | | | | | | | | | | |
Other | | 11,672 | | 40,380 | | 52,052 | | 11,879 | | 45,599 | | 57,478 | | (2 | ) | (11 | ) | (9 | ) |
| | | | | | | | | | | | | | | | | | | |
| | $ | 444,001 | | $ | 90,860 | | $ | 534,861 | | $ | 350,563 | | $ | 88,934 | | $ | 439,497 | | 27 | | 2 | | 22 | |
| | Year Ended | | % | |
| | December 31 | | Increase | |
| | 2008 | | 2007 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 924,986 | | $ | 63,432 | | $ | 988,418 | | $ | 801,639 | | $ | 50,408 | | $ | 852,047 | | 15 | | 26 | | 16 | |
GABITRIL | | 52,441 | | 8,256 | | 60,697 | | 50,642 | | 6,668 | | 57,310 | | 4 | | 24 | | 6 | |
CNS | | 977,427 | | 71,688 | | 1,049,115 | | 852,281 | | 57,076 | | 909,357 | | 15 | | 26 | | 15 | |
| | | | | | | | | | | | | | | | | | | |
ACTIQ | | 122,980 | | 53,541 | | 176,521 | | 199,407 | | 40,665 | | 240,072 | | (38 | ) | 32 | | (26 | ) |
Generic OTFC | | 95,760 | | — | | 95,760 | | 129,033 | | — | | 129,033 | | (26 | ) | — | | (26 | ) |
FENTORA | | 155,246 | | — | | 155,246 | | 135,136 | | — | | 135,136 | | 15 | | — | | 15 | |
AMRIX | | 73,641 | | — | | 73,641 | | 8,401 | | — | | 8,401 | | 777 | | — | | 777 | |
Pain | | 447,627 | | 53,541 | | 501,168 | | 471,977 | | 40,665 | | 512,642 | | (5 | ) | 32 | | (2 | ) |
| | | | | | | | | | | | | | | | | | | |
TREANDA | | 75,132 | | — | | 75,132 | | — | | — | | — | | — | | — | | — | |
Other Oncology | | 18,566 | | 91,919 | | 110,485 | | 16,561 | | 76,316 | | 92,877 | | 12 | | 20 | | 19 | |
Oncology | | 93,698 | | 91,919 | | 185,617 | | 16,561 | | 76,316 | | 92,877 | | 466 | | 20 | | 100 | |
| | | | | | | | | | | | | | | | | | | |
Other | | 49,667 | | 157,897 | | 207,564 | | 52,702 | | 159,721 | | 212,423 | | (6 | ) | (1 | ) | (2 | ) |
| | | | | | | | | | | | | | | | | | | |
| | $ | 1,568,419 | | $ | 375,045 | | $ | 1,943,464 | | $ | 1,393,521 | | $ | 333,778 | | $ | 1,727,299 | | 13 | | 12 | | 13 | |
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| | | | As adjusted | |
| | December 31, | | December 31, | |
| | 2008 | | 2007* | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 524,459 | | $ | 818,669 | |
Investments | | — | | 7,596 | |
Receivables, net | | 409,580 | | 276,776 | |
Inventory, net | | 117,297 | | 98,996 | |
Deferred tax assets, net | | 224,066 | | 182,268 | |
Other current assets | | 54,120 | | 43,267 | |
Total current assets | | 1,329,522 | | 1,427,572 | |
| | | | | |
PROPERTY AND EQUIPMENT, net | | 467,449 | | 500,396 | |
GOODWILL | | 445,332 | | 476,515 | |
INTANGIBLE ASSETS, net | | 607,332 | | 817,828 | |
DEFERRED TAX ASSETS, net | | 142,775 | | 141,752 | |
OTHER ASSETS | | 176,778 | | 132,463 | |
| | $ | 3,169,188 | | $ | 3,496,526 | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Current portion of long-term debt | | $ | 1,030,021 | | $ | 1,237,169 | |
Accounts payable | | 87,079 | | 91,437 | |
Accrued expenses | | 304,415 | | 677,184 | |
Total current liabilities | | 1,421,515 | | 2,005,790 | |
| | | | | |
LONG-TERM DEBT | | 3,692 | | 3,788 | |
DEFERRED TAX LIABILITIES, net | | 77,932 | | 56,540 | |
OTHER LIABILITIES | | 163,123 | | 138,084 | |
Total liabilities | | 1,666,262 | | 2,204,202 | |
| | | | | |
MINORITY INTEREST | | — | | — | |
| | | | | |
STOCKHOLDERS’ EQUITY: | | | | | |
Common stock, $0.01 par value | | 717 | | 700 | |
Additional paid-in capital | | 2,071,607 | | 1,934,965 | |
Treasury stock, at cost | | (201,705 | ) | (158,173 | ) |
Accumulated deficit | | (411,323 | ) | (633,871 | ) |
Accumulated other comprehensive income | | 43,630 | | 148,703 | |
Total stockholders’ equity | | 1,502,926 | | 1,292,324 | |
| | $ | 3,169,188 | | $ | 3,496,526 | |
* As adjusted for the retrospective application of a change in accounting method for inventory from LIFO to FIFO.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Year Ended | |
| | December 31, | |
| | 2008 | | As adjusted
2007* | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net income (loss) | | $ | 222,548 | | $ | (194,125 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
Deferred income tax benefit | | (50,889 | ) | (2,361 | ) |
Shortfall tax benefits from stock-based compensation | | (511 | ) | (360 | ) |
Depreciation and amortization | | 172,457 | | 141,358 | |
Stock-based compensation expense | | 43,975 | | 46,695 | |
Gain on forgiveness of debt | | — | | (5,319 | ) |
Gain on sale of investment | | — | | (5,791 | ) |
Loss on sales of property and equipment | | 17,178 | | 1,022 | |
Impairment charges | | 99,719 | | — | |
Acquired in-process research and development | | 16,955 | | — | |
Minority interest in variable interest entity | | (21,073 | ) | — | |
Changes in operating assets and liabilities: | | | | | |
Receivables | | (144,975 | ) | (601 | ) |
Inventory | | (37,397 | ) | (2,328 | ) |
Other assets | | 11,792 | | (54,838 | ) |
Accounts payable and accrued expenses | | (376,232 | ) | 385,463 | |
Other liabilities | | 44,576 | | 76,041 | |
| | | | | |
Net cash provided by (used for) operating activities | | (1,877 | ) | 384,856 | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Purchases of property and equipment | | (75,871 | ) | (96,867 | ) |
Proceeds from sale of property and equipment | | 16,000 | | — | |
Investment in third party | | (31,692 | ) | — | |
Cash balance from consolidation of variable interest entity | | 1,654 | | — | |
Acquisition of intangible assets | | (25,825 | ) | (107,246 | ) |
Proceeds from sale of investment | | — | | 12,291 | |
Sales and maturities of available-for-sale investments | | 7,596 | | 99,131 | |
Purchases of available-for-sale investments | | — | | (80,255 | ) |
| | | | | |
Net cash used for investing activities | | (108,138 | ) | (172,946 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
Proceeds from exercises of common stock options | | 43,962 | | 93,900 | |
Windfall tax benefits from stock-based compensation | | 7,834 | | 13,993 | |
Acquisition of treasury stock | | (6,947 | ) | (7,105 | ) |
Payments on and retirements of long-term debt | | (217,743 | ) | (3,853 | ) |
| | | | | |
Net cash (used for) provided by financing activities | | (172,894 | ) | 96,935 | |
| | | | | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | (11,301 | ) | 13,312 | |
| | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | (294,210 | ) | 322,157 | |
| | | | | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | 818,669 | | 496,512 | |
| | | | | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 524,459 | | $ | 818,669 | |
* As adjusted for the retrospective application of a change in accounting method for inventory from LIFO to FIFO.
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 | | Twelve Months Ended | |
| | March 31, 2009 | | December 31, 2009 | |
| | | | | | | | | | | |
Projected GAAP basic income per common share | | $ | 0.93 | | — | $ | 1.03 | | $ | 5.02 | | — | $ | 5.12 | |
| | | | | | | | | | | |
Amortization of current intangibles | | $ | 0.31 | | — | $ | 0.31 | | $ | 1.23 | | — | $ | 1.23 | |
Accelerated depreciation adjustment- CIMA | | $ | 0.02 | | — | $ | 0.02 | | $ | 0.09 | | — | $ | 0.09 | |
Accelerated depreciation adjustment- Mitry-Mory | | $ | 0.06 | | — | $ | 0.06 | | $ | 0.22 | | — | $ | 0.22 | |
Restructuring adjustments | | $ | 0.02 | | — | $ | 0.02 | | $ | 0.07 | | — | $ | 0.07 | |
Interest expense adjustment for APB 14-1 | | $ | 0.16 | | — | $ | 0.16 | | $ | 0.67 | | — | $ | 0.67 | |
| | | | | | | | | | | |
Tax effect of pre-tax adjustments at the applicable tax rates | | $ | (0.20 | ) | — | $ | (0.20 | ) | $ | (0.80 | ) | — | $ | (0.80 | ) |
| | | | | | | | | | | |
Basic adjusted income per common share guidance | | $ | 1.30 | | — | $ | 1.40 | | $ | 6.50 | | — | $ | 6.60 | |
The company’s guidance is being issued based on certain assumptions including:
· Adjusted effective tax rate of approximately 35.0 percent in 2009; and
· Weighted average number of common shares outstanding of 69.0 and 69.5 million shares for the three months ended March 31, 2009 and the twelve months ended December 31, 2009, respectively.
