Exhibit 99.1
For Immediate Release
Cephalon Delivers Record Sales in the Second Quarter 2009
Sales and Adjusted Net Income Exceed Guidance
NUVIGIL Launch off to Strong Start
Frazer, Pa. — August 4, 2009 — Cephalon, Inc. (Nasdaq: CEPH) today reported second quarter 2009 sales of $539.0 million, an 11 percent increase compared to sales of $485.0 million for the second quarter 2008 and exceeding the company’s sales guidance of $515 - $535 million. Basic income per common share for the quarter was $1.19. Excluding amortization expense and certain other items, basic adjusted income per common share for the quarter was $1.56, an increase of 25 percent over the comparable figure of $1.25 for the same period in 2008. Adjusted net income for the second quarter of 2009 was $110.7 million, a 31 percent increase over the comparable $84.5 million for the second quarter of 2008. This exceeded the company’s adjusted net income guidance range of $96.6 to $103.5 million.
Central nervous system (CNS) franchise sales were $290.6 million during the quarter, a 16 percent increase compared to the same period last year. Pain franchise reported sales of $123.6 million, an 8 percent decrease versus second quarter 2008, with growing sales of AMRIX® (cyclobenzaprine hydrochloride extended-release capsules) largely offsetting the continued generic erosion of ACTIQ (oral transmucosal fentanyl citrate) [C-II]. Oncology franchise sales were $82.2 million, an 86 percent increase over the same period last year due to strong sales of TREANDA® (bendamustine hydrochloride) of $55.8 million.
During the quarter the company launched NUVIGIL® (armodafinil) Tablets [C-IV]. A supplemental new drug application was filed with the FDA for NUVIGIL as a treatment of excessive sleepiness associated with jet lag disorder. If approved this would be the first acute indication for the franchise and further enhance the growth potential for NUVIGIL.
“With our recent business development activities and our fourth product launch in four years, we continue to build Cephalon into a premier biotech company,” said Frank Baldino, Jr., Ph.D., Chairman and CEO. “NUVIGIL, our most recent product launch, is off to a great start and in order to serve additional patients we continue to make meaningful progress with our clinical programs to further develop this product. In addition, TREANDA and AMRIX continue to experience tremendous year-over-year growth. We plan to continue to execute upon our strategy of diversification through both our internal discovery and business development activities while delivering solid financial performance.”
Also during the quarter, Cephalon continued to build its biotechnology platform by acquiring a controlling interest in the Australian biotechnology company Arana Therapeutics.
SOURCE: Cephalon, Inc. · 41 Moores Road · Frazer, PA 19355 · (610) 344-0200 · Fax (610) 344-0065
Arana brings to Cephalon antibody humanization and optimization technology as well as a pipeline of biologics for inflammatory diseases and cancer.
The company is updating its guidance for 2009. Total sales guidance remains $2.175-$2.225 billion. This includes CNS franchise sales of $1.16-$1.19 billion, pain franchise sales of $530-$555 million, oncology franchise sales which were increased to $315-$335 million, and other product sales of $150-$175 million. Full year R&D guidance decreased to $425-$445 million and SG&A remains $840-$860 million, respectively. Adjusted net income guidance was increased to $457-$464 million and basic adjusted income per common share guidance is $6.30-$6.40.
For the third quarter 2009, Cephalon is introducing sales guidance of $540-$560 million, adjusted net income guidance of $108-$116 million and basic adjusted income per common share guidance of $1.45-$1.55.
Basic adjusted income per common share guidance for both the third 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 second quarter 2009 performance in a conference call with investors beginning at 5:00 p.m. U.S. EDT today. To participate in the conference call, dial +1-913-312-0379 and refer to conference code number 1696714. 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®, TREANDA® for Injection, FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride),
2
NUVIGIL® 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.
# # #
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, including the growth and acceptance of Nuvigil, Treanda and Amrix in the market; sales, adjusted net income and basic adjusted income per common share guidance for the third quarter and full-year 2009 and SG&A and R&D guidance for the full-year 2009; 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 |
| Six Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| ||||||||
|
| 2009 |
| As adjusted |
| 2009 |
| As adjusted |
| ||||
REVENUES: |
|
|
|
|
|
|
|
|
| ||||
Sales |
| $ | 539,021 |
| $ | 485,042 |
| $ | 1,053,387 |
| $ | 918,939 |
|
Other revenues |
| 8,792 |
| 7,673 |
| 14,394 |
| 16,995 |
| ||||
|
| 547,813 |
| 492,715 |
| 1,067,781 |
| 935,934 |
| ||||
COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
| ||||
Cost of sales |
| 105,407 |
| 101,318 |
| 203,177 |
| 191,234 |
| ||||
Research and development |
| 102,085 |
| 80,409 |
| 205,109 |
| 161,844 |
| ||||
Selling, general and administrative |
| 223,656 |
| 209,900 |
| 424,246 |
| 408,888 |
| ||||
Restructuring charges |
| 1,245 |
| 1,565 |
| 2,882 |
| 5,476 |
| ||||
Acquired in-process research and development |
| 9,368 |
| — |
| 40,118 |
| 10,000 |
| ||||
|
| 441,761 |
| 393,192 |
| 875,532 |
| 777,442 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
INCOME FROM OPERATIONS |
| 106,052 |
| 99,523 |
| 192,249 |
| 158,492 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
|
| ||||
Interest income |
| 930 |
| 4,912 |
| 1,634 |
| 11,513 |
| ||||
Interest expense |
| (20,114 | ) | (20,789 | ) | (36,718 | ) | (43,067 | ) | ||||
Other income (expense), net |
| 32,104 |
| (1,543 | ) | 38,643 |
| 3,776 |
| ||||
|
| 12,920 |
| (17,420 | ) | 3,559 |
| (27,778 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
INCOME BEFORE INCOME TAXES |
| 118,972 |
| 82,103 |
| 195,808 |
| 130,714 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
INCOME TAX EXPENSE |
| 46,932 |
| 30,212 |
| 79,986 |
| 48,381 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
NET INCOME |
| 72,040 |
| 51,891 |
| 115,822 |
| 82,333 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST |
| 12,724 |
| — |
| 27,525 |
| — |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
NET INCOME ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 84,764 |
| $ | 51,891 |
| $ | 143,347 |
| $ | 82,333 |
|
|
|
|
|
|
|
|
|
|
| ||||
BASIC INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 1.19 |
| $ | 0.77 |
| $ | 2.05 |
| $ | 1.22 |
|
|
|
|
|
|
|
|
|
|
| ||||
DILUTED INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 1.11 |
| $ | 0.69 |
| $ | 1.87 |
| $ | 1.10 |
|
|
|
|
|
|
|
|
|
|
| ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO CEPHALON, INC. |
| 71,119 |
| 67,777 |
| 69,962 |
| 67,721 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION ATTRIBUTABLE TO CEPHALON, INC. |
| 76,629 |
| 74,852 |
| 76,808 |
| 74,569 |
| ||||
* As adjusted for FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.
(Unaudited)
|
| Three Months Ended |
| ||||
|
| June 30, |
| ||||
|
| 2009 |
| 2008 |
| ||
|
|
|
|
|
| ||
GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 84,764 |
| $ | 51,891 |
|
|
|
|
|
|
| ||
Cost of sales adjustments |
| 30,470 | (1) | 28,892 | (1) | ||
Research and development adjustments |
| 1,790 | (2) | — |
| ||
Selling, general and administrative adjustments |
| 12,874 | (3) | — |
| ||
Restructuring charges |
| 1,245 | (4) | 1,565 | (5) | ||
Interest expense adjustment |
| 12,965 | (5) | 16,667 | (6) | ||
Other (income) expense adjustment |
| (32,608 | )(6) | — |
| ||
In-process research and development adjustments |
| 9,368 | (7) | — |
| ||
Adjustment to noncontrolling interest |
| (819 | )(8) | — |
| ||
Income tax adjustment |
| (9,341 | )(9) | (14,554 | )(9) | ||
|
| 25,944 |
| 32,570 |
| ||
|
|
|
|
|
| ||
ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 110,708 |
| $ | 84,461 |
|
|
|
|
|
|
| ||
BASIC ADJUSTED INCOME PER COMMON SHARE |
| $ | 1.56 |
| $ | 1.25 |
|
|
|
|
|
|
| ||
DILUTED ADJUSTED INCOME PER COMMON SHARE |
| $ | 1.44 |
| $ | 1.13 |
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
| 71,119 |
| 67,777 |
| ||
|
|
|
|
|
| ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION |
| 76,629 |
| 74,852 |
| ||
Notes to Reconciliation of GAAP Net Income to Adjusted Net Income
(1) To exclude the on-going amortization of acquired intangible assets ($23.0M in 2009; $26.8M in 2008), accelerated depreciation related to restructuring ($4.5M in 2009; $2.1M in 2008) and the write-off of purchase commitments in excess of estimated requirements ($3.0M in 2009).
(2) To exclude accelerated depreciation related to restructuring ($0.3M) and charges related to our transaction with Arana Therapeutics Limited ($1.5M).
(3) To exclude charges related to the acquisition of Arana Therapeutics Limited ($6.3M) and charges related to our settlement with Takeda ($6.5M) which resolves our remaining contractual arrangements.
(4) To exclude costs related to the CIMA restructuring.
(5) To exclude interest expense associated with the implementation of APB 14-1 ($13.0M in 2009; $13.0M in 2008) and accrued interest related to the agreement in principle reached with the U.S. Attorney's Office in Philadelphia ($3.7M in 2008).
(6) To exclude the following gains and losses related to the acquisition of Arana Therapeutics Limited:
· $6.6M gain on pre-bid Arana holding;
· $2.8M loss on contingent consideration (90% ownership incentive payment);
· $10.0M gain on excess of net assets over consideration;
· $13.7M gains on foreign exchange derivative instruments; and
· $5.1M foreign exchange gain on Australian Dollar acquisition funds.
(7) To exclude the impact of Acusphere deconsolidation.
(8) To exclude the portion of non-cash charges related to our acquisition of Arana Therapeutics Limited that are reflected in adjustments (6) above but do not affect net income because they are attributed to noncontrolling interests.
(9) To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments primarily related to; changes in valuation allowances and other changes in tax assets and liabilities ($11.9M in 2009; $9.8M in 2008), the applicable tax impact related to the implementation of APB 14-1 ($4.6 in 2009; $4.7M in 2008), and to exclude taxes on gains and costs related to the acquisition of Arana Therapeutics ($10.1M in 2009).
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.
(Unaudited)
|
| Six Months Ended |
| ||||
|
| June 30, |
| ||||
|
| 2009 |
| 2008 |
| ||
|
|
|
|
|
| ||
GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 143,347 |
| $ | 82,333 |
|
|
|
|
|
|
| ||
Cost of sales adjustments |
| 56,178 | (1) | 56,780 | (1) | ||
Research and development adjustments |
| 3,086 | (2) | 7,754 | (2) | ||
Selling, general and administrative adjustments |
| 13,744 | (3) | 2,955 | (3) | ||
Restructuring charges |
| 2,882 | (4) | 5,476 | (5) | ||
Interest expense adjustment |
| 23,500 | (5) | 33,701 | (6) | ||
Other (income) expense adjustment |
| (39,527 | )(6) | — |
| ||
In-process research and development adjustments |
| 40,118 | (7) | 10,000 | (8) | ||
Adjustment to noncontrolling interest |
| (819 | )(8) | — |
| ||
Income tax adjustment |
| (30,717 | )(9) | (38,944 | )(9) | ||
|
| 68,445 |
| 77,722 |
| ||
|
|
|
|
|
| ||
ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC. |
| $ | 211,792 |
| $ | 160,055 |
|
|
|
|
|
|
| ||
BASIC ADJUSTED INCOME PER COMMON SHARE |
| $ | 3.03 |
| $ | 2.36 |
|
|
|
|
|
|
| ||
DILUTED ADJUSTED INCOME PER COMMON SHARE |
| $ | 2.76 |
| $ | 2.17 |
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
| 69,962 |
| 67,721 |
| ||
|
|
|
|
|
| ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION |
| 76,808 |
| 74,569 |
| ||
Notes to Reconciliation of GAAP Net Income to Adjusted Net Income
(1) To exclude the on-going amortization of acquired intangible assets ($44.2M in 2009; $53.0M in 2008) and accelerated depreciation related to restructuring ($9.0M in 2009; $3.8M in 2008) and the write-off of purchase commitments in excess of estimated requirements ($3.0M in 2009).
(2) To exclude accelerated depreciation related to restructuring ($0.6M in 2009), charges related to payments for several research and development collaborations ($1.0M in 2009; $6.0M in 2008), charges related to our transaction with Arana Therapeutics Limited ($1.5M in 2009) and other charges ($1.8M in 2008) related to employee severance costs.
(3) In 2009, to exclude charges related to the acquisition of Arana Therapeutics Limited ($7.2M) 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.
(4) To exclude costs related to the CIMA restructuring.
(5) To exclude interest expense associated with the implementation of APB 14-1 ($23.5M in 2009; $26.3M in 2008) and accrued interest related to the agreement in principle reached with the U.S. Attorney's Office in Philadelphia ($7.5M in 2008).
(6) To exclude the following gains and losses related to the acquisition of Arana Therapeutics Limited:
· $6.6M gain on pre-bid Arana holding;
· $2.8M loss on contingent consideration (90% ownership incentive payment);
· $10.0M gain on excess of net assets over consideration;
· $19.0M gains on foreign exchange derivative instruments;
· $5.1M foreign exchange gain on Australian Dollar acquisition funds; and
· $1.6M dividend income related to our initial purchase of Arana shares.
(7) To exclude charges related to the deconsolidation of Acusphere ($9.3M), the acquisition of worldwide license rights related to LUPUZOR from ImmuPharma ($30.0M) and license rights for bendamustine hydrochloride in China and Hong Kong ($0.8M) in 2009 and the license of Acusphere HDDS technology for use in oncology therapeutics in 2008.
(8) To exclude the portion of non-cash charges related to our acquisition of Arana Therapeutics Limited that are reflected in adjustments (6) above but do not affect net income because they are attributed to noncontrolling interests.
(9) To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments primarily related to; changes in valuation allowances and other changes in tax assets and liabilities ($31.8M in 2009; $29.3M in 2008), the applicable tax impact related to the implementation of APB 14-1 ($8.3M in 2009; $9.6M in 2008), and to exclude taxes on gains and costs related to the acquisition of Arana Therapeutics ($8.0M in 2009).
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
|
| Three Months Ended |
| % |
| ||||||||||||||||||||
|
| June 30, |
| Increase |
| ||||||||||||||||||||
|
| 2009 |
| 2008 |
| (Decrease) |
| ||||||||||||||||||
|
| United |
| Europe |
| Total |
| United |
| Europe |
| Total |
| United |
| Europe |
| Total |
| ||||||
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
PROVIGIL |
| $ | 246,583 |
| $ | 15,485 |
| $ | 262,068 |
| $ | 218,942 |
| $ | 15,869 |
| $ | 234,811 |
| 13 | % | (2 | )% | 12 | % |
NUVIGIL |
| 16,786 |
| — |
| 16,786 |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||
GABITRIL |
| 10,749 |
| 1,026 |
| 11,775 |
| 14,307 |
| 2,039 |
| 16,346 |
| (25 | ) | (50 | ) | (28 | ) | ||||||
CNS |
| 274,118 |
| 16,511 |
| 290,629 |
| 233,249 |
| 17,908 |
| 251,157 |
| 18 |
| (8 | ) | 16 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
ACTIQ |
| 25,153 |
| 12,712 |
| 37,865 |
| 38,051 |
| 14,130 |
| 52,181 |
| (34 | ) | (10 | ) | (27 | ) | ||||||
Generic OTFC |
| 23,390 |
| — |
| 23,390 |
| 28,958 |
| — |
| 28,958 |
| (19 | ) | — |
| (19 | ) | ||||||
FENTORA |
| 30,617 |
| 814 |
| 31,431 |
| 36,374 |
| — |
| 36,374 |
| (16 | ) | — |
| (14 | ) | ||||||
AMRIX |
| 30,867 |
| — |
| 30,867 |
| 17,119 |
| — |
| 17,119 |
| 80 |
| — |
| 80 |
| ||||||
Pain |
| 110,027 |
| 13,526 |
| 123,553 |
| 120,502 |
| 14,130 |
| 134,632 |
| (9 | ) | (4 | ) | (8 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TREANDA |
| 55,820 |
| — |
| 55,820 |
| 14,381 |
| — |
| 14,381 |
| 288 |
| — |
| 288 |
| ||||||
Other |
| 4,193 |
| 22,168 |
| 26,361 |
| 4,380 |
| 25,372 |
| 29,752 |
| (4 | ) | (13 | ) | (11 | ) | ||||||
Oncology |
| 60,013 |
| 22,168 |
| 82,181 |
| 18,761 |
| 25,372 |
| 44,133 |
| 220 |
| (13 | ) | 86 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other |
| 8,380 |
| 34,278 |
| 42,658 |
| 13,117 |
| 42,003 |
| 55,120 |
| (36 | ) | (18 | ) | (23 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| $ | 452,538 |
| $ | 86,483 |
| $ | 539,021 |
| $ | 385,629 |
| $ | 99,413 |
| $ | 485,042 |
| 17 | % | (13 | )% | 11 | % |
|
| Six Months Ended |
| % |
| ||||||||||||||||||||
|
| June 30, |
| Increase |
| ||||||||||||||||||||
|
| 2009 |
| 2008 |
| (Decrease) |
| ||||||||||||||||||
|
| United |
| Europe |
| Total |
| United |
| Europe |
| Total |
| United |
| Europe |
| Total |
| ||||||
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
PROVIGIL |
| $ | 485,012 |
| $ | 30,418 |
| $ | 515,430 |
| $ | 417,411 |
| $ | 30,635 |
| $ | 448,046 |
| 16 | % | (1 | )% | 15 | % |
NUVIGIL |
| 16,786 |
| — |
| 16,786 |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||
GABITRIL |
| 25,498 |
| 2,531 |
| 28,029 |
| 25,438 |
| 4,332 |
| 29,770 |
| — |
| (42 | ) | (6 | ) | ||||||
CNS |
| 527,296 |
| 32,949 |
| 560,245 |
| 442,849 |
| 34,967 |
| 477,816 |
| 19 |
| (6 | ) | 17 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
ACTIQ |
| 51,570 |
| 24,459 |
| 76,029 |
| 75,568 |
| 26,333 |
| 101,901 |
| (32 | ) | (7 | ) | (25 | ) | ||||||
Generic OTFC |
| 47,502 |
| — |
| 47,502 |
| 56,276 |
| — |
| 56,276 |
| (16 | ) | — |
| (16 | ) | ||||||
FENTORA |
| 63,907 |
| 1,237 |
| 65,144 |
| 75,307 |
| — |
| 75,307 |
| (15 | ) | — |
| (13 | ) | ||||||
AMRIX |
| 57,104 |
| — |
| 57,104 |
| 26,887 |
| — |
| 26,887 |
| 112 |
| — |
| 112 |
| ||||||
Pain |
| 220,083 |
| 25,696 |
| 245,779 |
| 234,038 |
| 26,333 |
| 260,371 |
| (6 | ) | (2 | ) | (6 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
TREANDA |
| 106,017 |
| — |
| 106,017 |
| 14,381 |
| — |
| 14,381 |
| 637 |
| — |
| 637 |
| ||||||
Other |
| 9,519 |
| 43,200 |
| 52,719 |
| 9,568 |
| 47,642 |
| 57,210 |
| (1 | ) | (9 | ) | (8 | ) | ||||||
Oncology |
| 115,536 |
| 43,200 |
| 158,736 |
| 23,949 |
| 47,642 |
| 71,591 |
| 382 |
| (9 | ) | 122 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other |
| 19,535 |
| 69,092 |
| 88,627 |
| 26,644 |
| 82,517 |
| 109,161 |
| (27 | ) | (16 | ) | (19 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
| $ | 882,450 |
| $ | 170,937 |
| $ | 1,053,387 |
| $ | 727,480 |
| $ | 191,459 |
| $ | 918,939 |
| 21 | % | (11 | )% | 15 | % |
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
|
|
| As adjusted |
| ||
|
| June 30 |
| December 31, |
| ||
|
| 2009 |
| 2008* |
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 1,281,926 |
| $ | 524,459 |
|
Short term investments |
| 122,701 |
| — |
| ||
Receivables, net |
| 344,909 |
| 409,580 |
| ||
Inventory, net |
| 239,785 |
| 117,297 |
| ||
Deferred tax assets, net |
| 235,916 |
| 224,066 |
| ||
Other current assets |
| 52,685 |
| 54,120 |
| ||
Total current assets |
| 2,277,922 |
| 1,329,522 |
| ||
|
|
|
|
|
| ||
INVESTMENTS |
| 17,123 |
| 8,081 |
| ||
PROPERTY AND EQUIPMENT, net |
| 462,207 |
| 467,449 |
| ||
GOODWILL |
| 571,706 |
| 445,332 |
| ||
INTANGIBLE ASSETS, net |
| 1,098,675 |
| 607,332 |
| ||
DEFERRED TAX ASSETS, net |
| 2,605 |
| 46,074 |
| ||
DEBT ISSUANCE COSTS |
| 21,351 |
| 11,838 |
| ||
OTHER ASSETS |
| 30,143 |
| 167,314 |
| ||
|
| $ | 4,481,732 |
| $ | 3,082,942 |
|
|
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Current portion of long-term debt, net |
| $ | 799,832 |
| $ | 781,618 |
|
Accounts payable |
| 91,187 |
| 87,079 |
| ||
Accrued expenses |
| 314,737 |
| 304,415 |
| ||
Total current liabilities |
| 1,205,756 |
| 1,173,112 |
| ||
|
|
|
|
|
| ||
LONG-TERM DEBT |
| 352,805 |
| 3,692 |
| ||
DEFERRED TAX LIABILITIES, net |
| 219,396 |
| 77,932 |
| ||
OTHER LIABILITIES |
| 168,314 |
| 163,123 |
| ||
Total liabilities |
| 1,946,271 |
| 1,417,859 |
| ||
|
|
|
|
|
| ||
REDEEMABLE EQUITY |
| 228,224 |
| 248,403 |
| ||
|
|
|
|
|
| ||
EQUITY: |
|
|
|
|
| ||
Cephalon Stockholders’ Equity |
|
|
|
|
| ||
Common stock, $0.01 par value |
| 776 |
| 717 |
| ||
Additional paid-in capital |
| 2,484,536 |
| 2,095,324 |
| ||
Treasury stock, at cost |
| (201,734 | ) | (201,705 | ) | ||
Accumulated deficit |
| (377,939 | ) | (521,286 | ) | ||
Accumulated other comprehensive income |
| 91,948 |
| 43,630 |
| ||
Total Cephalon stockholders’ equity |
| 1,997,587 |
| 1,416,680 |
| ||
Noncontrolling Interest |
| 309,650 |
| — |
| ||
Total equity |
| 2,307,237 |
| 1,416,680 |
| ||
|
| $ | 4,481,732 |
| $ | 3,082,942 |
|
* As adjusted for FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
| Six Months Ended |
| ||||
|
| June 30, |
| ||||
|
| 2009 |
| As adjusted |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net income |
| $ | 115,822 |
| $ | 82,333 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Deferred income tax benefit |
| (385 | ) | (12,218 | ) | ||
Depreciation and amortization |
| 87,029 |
| 84,006 |
| ||
Stock-based compensation expense |
| 24,840 |
| 21,894 |
| ||
Loss on disposals of property and equipment |
| — |
| 1,031 |
| ||
Amortization of debt discount and debt issuance costs |
| 23,749 |
| 26,201 |
| ||
Gain on foreign exchange contracts |
| (26,754 | ) | — |
| ||
Gain on acquisition of Arana |
| (10,008 | ) | — |
| ||
Acquired in-process research and development from Acusphere deconsolidation |
| 8,366 |
| — |
| ||
Other |
| (5,283 | ) | (418 | ) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Receivables |
| 74,211 |
| (56,210 | ) | ||
Inventory |
| (9,550 | ) | (7,933 | ) | ||
Other assets |
| 31,479 |
| (24,027 | ) | ||
Accounts payable, accrued expenses and deferred revenues |
| 1,493 |
| (10,427 | ) | ||
Other liabilities |
| (1,501 | ) | 16,418 |
| ||
Net cash provided by operating activities |
| 313,508 |
| 120,650 |
| ||
|
|
|
|
|
| ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Purchases of property and equipment |
| (30,234 | ) | (42,898 | ) | ||
Acquisition of intangible assets |
| — |
| (25,575 | ) | ||
Cash balance from consolidation of variable interest entity |
| 52,563 |
| — |
| ||
Investment in Ception |
| (75,000 | ) | — |
| ||
Acquisition of Arana, net of cash acquired |
| (211,803 | ) | — |
| ||
Purchases of investments |
| (9,082 | ) | (6,242 | ) | ||
Proceeds from foreign exchange contract |
| 26,754 |
| — |
| ||
Sales and maturities of available-for-sale investments |
| 4,456 |
| 7,596 |
| ||
Net cash used for investing activities |
| (242,346 | ) | (67,119 | ) | ||
|
|
|
|
|
| ||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from sale of common stock |
| 288,000 |
| — |
| ||
Proceeds from exercises of common stock options |
| 6,271 |
| 13,562 |
| ||
Windfall tax benefits from stock-based compensation |
| 197 |
| 480 |
| ||
Acquisition of treasury stock |
| (29 | ) | (24 | ) | ||
Payments on and retirements of long-term debt |
| (9,131 | ) | (215,129 | ) | ||
Net proceeds from issuance of convertible subordinated notes |
| 484,738 |
| — |
| ||
Proceeds from sale of warrants |
| 37,640 |
| — |
| ||
Purchase of convertible note hedge |
| (121,040 | ) | — |
| ||
Net cash provided by (used for) financing activities |
| 686,646 |
| (201,111 | ) | ||
|
|
|
|
|
| ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
| (341 | ) | 2,282 |
| ||
|
|
|
|
|
| ||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
| 757,467 |
| (145,298 | ) | ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
| 524,459 |
| 818,669 |
| ||
|
|
|
|
|
| ||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
| $ | 1,281,926 |
| $ | 673,371 |
|
* As adjusted for FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” and SFAS No. 160, “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 |
| Twelve Months Ended |
| ||||||||||||
|
| September 30, 2009 |
| December 31, 2009 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Projected GAAP basic income per common share |
| $ | 1.01 |
| — |
| $ | 1.11 |
| $ | 4.49 |
| — |
| $ | 4.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of current intangibles |
| $ | 0.35 |
| — |
| $ | 0.35 |
| $ | 1.33 |
| — |
| $ | 1.33 |
|
Accelerated depreciation adjustment- CIMA |
| $ | 0.02 |
| — |
| $ | 0.02 |
| $ | 0.09 |
| — |
| $ | 0.09 |
|
Accelerated depreciation adjustment- Mitry-Mory |
| $ | 0.06 |
| — |
| $ | 0.06 |
| $ | 0.21 |
| — |
| $ | 0.21 |
|
Research and development adjustments |
| $ | — |
| — |
| $ | — |
| $ | 0.01 |
| — |
| $ | 0.01 |
|
Selling, general and administrative adjustments |
| $ | — |
| — |
| $ | — |
| $ | 0.19 |
| — |
| $ | 0.19 |
|
Cost of goods sold adjustments |
| $ | — |
| — |
| $ | — |
| $ | 0.06 |
| — |
| $ | 0.06 |
|
Restructuring adjustments |
| $ | 0.01 |
| — |
| $ | 0.01 |
| $ | 0.07 |
| — |
| $ | 0.07 |
|
Acquired in-process research and development adjustments |
| $ | — |
| — |
| $ | — |
| $ | 0.55 |
| — |
| $ | 0.55 |
|
Other income (expense) adjustments |
| $ | — |
| — |
| $ | — |
| $ | (0.56 | ) | — |
| $ | (0.56 | ) |
Interest expense adjustments |
| $ | 0.23 |
| — |
| $ | 0.23 |
| $ | 0.80 |
| — |
| $ | 0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Tax effect of pre-tax adjustments at the applicable tax rates |
| $ | (0.23 | ) | — |
| $ | (0.23 | ) | $ | (0.94 | ) | — |
| $ | (0.94 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic adjusted income per common share guidance |
| $ | 1.45 |
| — |
| $ | 1.55 |
| $ | 6.30 |
| — |
| $ | 6.40 |
|
The company’s guidance is being issued based on certain assumptions including:
· Adjusted effective tax rate of approximately 34.0 percent in 2009; and
· Weighted average number of common shares outstanding of 74.9 and 72.5 million shares for the three months ended September 30, 2009 and the twelve months ended December 31, 2009, respectively.
