UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2004 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission File Number 0-19119
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CEPHALON, INC. |
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(Exact Name of Registrant as Specified in its Charter) |
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Delaware |
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23-2484489 |
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification Number) |
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145 Brandywine Parkway, West Chester, PA |
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19380-4245 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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(610) 344-0200 |
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(Registrant’s Telephone Number, Including Area Code) |
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Not Applicable |
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(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding as of May 3, 2004 |
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Common Stock, par value $.01 |
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56,094,158 Shares |
CEPHALON, INC. AND SUBSIDIARIES
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical facts or statements of current condition, this report and the documents into which this report is and will be incorporated contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements contained in this report constitute our expectations or forecasts of future events as of the date this report was filed with the SEC and are not statements of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives and business strategies, regulatory or competitive environments, our intellectual property and product development. In particular, these forward-looking statements include, among others, statements about:
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our dependence on sales of PROVIGIL® (modafinil) tablets [C-IV], ACTIQ® (oral transmucosal fentanyl citrate) [C-II], and GABITRIL® (tiagabine hydrochloride) in the United States and the market prospects and future marketing efforts for these products, including with respect to expected new indications for PROVIGIL; |
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any potential expansion of the authorized uses of our existing products; |
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our anticipated scientific progress in our research programs and our development of potential pharmaceutical products including our ongoing or planned clinical trials, the timing and costs of such trials and the likelihood or timing of revenues from these products, if any; |
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the timing and unpredictability of regulatory approvals in the pharmaceutical industry; |
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our ability to adequately protect our technology and enforce our intellectual property rights and the future expiration of patent and/or regulatory exclusivity on certain of our products; |
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our future cash flow, our ability to service or repay our existing debt and our ability to raise additional funds, if needed, in light of our current and projected level of operations; |
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our ability to close the CIMA LABS, INC. (CIMA), transaction and the timing thereof; and |
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other statements regarding matters that are not historical facts or statement of current condition. |
Any or all of our forward-looking statements in this report and in the documents we have referred you to may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Therefore, you should not place undue reliance on any such forward-looking statements. The factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include, among others:
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the acceptance of our products by physicians and patients in our current markets and new markets; |
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our ability to obtain regulatory approvals of expanded indications for certain of our products; |
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scientific or regulatory setbacks with respect to research programs, clinical trials, manufacturing activities and/or our existing products; |
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unanticipated cash requirements to support current operations, expand our business or incur capital expenditures; |
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the inability to adequately protect our key intellectual property rights, including as a result of an adverse adjudication with respect to the PROVIGIL litigation; |
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the loss of key management or scientific personnel; |
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the activities of our competitors in the industry, including the filing of Abbreviated New Drug Applications (ANDAs) with a Paragraph IV certification for any product containing modafinil; |
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market conditions in the biotechnology industry that make raising capital or consummating acquisitions difficult, expensive or both; |
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our ability to obtain the necessary regulatory and shareholder approvals to complete the CIMA transaction; and |
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enactment of new government regulations, court decisions, regulatory interpretations or other initiatives that are adverse to us or our interests. |
3
We do not intend to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We discuss in more detail the risks that we anticipate in the section above included in this Item 2 and entitled “Certain Risks Related to our Business.” This discussion is permitted by the Private Securities Litigation Reform Act of 1995.
4
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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(In thousands, except share data) |
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March 31, |
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December
31, |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
1,093,237 |
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$ |
1,115,699 |
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Investments |
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53,292 |
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39,464 |
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Receivables, net |
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104,557 |
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86,348 |
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Inventory, net |
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64,581 |
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61,249 |
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Deferred tax asset |
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57,412 |
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57,972 |
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Other current assets |
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21,137 |
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9,198 |
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Total current assets |
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1,394,216 |
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1,369,930 |
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PROPERTY AND EQUIPMENT, net |
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130,853 |
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126,442 |
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GOODWILL |
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298,769 |
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298,769 |
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OTHER INTANGIBLE ASSETS, net |
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316,914 |
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326,445 |
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DEBT ISSUANCE COSTS, net |
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33,051 |
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35,250 |
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DEFERRED TAX ASSET, net |
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160,794 |
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168,506 |
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OTHER ASSETS |
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56,695 |
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56,314 |
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$ |
2,391,292 |
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$ |
2,381,656 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Current portion of long-term debt |
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$ |
42,328 |
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$ |
9,637 |
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Accounts payable |
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28,694 |
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28,591 |
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Accrued expenses |
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95,987 |
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99,038 |
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Current portion of deferred revenues |
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420 |
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422 |
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Total current liabilities |
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167,429 |
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137,688 |
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LONG-TERM DEBT |
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1,370,119 |
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1,409,417 |
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DEFERRED REVENUES |
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1,659 |
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1,736 |
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DEFERRED TAX LIABILITIES |
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44,922 |
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45,665 |
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OTHER LIABILITIES |
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12,616 |
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16,780 |
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Total liabilities |
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1,596,745 |
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1,611,286 |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS’ EQUITY: |
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Preferred stock, $.01 par value, 5,000,000 shares authorized, 2,500,000 shares issued, and none outstanding |
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Common stock, $.01 par value, 200,000,000 shares authorized, 56,065,179 and 55,842,510 shares issued, and 55,756,351 and 55,533,682 shares outstanding |
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560 |
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558 |
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Additional paid-in capital |
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1,060,951 |
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1,052,059 |
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Treasury stock, 308,828 and 308,828 shares outstanding, at cost |
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(13,692 |
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(13,692 |
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Accumulated deficit |
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(299,594 |
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(321,305 |
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Accumulated other comprehensive income |
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46,322 |
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52,750 |
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Total stockholders’ equity |
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794,547 |
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770,370 |
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$ |
2,391,292 |
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$ |
2,381,656 |
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The accompanying notes are an integral part of these consolidated financial statements.