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., Feb. 11 /PRNewswire-FirstCall/ -- 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 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 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.
Contacts: |
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Media: |
Investors: |
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Sheryl Williams |
Robert (Chip) Merritt |
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610-738-6493 |
610-738-6376 |
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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,
---------------------------------------
As As
adjusted adjusted
2009 2008* 2009 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
2009 2008
---- ----
United United
States Europe Total States Europe Total
------- ------ ----- ------- ------ -----
Sales:
PROVIGIL $234,757 $16,507 $251,264 $266,209 $15,004 $281,213
NUVIGIL 35,614 - 35,614 - - -
GABITRIL 14,042 1,515 15,557 14,827 1,587 16,414
------ ----- ------ ------ ----- ------
CNS 284,413 18,022 302,435 281,036 16,591 297,627
ACTIQ 18,726 18,949 37,675 22,646 16,181 38,827
Generic OTFC 16,198 - 16,198 19,915 - 19,915
FENTORA 36,877 1,676 38,553 38,609 - 38,609
AMRIX 30,628 - 30,628 26,242 - 26,242
------ -- ------ ------ -- ------
Pain 102,429 20,625 123,054 107,412 16,181 123,593
TREANDA 61,563 - 61,563 36,200 - 36,200
Other
Oncology 4,752 27,744 32,496 4,307 21,082 25,389
----- ------ ------ ----- ------ ------
Oncology 66,315 27,744 94,059 40,507 21,082 61,589
Other 6,814 36,576 43,390 11,672 40,380 52,052
----- ------ ------ ------ ------ ------
$459,971 $102,967 $562,938 $440,627 $94,234 $534,861
======== ======== ======== ======== ======= ========
%
Increase
(Decrease)
----------
United
States Europe Total
------- ------ -----
Sales:
PROVIGIL (12) 10 (11)
NUVIGIL - - -
GABITRIL (5) (5) (5)
CNS 1 9 2
ACTIQ (17) 17 (3)
Generic OTFC (19) - (19)
FENTORA (4) - 0
AMRIX 17 - 17
Pain (5) 27 -
TREANDA 70 - 70
Other
Oncology 10 32 28
Oncology 64 32 53
Other (42) (9) (17)
4 9 5
Year Ended
December 31
2009 2008
---- ----
United United
States Europe Total States Europe Total
------- ------ ----- ------- ------ -----
Sales:
PROVIGIL $961,070 $63,618 $1,024,688 $924,986 $63,432 $988,418
NUVIGIL 73,391 - 73,391 - - -
GABITRIL 51,100 5,386 56,486 52,441 8,256 60,697
------ ----- ------ ------ ----- ------
CNS 1,085,561 69,004 1,154,565 977,427 71,688 1,049,115
ACTIQ 75,418 71,527 146,945 105,351 71,170 176,521
Generic
OTFC 83,032 - 83,032 95,760 - 95,760
FENTORA 136,563 4,114 140,677 155,246 - 155,246
AMRIX 114,435 - 114,435 73,641 - 73,641
------- -- ------- ------ -- ------
Pain 409,448 75,641 485,089 429,998 71,170 501,168
TREANDA 222,112 - 222,112 75,132 - 75,132
Other
Oncology 18,281 95,470 113,751 18,566 91,919 110,485
------ ------ ------- ------ ------ -------
Oncology 240,393 95,470 335,863 93,698 91,919 185,617
Other 32,981 143,050 176,031 49,667 157,897 207,564
------ ------- ------- ------ ------- -------
$1,768,383 $383,165 $2,151,548 $1,550,790 $392,674 $1,943,464
========== ======== ========== ========== ======== ==========
%
Increase
(Decrease)
----------
United
States Europe Total
------- ------ -----
Sales:
PROVIGIL 4 - 4
NUVIGIL - - -
GABITRIL (3) (35) (7)
CNS 11 (4) 10
ACTIQ (28) 1 (17)
Generic OTFC (13) - (13)
FENTORA (12) - (9)
AMRIX 55 - 55
Pain (5) 6 (3)
TREANDA 196 - 196
Other
Oncology (2) 4 3
Oncology 157 4 81
Other (34) (9) (15)
14 (2) 11
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
As adjusted
December 31, December 31,
2009 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,
As
adjusted
2009 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 Twelve Months
Ended Ended
March 31, December 31,
2010 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.
SOURCE Cephalon, Inc.
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