Exhibit 99.1
For Immediate Release
Cephalon Reports Record Sales and
Adjusted Net Income for 2009
Sales Exceed $2 Billion, Increasing for Tenth Year in a Row
2010 Guidance Increased
Cash From Operations Totals $681 Million
Frazer, Pa. — February 11, 2009 — Cephalon, Inc. (Nasdaq: CEPH) today reported 2009 net sales of $2.152 billion, an 11 percent increase compared to net sales of $1.943 billion for 2008. Basic income per common share for the year was $4.74. Excluding amortization expense and certain other items, adjusted net income for full year 2009 was $469 million, a 28 percent increase over the previous year. This exceeded the company’s adjusted net income guidance range of $457 to $464 million for 2009. Basic adjusted income per common share for the year was $6.48 in 2009 and $5.39 in 2008.
Central nervous system (CNS) franchise net sales were $1.155 billion during the year, a 10 percent increase compared to 2008. Pain franchise reported net sales of $485.1 million, a 3 percent decrease versus last year. Oncology franchise net sales were $335.9 million, an 81 percent increase over 2008 due to strong net sales of TREANDA® (bendamustine hydrochloride) of $222.1 million. Sales of other products were $176.0 million compared to $207.6 million for 2008 due to unfavorable exchange rates partially offset by volume increases.
During the fourth quarter 2009 Cephalon recorded net cash provided by operating activities of $164 million bringing the year-to-date cash flow from operations to $681 million.
“2009 was a year of extraordinary innovation and growth,” said Frank Baldino, Jr., Ph.D., Chairman and CEO. “For the year we reported positive clinical study results on several of our drug candidates, advanced five new compounds into man and continued to acquire promising assets. We continue our steadfast commitment to patients while building an enduring, diversified business for our shareholders.”
The company is introducing new guidance for 2010, which assumes that the Mepha acquisition closes on April 1st. Total sales guidance for 2010 is $2.610-$2.690 billion. This includes CNS franchise sales of $1.180 -$1.220 billion, pain franchise sales of $495-$530 million, oncology franchise sales of $440-$470 million, and other product sales of $470-$490 million. Full year R&D and SG&A expense guidance is $480-$500 million and $960-$980
SOURCE: Cephalon, Inc. · 41 Moores Road · Frazer, PA 19355 · (610) 344-0200 · Fax (610) 344-0065
million, respectively. Adjusted net income guidance is $518-$533 million. Basic adjusted income per common share guidance is $6.80-$7.00 assuming 76.2 million basic shares outstanding.
Cephalon is introducing first quarter 2010 sales guidance of $575 - $595 million, adjusted net income guidance of $121 - $128 million and basic adjusted income per common share guidance of $1.60 - - $1.70 assuming 75.5 million basic shares outstanding.
Basic adjusted income per common share for both the first quarter 2010 and full-year 2010 is reconciled below and is subject to the assumptions set forth therein. References in this press release to basic income per common share, basic adjusted income per common share, basic adjusted income per common share guidance, adjusted net income, adjusted net income guidance, adjusted net income per common share, adjusted net income per common share guidance refers to those metrics on an “attributable to Cephalon” basis and does not include any income or losses attributable to noncontrolling interests.
Cephalon’s management will discuss the company’s full year 2009 performance in a conference call with investors beginning at 5:00 p.m. U.S. EST today. To participate in the conference call, dial +1-913-312-0705 and refer to conference code number 2954672. Investors can listen to the call live by logging on to the company’s website at www.cephalon.com and clicking on “Investors” then “Webcast.” The conference call will be archived and available to investors for one week after the call.
About Cephalon, Inc.
Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of many unique products in four core therapeutic areas: central nervous system, inflammatory diseases, pain and oncology. A member of the Fortune 1000 and the S&P 500 Index, Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company’s headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota.
Cephalon has a growing presence in Europe, the Middle East and Africa. The Cephalon European headquarters and pre-clinical development center are located in Maisons-Alfort, France, just outside of Paris. Key business units are located in England, Ireland, France, Germany, Italy, Spain, the Netherlands for the Benelux countries, and Poland for Eastern and Central European countries. Cephalon Europe markets more than 30 products in four areas: central nervous system, pain, primary care and oncology.
The company’s proprietary products in the United States include: AMRIX® (cyclobenzaprine hydrochloride extended-release capsules), TREANDA® for Injection, FENTORA® (fentanyl buccal tablet) [C-II], PROVIGIL® (modafinil) Tablets [C-IV], TRISENOX® (arsenic trioxide) injection, GABITRIL® (tiagabine hydrochloride), NUVIGIL® (armodafinil) Tablets [C-IV] and ACTIQ® (oral transmucosal fentanyl citrate) [C-II]. The
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company also markets numerous products internationally. Full prescribing information on its U.S. products is available at http://www.cephalon.com or by calling 1-800-896-5855.
# # #
In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon’s current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; sales, adjusted net income and basic adjusted income per common share guidance for the first quarter and full-year 2010 and SG&A and R&D guidance for the first quarter and full-year 2010; and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words and terms of similar meaning. Cephalon’s performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.
This press release and/or the financial results attached to this press release include “Adjusted Net Income,” “Basic Adjusted Income per Common Share,” “Adjusted Net Income Guidance,” “Basic Adjusted Income per Common Share Guidance,” and “Diluted Adjusted Income Per Common Share,” amounts that are considered “non-GAAP financial measures” under SEC rules. As required, we have provided reconciliations of these measures. Additional required information is located in the Form 8-K furnished to the SEC in connection with this press release.
Source: Cephalon, Inc. | |
| |
Contacts: | |
Media: | Investors: |
Sheryl Williams | Robert (Chip) Merritt |
610-738-6493 | 610-738-6376 |
swilliam@cephalon.com | cmerritt@cephalon.com |
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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, | |
| | 2009 | | As adjusted
2008* | | 2009 | | As adjusted
2008* | |
REVENUES: | | | | | | | | | |
Net sales | | $ | 562,938 | | $ | 534,861 | | $ | 2,151,548 | | $ | 1,943,464 | |
Other revenues | | 12,177 | | 5,277 | | 40,760 | | 31,090 | |
| | 575,115 | | 540,138 | | 2,192,308 | | 1,974,554 | |
COSTS AND EXPENSES: | | | | | | | | | |
Cost of sales | | 105,204 | | 99,523 | | 398,837 | | 412,234 | |
Research and development | | 91,165 | | 112,039 | | 395,431 | | 362,208 | |
Selling, general and administrative | | 203,738 | | 209,037 | | 822,052 | | 840,873 | |
Settlement reserve | | — | | — | | — | | 7,450 | |
Restructuring charges | | 9,881 | | 1,442 | | 13,825 | | 8,415 | |
Impairment charge | | 182,080 | | 99,719 | | 182,080 | | 99,719 | |
Acquired in-process research and development | | — | | 31,955 | | 46,118 | | 41,955 | |
Loss on sale of equipment | | — | | 17,178 | | — | | 17,178 | |
| | 592,068 | | 570,893 | | 1,858,343 | | 1,790,032 | |
| | | | | | | | | |
INCOME (LOSS) FROM OPERATIONS | | (16,953 | ) | (30,755 | ) | 333,965 | | 184,522 | |
| | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | |
Interest income | | 1,808 | | 1,386 | | 5,263 | | 16,901 | |
Interest expense | | (27,123 | ) | (13,153 | ) | (90,336 | ) | (75,233 | ) |
Other income (expense), net | | (1,903 | ) | 6,388 | | 40,515 | | 7,880 | |
| | (27,218 | ) | (5,379 | ) | (44,558 | ) | (50,452 | ) |
| | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | (44,171 | ) | (36,134 | ) | 289,407 | | 134,070 | |
| | | | | | | | | |
INCOME TAX EXPENSE (BENEFIT) | | (43,979 | ) | (20,092 | ) | 78,680 | | (37,819 | ) |
| | | | | | | | | |
NET INCOME (LOSS) | | (192 | ) | (16,042 | ) | 210,727 | | 171,889 | |
| | | | | | | | | |
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | | 96,750 | | 21,073 | | 131,900 | | 21,073 | |
| | | | | | | | | |
NET INCOME ATTRIBUTABLE TO CEPHALON, INC. | | $ | 96,558 | | $ | 5,031 | | $ | 342,627 | | $ | 192,962 | |
| | | | | | | | | |
BASIC INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC. | | $ | 1.29 | | $ | 0.07 | | $ | 4.74 | | $ | 2.84 | |
| | | | | | | | | |
DILUTED INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC. | | $ | 1.23 | | $ | 0.06 | | $ | 4.41 | | $ | 2.54 | |
| | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO CEPHALON, INC. | | 74,720 | | 68,505 | | 72,342 | | 68,018 | |
| | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION ATTRIBUTABLE TO CEPHALON, INC. | | 78,508 | | 77,823 | | 77,733 | | 76,097 | |
*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Adjusted Net Income
(In thousands, except per share data)
(Unaudited)
| | Three Months Ended | |
| | December 31, | |
| | 2009 | | 2008 | |
| | | | | |
GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC. | | $ | 96,558 | | $ | 5,031 | |
| | | | | |
Cost of sales adjustments | | 34,875 | (1) | 27,804 | (1) |
Research and development adjustments | | 343 | (2) | 255 | (2) |
Selling, general and administrative adjustments | | 232 | (3) | 13,215 | (3) |
Restructuring charges | | 9,881 | (4) | 1,442 | (4) |
Acquired in-process research and development | | — | | 15,000 | (5) |
Interest expense adjustment | | 17,307 | (6) | 10,357 | (6) |
Impairment charges | | 7,080 | (7) | 90,445 | (7) |
Loss on sale of equipment | | — | | 17,178 | (8) |
Income taxes | | (35,787 | )(9) | (78,720 | )(9) |
Noncontrolling interest: | | | | | |
Impairment charge | | 175,000 | (10) | 9,274 | (10) |
Acquired in-process research and development | | — | | 16,955 | (10) |
Less amount attributable to noncontrolling interest | | (100,765 | )(10) | (14,567 | )(10) |
Impairment charge tax benefit | | (74,235 | )(10) | — | |
| | | | | |
Total adjustments to GAAP net income attributable to Cephalon, Inc. | | 33,931 | | 108,638 | |
| | | | | |
ADJUSTED NET INCOME | | $ | 130,489 | | $ | 113,669 | |
| | | | | |
BASIC ADJUSTED INCOME PER COMMON SHARE | | $ | 1.75 | | $ | 1.66 | |
| | | | | |
DILUTED ADJUSTED INCOME PER COMMON SHARE | | $ | 1.66 | | $ | 1.46 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 74,720 | | 68,505 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 78,508 | | 77,823 | |
Notes to Reconciliation of GAAP Net Income to Adjusted Net Income
(1) To exclude the on-going amortization of acquired intangible assets ($26.9M in 2009; $23.7M in 2008), accelerated depreciation related to restructuring ($5.0M in 2009; $4.1M in 2008), and reserve for modafinil purchase commitments in excess of requirements ($3.0M in 2009)
(2) To exclude accelerated depreciation related to restructuring ($0.3M in 2009; $0.2M in 2008).
(3) In 2009, to exclude charges related to the acquisition of Arana Therapeutics Limited. In 2008, to exclude charges related to the termination payments due to Takeda Pharmaceuticals North America, Inc. ($1.0M) and charges related to the termination payment due to Alkermes ($11.0M) and related severance ($1.2M).
(4) To exclude costs related to worldwide restructuring efforts ($9.9M in 2009; $1.4M in 2008).
(5) To exclude charges related to the acquisition of license rights to LUPUZOR from ImmuPharma PLC ($15.0M).
(6) To exclude non-cash interest expense associated with our convertible debt ($17.3M in 2009; $10.4M in 2008).
(7) In 2009, to exclude the impairment of our investment in SymBio Pharmaceuticals Limited ($7.0M). In 2008, to exclude the impairment of the VIVITROL intangible assets ($90.4M).
(8) To exclude the loss on sale of equipment related to the VIVITROL termination.
(9) To reflect the tax effect of pre-tax adjustments at the applicable tax rates and certain other tax adjustments primarily related to changes in valuation allowances, other changes in tax assets and liabilities.
(10) In 2009, to exclude the impairment of the Ception product rights ($175.0M) and the associated impact on the net loss attributable to noncontrolling interest ($100.8M) and income taxes ($74.2M). In 2008, to exclude the charges related to the impairment of Acusphere fixed assets ($9.3M), the acquisition of licensed technology from Acusphere ($17.0M) and the impact on the net loss attributable to noncontrolling interest ($14.6M).
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income
(In thousands, except per share data)
(Unaudited)
| | Year Ended | |
| | December 31 | |
| | 2009 | | 2008 | |
| | | | | |
GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC. | | $ | 342,627 | | $ | 192,962 | |
| | | | | |
Adjustments attributable to Cephalon, Inc.: | | | | | |
Cost of sales adjustments | | 113,021 | (1) | 139,153 | (1) |
Research and development adjustments | | 4,747 | (2) | 8,268 | (2) |
Selling, general and administrative adjustments | | 14,611 | (3) | 43,339 | (3) |
Settlement reserve | | — | | 7,450 | (4) |
Restructuring expense | | 13,825 | (5) | 8,415 | (5) |
Acquired in-process research and development | | 46,118 | (6) | 25,000 | (6) |
Interest expense adjustment | | 57,766 | (7) | 57,990 | (7) |
Impairment charge | | 7,080 | (8) | 90,445 | (8) |
Other income (expense) adjustment | | (40,011 | )(9) | — | |
Loss on sale of equipment | | — | | 17,178 | (10) |
Income taxes | | (89,979 | )(11) | (235,233 | )(11) |
Noncontrolling interest: | | | | | |
Impairment charge | | 175,000 | (12) | 9,274 | (12) |
Acquired in-process research and development | | — | | 16,955 | (12) |
Less amount attributable to noncontrolling interest | | (101,584 | )(12) | (14,567 | )(12) |
Impairment charge tax benefit | | (74,235 | )(12) | — | |
| | | | | |
Total adjustments to GAAP net income attributable to Cephalon, Inc. | | 126,359 | | 173,667 | |
| | | | | |
ADJUSTED NET INCOME | | $ | 468,986 | | $ | 366,629 | |
| | | | | |
BASIC ADJUSTED INCOME PER COMMON SHARE | | $ | 6.48 | | $ | 5.39 | |
| | | | | |
DILUTED ADJUSTED INCOME PER COMMON SHARE | | $ | 6.03 | | $ | 4.82 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | 72,342 | | 68,018 | |
| | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION | | 77,733 | | 76,097 | |
Notes to Reconciliation of GAAP Net Income to Adjusted Net Income
(1) To exclude the on-going amortization of acquired intangible assets ($97.5M in 2009; $100.7M in 2008), accelerated depreciation related to restructuring ($19.0M in 2009; $12.4M in 2008) and the reserve for modafinil purchase commitments in excess of estimated requirements ($6.0M in 2009; $26.0M in 2008), offset by the gain recognized in connection with an agreement to reduce our excess modafinil purchase commitments ($9.5M in 2009).
(2) To exclude accelerated depreciation related to restructuring ($1.3M in 2009; $0.5M in 2008), charges related to payments for several research and development collaborations ($2.0M in 2009; $6.0M in 2008), charges related to our transaction with Arana Therapeutics Limited ($1.5M in 2009) and other charges ($1.8M in 2008) related to employee severance costs.
(3) In 2009, to exclude charges related to the acquisition of Arana Therapeutics Limited ($8.1M) and charges related to our settlement with Takeda ($6.5M) which resolves our remaining contractual arrangements. In 2008, to exclude charges related to employee severance costs ($3.0M), charges related to estimated termination payments due to Takeda Pharmaceuticals North America, Inc. ($28.2M) and charges related to the termination payment due to Alkermes ($11.0M) and related severance ($1.2M).
(4) To exclude charges related to the settlement of investigations by the Offices of the Attorney General of Connecticut and Massachusetts and relator attorney fees.
(5) To exclude costs related to worldwide restructuring efforts ($13.8M in 2009; $8.4M in 2008).
(6) In 2009, to exclude charges related to the deconsolidation of Acusphere ($9.3M), the acquisition of worldwide license rights related to LUPUZOR from Immupharma ($30.0M), license rights for bendamustine hydrochloride in China and Hong Kong ($0.8M) and license rights to certain of XOMA Ltd.’s proprietary antibody library materials ($6.0M). In 2008, to exclude charges related to the acquisition of license rights to LUPUZOR from ImmuPharma PLC ($15.0M).
(7) To exclude non-cash interest expense associated with our convertible debt ($57.8M in 2009; $46.7M in 2008) and the accrued interest related to the agreement in principle reached with the U.S. Attorney’s Office in Philadelphia ($11.3M in 2008).
(8) In 2009, to exclude the impairment of our investment in SymBio Pharmaceuticals Limited ($7.0M). In 2008, to exclude the impairment of the VIVITROL intangible assets ($90.4M).
(9) In 2009, to exclude the following gains and losses related to the acquisition of Arana Therapeutics Limited:
· $6.6M gain on pre-bid Arana holdings;
· $2.8M loss on contingent consideration (90% ownership incentive payment);
· $10.0M gain on the excess of net assets over consideration;
· $19.0M gains on foreign exchange derivative instruments;
· $5.6M foreign exchange gain on Australian Dollar acquisition funds; and
· $1.6M dividend income related to our initial purchase of Arana shares.
(10) To exclude the loss on sale of equipment related to the VIVITROL termination.
(11) To reflect the tax effect of pre-tax adjustments at applicable tax rates and certain other tax adjustments, the tax benefits for the settlement with the U.S. Attorney’s Office ($13.8M in 2009; $84.5M in 2008), for which the related expense was recorded in 2007 and for the states of Connecticut and Massachusetts, for which the related expense was recorded in the third quarter of 2008.
(12) In 2009, to exclude the impairment of the Ception product rights ($175.0M) and the associated impact on the net loss attributable noncontrolling interest ($100.8M) and income taxes ($74.2M). Also in 2009, to exclude the portion of non-cash charges related to our acquisition of Arana Therapeutics Limited that are reflected in adjustments (9) above but do not affect net income because they are attributed to noncontrolling interests ($0.8M). In 2008, to exclude charges related to the impairment of Acusphere fixed assets ($9.3M), the acquisition of licensed technology from Acusphere ($17.0M) and the impact on the net loss attributable to noncontrolling interest ($14.6M).
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
| | Three Months Ended | | % | |
| | December 31 | | Increase | |
| | 2009 | | 2008 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 234,757 | | $ | 16,507 | | $ | 251,264 | | $ | 266,209 | | $ | 15,004 | | $ | 281,213 | | (12 | ) | 10 | | (11 | ) |
NUVIGIL | | 35,614 | | — | | 35,614 | | — | | — | | — | | — | | — | | — | |
GABITRIL | | 14,042 | | 1,515 | | 15,557 | | 14,827 | | 1,587 | | 16,414 | | (5 | ) | (5 | ) | (5 | ) |
CNS | | 284,413 | | 18,022 | | 302,435 | | 281,036 | | 16,591 | | 297,627 | | 1 | | 9 | | 2 | |
| | | | | | | | | | | | | | | | | | | |
ACTIQ | | 18,726 | | 18,949 | | 37,675 | | 22,646 | | 16,181 | | 38,827 | | (17 | ) | 17 | | (3 | ) |
Generic OTFC | | 16,198 | | — | | 16,198 | | 19,915 | | — | | 19,915 | | (19 | ) | — | | (19 | ) |
FENTORA | | 36,877 | | 1,676 | | 38,553 | | 38,609 | | — | | 38,609 | | (4 | ) | — | | (0 | ) |
AMRIX | | 30,628 | | — | | 30,628 | | 26,242 | | — | | 26,242 | | 17 | | — | | 17 | |
Pain | | 102,429 | | 20,625 | | 123,054 | | 107,412 | | 16,181 | | 123,593 | | (5 | ) | 27 | | — | |
| | | | | | | | | | | | | | | | | | | |
TREANDA | | 61,563 | | — | | 61,563 | | 36,200 | | — | | 36,200 | | 70 | | — | | 70 | |
Other Oncology | | 4,752 | | 27,744 | | 32,496 | | 4,307 | | 21,082 | | 25,389 | | 10 | | 32 | | 28 | |
Oncology | | 66,315 | | 27,744 | | 94,059 | | 40,507 | | 21,082 | | 61,589 | | 64 | | 32 | | 53 | |
| | | | | | | | | | | | | | | | | | | |
Other | | 6,814 | | 36,576 | | 43,390 | | 11,672 | | 40,380 | | 52,052 | | (42 | ) | (9 | ) | (17 | ) |
| | | | | | | | | | | | | | | | | | | |
| | $ | 459,971 | | $ | 102,967 | | $ | 562,938 | | $ | 440,627 | | $ | 94,234 | | $ | 534,861 | | 4 | | 9 | | 5 | |
| | Year Ended | | % | |
| | December 31 | | Increase | |
| | 2009 | | 2008 | | (Decrease) | |
| | United
States | | Europe | | Total | | United
States | | Europe | | Total | | United
States | | Europe | | Total | |
Sales: | | | | | | | | | | | | | | | | | | | |
PROVIGIL | | $ | 961,070 | | $ | 63,618 | | $ | 1,024,688 | | $ | 924,986 | | $ | 63,432 | | $ | 988,418 | | 4 | | — | | 4 | |
NUVIGIL | | 73,391 | | — | | 73,391 | | — | | — | | — | | — | | — | | — | |
GABITRIL | | 51,100 | | 5,386 | | 56,486 | | 52,441 | | 8,256 | | 60,697 | | (3 | ) | (35 | ) | (7 | ) |
CNS | | 1,085,561 | | 69,004 | | 1,154,565 | | 977,427 | | 71,688 | | 1,049,115 | | 11 | | (4 | ) | 10 | |
| | | | | | | | | | | | | | | | | | | |
ACTIQ | | 75,418 | | 71,527 | | 146,945 | | 105,351 | | 71,170 | | 176,521 | | (28 | ) | 1 | | (17 | ) |
Generic OTFC | | 83,032 | | — | | 83,032 | | 95,760 | | — | | 95,760 | | (13 | ) | — | | (13 | ) |
FENTORA | | 136,563 | | 4,114 | | 140,677 | | 155,246 | | — | | 155,246 | | (12 | ) | — | | (9 | ) |
AMRIX | | 114,435 | | — | | 114,435 | | 73,641 | | — | | 73,641 | | 55 | | — | | 55 | |
Pain | | 409,448 | | 75,641 | | 485,089 | | 429,998 | | 71,170 | | 501,168 | | (5 | ) | 6 | | (3 | ) |
| | | | | | | | | | | | | | | | | | | |
TREANDA | | 222,112 | | — | | 222,112 | | 75,132 | | — | | 75,132 | | 196 | | — | | 196 | |
Other Oncology | | 18,281 | | 95,470 | | 113,751 | | 18,566 | | 91,919 | | 110,485 | | (2 | ) | 4 | | 3 | |
Oncology | | 240,393 | | 95,470 | | 335,863 | | 93,698 | | 91,919 | | 185,617 | | 157 | | 4 | | 81 | |
| | | | | | | | | | | | | | | | | | | |
Other | | 32,981 | | 143,050 | | 176,031 | | 49,667 | | 157,897 | | 207,564 | | (34 | ) | (9 | ) | (15 | ) |
| | | | | | | | | | | | | | | | | | | |
| | $ | 1,768,383 | | $ | 383,165 | | $ | 2,151,548 | | $ | 1,550,790 | | $ | 392,674 | | $ | 1,943,464 | | 14 | | (2 | ) | 11 | |
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| | December 31,
2009 | | As adjusted
December 31,
2008* | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 1,647,635 | | $ | 524,459 | |
Receivables, net | | 376,076 | | 409,580 | |
Inventory, net | | 240,576 | | 117,297 | |
Deferred tax assets, net | | 243,246 | | 224,066 | |
Other current assets | | 58,423 | | 54,120 | |
Total current assets | | 2,565,956 | | 1,329,522 | |
| | | | | |
INVESTMENTS | | 12,427 | | 8,081 | |
PROPERTY AND EQUIPMENT, net | | 451,879 | | 467,449 | |
GOODWILL | | 590,284 | | 445,332 | |
INTANGIBLE ASSETS, net | | 981,857 | | 607,332 | |
DEFERRED TAX ASSETS, net | | 237 | | 46,074 | |
DEBT ISSUANCE COSTS | | 18,862 | | 11,838 | |
OTHER ASSETS | | 36,593 | | 167,314 | |
| | $ | 4,658,095 | | $ | 3,082,942 | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Current portion of long-term debt, net | | $ | 818,925 | | $ | 781,618 | |
Accounts payable | | 88,829 | | 87,079 | |
Accrued expenses | | 430,209 | | 304,415 | |
Total current liabilities | | 1,337,963 | | 1,173,112 | |
| | | | | |
LONG-TERM DEBT | | 363,696 | | 3,692 | |
DEFERRED TAX LIABILITIES, net | | 159,328 | | 77,932 | |
OTHER LIABILITIES | | 111,728 | | 163,123 | |
Total liabilities | | 1,972,715 | | 1,417,859 | |
| | | | | |
REDEEMABLE EQUITY | | 207,307 | | 248,403 | |
| | | | | |
EQUITY: | | | | | |
Cephalon Stockholders’ Equity | | | | | |
Common stock, $0.01 par value | | 780 | | 717 | |
Additional paid-in capital | | 2,534,070 | | 2,095,324 | |
Treasury stock, at cost | | (208,427 | ) | (201,705 | ) |
Accumulated deficit | | (178,659 | ) | (521,286 | ) |
Accumulated other comprehensive income | | 114,194 | | 43,630 | |
| | | | | |
Total Cephalon stockholders’ equity | | 2,261,958 | | 1,416,680 | |
Noncontrolling Interest | | 216,115 | | — | |
Total equity | | 2,478,073 | | 1,416,680 | |
| | $ | 4,658,095 | | $ | 3,082,942 | |
*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Year Ended
December 31, | |
| | 2009 | | As adjusted
2008* | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 210,727 | | $ | 171,889 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 186,192 | | 172,457 | |
Deferred income tax benefit | | (84,155 | ) | (68,043 | ) |
Stock-based compensation expense | | 50,410 | | 43,975 | |
Amortization of debt discount and debt issuance costs | | 59,145 | | 46,740 | |
Gain on foreign exchange contracts | | (26,754 | ) | — | |
Gain on acquisition of Arana | | (10,008 | ) | — | |
Loss on disposals of property and equipment | | — | | 17,178 | |
Impairment charges | | 182,080 | | 99,719 | |
Acquired in-process research and development from Acusphere deconsolidation | | 8,366 | | — | |
Acquired in-process research and development | | — | | 16,955 | |
Shortfall tax benefits from stock-based compensation | | (38 | ) | (511 | ) |
Other | | (3,503 | ) | — | |
Changes in operating assets and liabilities: | | | | | |
Receivables | | 81,022 | | (144,975 | ) |
Inventory | | (8,604 | ) | (37,397 | ) |
Other assets | | (14,348 | ) | 11,792 | |
Accounts payable and accrued expenses | | 99,013 | | (376,232 | ) |
Other liabilities | | (48,194 | ) | 44,576 | |
Net cash provided by (used for) operating activities | | 681,351 | | (1,877 | ) |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Purchases of property and equipment | | (60,927 | ) | (75,871 | ) |
Acquisition of intangible assets | | (53,324 | ) | (25,825 | ) |
Cash balance from consolidation of variable interest entities | | 53,706 | | 1,654 | |
Investment in Ception | | (75,000 | ) | (25,000 | ) |
Investment in BDC | | (30,000 | ) | — | |
Purchases of investments | | (11,797 | ) | (6,692 | ) |
Acquisition of Arana, net of cash acquired | | (232,527 | ) | — | |
Proceeds from sale of property and equipment | | — | | 16,000 | |
Purchases of investments | | — | | — | |
Proceeds from foreign exchange contracts | | 26,754 | | — | |
Sales and maturities of available-for-sale investments | | 125,026 | | 7,596 | |
Net cash used for investing activities | | (258,089 | ) | (108,138 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
Proceeds from sale of common stock | | 288,000 | | — | |
Proceeds from exercises of common stock options | | 10,211 | | 43,962 | |
Windfall tax benefits from stock-based compensation | | 2,017 | | 7,834 | |
Acquisition of treasury stock | | (6,722 | ) | (6,947 | ) |
Payments on and retirements of long-term debt | | (13,412 | ) | (217,743 | ) |
Net proceeds from issuance of convertible subordinated notes | | 484,719 | | — | |
Proceeds from sale of warrants | | 37,640 | | — | |
Purchase of convertible note hedge | | (121,040 | ) | — | |
Net cash provided by (used for) financing activities | | 681,413 | | (172,894 | ) |
| | | | | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | 18,501 | | (11,301 | ) |
| | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | 1,123,176 | | (294,210 | ) |
| | | | | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | 524,459 | | 818,669 | |
| | | | | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 1,647,635 | | $ | 524,459 | |
*As adjusted in accordance with the transition provisions of accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) and accounting for noncontrolling interests in consolidated financial statements.
CEPHALON, INC. AND SUBSIDIARIES
Reconciliation of Projected GAAP Basic Income per Common Share
to Basic Adjusted Income Per Common Share Guidance
(Unaudited)
| | Three Months Ended
March 31, 2010 | | Twelve Months Ended
December 31, 2010 | |
| | | | | | | | | | | | | |
Projected GAAP basic income per common share | | $ | 1.18 | | — | | $ | 1.28 | | $ | 5.24 | | — | | $ | 5.44 | |
| | | | | | | | | | | | | |
Amortization of current intangibles | | 0.34 | | — | | 0.34 | | 1.27 | | — | | 1.27 | |
Accelerated depreciation adjustment- CIMA | | 0.02 | | — | | 0.02 | | 0.08 | | — | | 0.08 | |
Accelerated depreciation adjustment- Mitry-Mory | | 0.05 | | — | | 0.05 | | 0.10 | | — | | 0.10 | |
Restructuring adjustments | | 0.01 | | — | | 0.01 | | 0.06 | | — | | 0.06 | |
Interest expense adjustments | | 0.23 | | — | | 0.23 | | 0.86 | | — | | 0.86 | |
| | | | | | | | | | | | | |
Tax effect of pre-tax adjustments at the applicable tax rates | | (0.23 | ) | — | | (0.23 | ) | (0.81 | ) | — | | (0.81 | ) |
| | | | | | | | | | | | | |
Basic adjusted income per common share guidance | | $ | 1.60 | | — | | $ | 1.70 | | $ | 6.80 | | — | | $ | 7.00 | |
The company’s guidance is being issued based on certain assumptions including:
· Adjusted effective tax rate of approximately 35 and 34 percent for the three months ended March 31, 2010 and the twelve months ended December 31, 2010, respectively; and
· Weighted average number of common shares outstanding of 75.5 million and 76.2 million shares for the three months ended March 31, 2010 and the twelve months ended December 31, 2010, respectively.
· Completion of the Mepha AG transaction and its accretive effect on basic adjusted income per common share is included from the estimated closing date of April 1, 2010 based on currently available financial data. Amounts do not include the effect of US GAAP purchase accounting adjustments related to our acquisition of Mepha AG as such amounts are not estimable at this time.
