CEPHALON INC - FORM 8-K - EX-99.1 - August 2, 2011

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Exhibit 99.1

 

For Immediate Release

 

Cephalon Reported Financial Results

For The Second Quarter Of 2011

 

Sales For The Period Were $730 Million

 

Basic Income Per Common Share Increased 31 Percent

 

Frazer, Pa. — August 2, 2011 — Cephalon, Inc. (Nasdaq: CEPH) today reported second quarter 2011 net sales of $730.1 million, a 2 percent increase compared to net sales of $712.4 million for the second quarter of 2010.  Basic income per common share for the period was $1.54 compared to $1.18 for the second quarter of 2010.  Excluding amortization expense and certain other items, adjusted net income for the second quarter of 2011 was $142.6 million, a 14 percent decrease versus the same period in 2010.  Basic adjusted income per common share for the quarter was $1.86, a 15 percent decrease from the $2.20 for the second quarter of 2010.

 

Central nervous system (CNS) franchise net sales were $332.3 million during the quarter, a 5 percent decrease compared to the same period last year.  Pain franchise reported net sales of $140.6 million, a 4 percent increase versus second quarter 2010.  Oncology franchise net sales were $158.8 million, a 22 percent increase over the same period last year due to strong net sales of TREANDA® (bendamustine hydrochloride) of $125.8 million.  Sales of other products remained relatively constant at $98.5 million.

 

During the second quarter 2011 Cephalon recorded net cash provided by operating activities of $74.2 million and ended the period with $997.5 million of cash and cash equivalents.

 

“We continue to work with both US and European authorities to obtain all necessary regulatory approvals in order to close the transaction with Teva,” said Kevin Buchi, Chief Executive Officer.

 

About Cephalon, Inc.

 

Cephalon is a global biopharmaceutical company dedicated to discovering, developing and bringing to market medications to improve the quality of life of individuals around the world. Since its inception in 1987, Cephalon has brought first-in-class and best-in-class medicines to patients in several therapeutic areas. Cephalon has the distinction of being one of the world’s fastest-growing biopharmaceutical companies, now among the Fortune 1000 and a

 

SOURCE:  Cephalon, Inc.  ·  41 Moores Road  ·  Frazer, PA 19355  ·  (610) 344-0200  ·  Fax (610) 344-0065

 


 

member of the S&P 500 Index, employing approximately 4,000 people worldwide. The company sells numerous branded and generic products around the world. In total, Cephalon sells more than 180 products in more than 100 countries. More information on Cephalon and its products is available at http://www.cephalon.com/.

 

# # #

 

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 Teva’s proposed acquisition of Cephalon; 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; 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,” 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:

Fritz Bittenbender

 

Robert (Chip) Merritt

610-883-5855

 

610-738-6376

fbittenb@cephalon.com

 

cmerritt@cephalon.com

 

 

 

Natalie deVane

 

Joseph Marczely

610-727-6536

 

610-883-5894

ndevane@cephalon.com

 

jmarczely@cephalon.com

 

2


 

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,

 

 

 

2011

 

2010

 

2011

 

2010

 

REVENUES:

 

 

 

 

 

 

 

 

 

Net sales

 

$

730,100

 

$

712,435

 

$

1,466,102

 

$

1,289,116

 

Other revenues

 

8,163

 

14,475

 

17,274

 

34,379

 

 

 

738,263

 

726,910

 

1,483,376

 

1,323,495

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

Cost of sales

 

123,667

 

170,739

 

281,650

 

275,782

 

Research and development

 

134,851

 

101,261

 

257,164

 

206,638

 

Selling, general and administrative

 

276,068

 

258,468

 

526,754

 

463,109

 

Change in fair value of contingent consideration

 

2,600

 

—

 

4,401

 

—

 

Restructuring charges

 

4,279

 

4,581

 

5,137

 

5,325

 

Acquired in-process research and development

 

—

 

—

 

30,000

 

—

 

Impairment and (gain) loss on sale of assets

 

48,408

 

—

 

54,056

 

—

 

 

 

589,873

 

535,049

 

1,159,162

 

950,854

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

148,390

 

191,861

 

324,214

 

372,641

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

Interest income

 

1,253

 

1,300

 

2,270

 

3,230

 

Interest expense

 

(24,475

)

(28,182

)

(48,682

)

(54,973

)

Change in fair value of investments

 

99,473

 

—

 

264,208

 

—

 

Other income (expense), net

 

(26,360

)

(9,332

)

(29,388

)

(16,603

)

 

 

49,891

 

(36,214

)

188,408

 

(68,346

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

198,281

 

155,647

 

512,622

 

304,295

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

 

83,089

 

63,254

 

185,820

 

111,565

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

115,192

 

92,393

 

326,802

 

192,730

 

 

 

 

 

 

 

 

 

 

 

NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

2,983

 

(3,329

)

2,461

 

6,899

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

118,175

 

$

89,064

 

$

329,263

 

$

199,629

 

 

 

 

 

 

 

 

 

 

 

BASIC INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.54

 

$

1.18

 

$

4.32

 

$

2.66

 

 

 

 

 

 

 

 

 

 

 

DILUTED INCOME PER COMMON SHARE ATTRIBUTABLE TO CEPHALON, INC.

 

$

1.34

 

$

1.11

 

$

3.97

 

$

2.46

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ATTRIBUTABLE TO CEPHALON, INC.

 

76,679

 

75,192

 

76,213

 

75,092

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION ATTRIBUTABLE TO CEPHALON, INC.

 

88,303

 

80,507

 

82,871

 

81,223

 

 

3


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.

(Unaudited)

 

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

118,175

 

$

89,064

 

 

 

 

 

 

 

Cost of sales adjustments

 

(834

)(1)

52,209

(1)

Research and development adjustments

 

320

(2)

317

(2)

Selling, general and administrative adjustments

 

24,774

(3)

9,225

(3)

Change in fair value of contingent consideration adjustment

 

2,600

(4)

 

 

Restructuring adjustment

 

4,279

(5)

4,581

(5)

Impairment and (gain) loss on sale of assets adjustment

 

48,408

(6)

 

 

Interest expense adjustment

 

16,016

(7)

18,476

(7)

Change in fair value of investments adjustment

 

(99,473

)(8)

 

 

Other (income) expense adjustment

 

16,483

(9)

5,398

(9)

Income tax adjustment

 

11,875

(10)

(14,017

)(10)

*Noncontrolling Interest adjustments:

 

 

 

 

 

Other revenues

 

—

 

—

 

Research and development

 

1,214

 

(2,018

)

Selling, general and administrative

 

706

 

200

 

Interest income

 

—

 

—

 

Interest expense

 

424

 

(3

)

Other income (expense)

 

—

 

1

 

Income taxes

 

—

 

(2,658

)

Less amount attributable to noncontrolling interest

 

(2,344

)

4,478

 

 

 

24,448

 

76,189

 

 

 

 

 

 

 

ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

142,623

 

$

165,253

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

1.86

 

$

2.20

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

1.62

 

$

2.05

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

76,679

 

75,192

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

88,303

 

80,507

 

 

* Amounts recorded by our Variable Interest Entities that have been excluded from net income attributable to Cephalon, Inc.

 

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 2011: $32.2M in 2010), the reversal of a royalty accrual related to AMRIX sales milestones that are no longer expected to be payable ($27.8M in 2011), accelerated depreciation related to restructuring ($5.5M in 2010), amortization of inventory revaluation related to Mepha ($5.0M in 2010) and the write-off of modafinil purchase commitments in excess of estimated requirements ($9.4M in 2010).

 

 

 

(2)

 

To exclude accelerated depreciation related to worldwide restructuring ($0.3M in 2011 and 2010).

 

 

 

(3)

 

In 2011, to exclude charges related to the unsolicited proposal we received from Valeant Pharmaceuticals International and the Agreement and Plan of Merger with Teva Pharmaceutical Industries Ltd. ($20.9M), and charges associated with recent acquisitions. In 2010, to exclude charges related to the acquisition of Mepha ($7.9M) and the acquisition of Ception noncontrolling interest ($1.4M).

 

 

 

(4)

 

In 2011, to exclude the change in fair value of the Ception Therapeutics, Inc. ($1.4M), BioAssets Development Company ($0.3M) and Gemin X Pharmaceuticals ($0.9M) contingent consideration.

 

 

 

(5)

 

To exclude costs related to restructurings.

 

 

 

(6)

 

In 2011, to exclude costs related to the impairments of AMRIX ($43.3M) and Mepha in-process research and development ($5.2M).

 

 

 

(7)

 

To exclude imputed interest expense associated with convertible debt.

 

 

 

(8)

 

In 2011, to exclude the change in fair value of our investments in Mesoblast Ltd. ($91.2M) and ChemGenex Pharmaceuticals Ltd. ($8.3M).

 

 

 

(9)

 

In 2011, to exclude costs and changes in fair value of certain derivative contracts ($16.5M). In 2010, to exclude losses related to the acquisition of Mepha AG, including a loss on foreign exchange derivative instruments ($2.9M) and a loss on foreign exchange of Swiss Franc acquisition funds ($2.5M).

 

 

 

(10)

 

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.

 

4


 

CEPHALON, INC. AND SUBSIDIARIES

 

Reconciliation of GAAP Net Income to Adjusted Net Income Attributable to Cephalon, Inc.

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

GAAP NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

329,263

 

$

199,629

 

 

 

 

 

 

 

Cost of sales adjustments

 

28,284

(1)

83,175

(1)

Research and development adjustments

 

320

(2)

676

(2)

Selling, general and administrative adjustments

 

25,704

(3)

11,502

(3)

Change in fair value of contingent consideration adjustments

 

4,401

(4)

—

 

Restructuring adjustment

 

5,137

(5)

5,325

(5)

Acquired in-process research and development adjustments

 

30,000

(6)

—

 

Impairment and (gain) loss on sale of assets adjustment

 

54,056

(7)

—

 

Interest expense adjustment

 

31,691

(8)

36,055

(8)

Change in fair value of investments adjustments

 

(264,208

)(9)

—

 

Other (income) expense adjustment

 

16,989

(10)

11,567

(10)

Income tax adjustment

 

39,359

(11)

(38,690

)(11)

*Noncontrolling Interest adjustments:

 

 

 

 

 

Other revenues

 

—

 

(31

)

Research and development

 

1,417

 

6,094

 

Selling, general and administrative

 

1,063

 

3,222

 

Other income (expense)

 

—

 

166

 

Interest income

 

—

 

(7

)

Interest expense

 

723

 

154

 

Income taxes

 

—

 

(3,848

)

Less amount attributable to noncontrolling interest

 

(3,203

)

(5,750

)

 

 

(28,267

)

109,610

 

 

 

 

 

 

 

ADJUSTED NET INCOME ATTRIBUTABLE TO CEPHALON, INC.

 

$

300,996

 

$

309,239

 

 

 

 

 

 

 

BASIC ADJUSTED INCOME PER COMMON SHARE

 

$

3.95

 

$

4.12

 

 

 

 

 

 

 

DILUTED ADJUSTED INCOME PER COMMON SHARE

 

$

3.63

 

$

3.81

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

76,213

 

75,092

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION

 

82,871

 

81,223

 

 

* Amounts recorded by our Variable Interest Entities that have been excluded from net income attributable to Cephalon, Inc.

 

Notes to Reconciliation of GAAP Net Income to Adjusted Net Income

 

(1)                   To exclude the on-going amortization of acquired intangible assets ($56.0M in 2011; $58.0M in 2010), the reversal of a royalty accrual related to AMRIX sales milestones that are no longer expected to be payable ($27.8M in 2011), accelerated depreciation related to restructuring ($10.7M in 2010), amortization of inventory revaluation related to Mepha ($5.0M in 2010) and the write-off of modafinil purchase commitments in excess of estimated requirements ($9.4M in 2010).

 

(2)                   To exclude accelerated depreciation related to restructuring.

 

(3)                   In 2011, to exclude charges related to the unsolicited proposal we received from Valeant Pharmaceuticals International and the Agreement and Plan of Merger with Teva Pharmaceutical Industries Ltd. ($20.9M), and charges associated with recent acquisitions.  In 2010, to exclude charges related to the acquisition of Mepha ($10.1M) and the acquisition of Ception noncontrolling interest ($1.4M).

 

(4)                   In 2011, to exclude the change in fair value of the Ception Therapeutics, Inc. ($2.7M), BioAssets Development Company ($0.8M) and Gemin X Pharmaceuticals ($0.9M) contingent consideration.

 

(5)                   To exclude costs related to restructurings.

 

(6)                   In 2011, to exclude costs related to the acquisition of worldwide license rights to Mesoblast Limited’s proprietary technology platform.

 

(7)                   In 2011, to exclude costs related to the impairments of AMRIX ($43.3M) and Mepha in-process research and development ($5.2M) and costs associated with our plant to sell our manufacturing facility in Mitry Mory, France ($6.1M), offset by a gain on the sale of our facility in Savigny le Temple, France ($0.4M).

 

(8)                   To exclude imputed interest expense associated with convertible debt.

 

(9)                   In 2011, to exclude the change in fair value of our investments in Mesoblast Ltd. ($250.8M) and ChemGenex Pharmaceuticals Ltd. ($13.4M).

 

(10)            In 2011, to exclude costs and changes in fair value of certain derivative contracts ($17.0M).  In 2010, to exclude losses related to the  acquisition of Mepha AG, including a loss on foreign exchange derivative instruments ($9.1M) and a loss on foreign exchange of Swiss Franc acquisition funds ($2.5M).

 

(11)            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.

 

5


CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED SALES DETAIL

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

%

 

 

 

June 30,

 

Increase

 

 

 

2011

 

2010

 

(Decrease)

 

 

 

United States

 

Europe

 

Total

 

United States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CNS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary CNS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

237,684

 

$

13,462

 

$

251,146

 

$

268,550

 

$

16,280

 

$

284,830

 

(11

)%

(17

)%

(12

)%

NUVIGIL

 

58,576

 

—

 

58,576

 

40,968

 

—

 

40,968

 

43

 

—

 

43

 

GABITRIL

 

8,765

 

1,165

 

9,930

 

11,118

 

1,024

 

12,142

 

(21

)

14

 

(18

)

Other Proprietary CNS

 

—

 

2,608

 

2,608

 

—

 

2,652

 

2,652

 

—

 

(2

)

(2

)

Generic CNS

 

—

 

9,990

 

9,990

 

—

 

8,574

 

8,574

 

—

 

17

 

17

 

CNS

 

305,025

 

27,225

 

332,250

 

320,636

 

28,530

 

349,166

 

(5

)

(5

)

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FENTORA

 

41,910

 

9,516

 

51,426

 

38,861

 

5,661

 

44,522

 

8

 

68

 

16

 

Other Proprietary Pain

 

—

 

—

 

—

 

—

 

49

 

49

 

—

 

(100

)

(100

)

Generic Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

14,607

 

15,387

 

29,994

 

14,471

 

14,067

 

28,538

 

1

 

9

 

5

 

Generic OTFC

 

6,015

 

—

 

6,015

 

11,535

 

—

 

11,535

 

(48

)

—

 

(48

)

AMRIX

 

13,554

 

—

 

13,554

 

28,548

 

—

 

28,548

 

(53

)

—

 

(53

)

Generic AMRIX

 

11,420

 

—

 

11,420

 

—

 

—

 

—

 

100

 

—

 

100

 

Other Generic Pain

 

—

 

28,224

 

28,224

 

—

 

21,556

 

21,556

 

—

 

31

 

31

 

Pain

 

87,506

 

53,127

 

140,633

 

93,415

 

41,333

 

134,748

 

(6

)

29

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

125,847

 

—

 

125,847

 

99,732

 

—

 

99,732

 

26

 

—

 

26

 

Other Proprietary Oncology

 

5,017

 

21,699

 

26,716

 

6,253

 

18,769

 

25,022

 

(20

)

16

 

7

 

Generic Oncology

 

—

 

6,188

 

6,188

 

—

 

5,704

 

5,704

 

—

 

8

 

8

 

Oncology

 

130,864

 

27,887

 

158,751

 

105,985

 

24,473

 

130,458

 

23

 

14

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Proprietary

 

4,726

 

1,804

 

6,530

 

2,883

 

1,754

 

4,637

 

64

 

3

 

41

 

Other Generic

 

4,536

 

87,400

 

91,936

 

3,058

 

90,368

 

93,426

 

48

 

(3

)

(2

)

Other

 

9,262

 

89,204

 

98,466

 

5,941

 

92,122

 

98,063

 

56

 

(3

)

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

532,657

 

$

197,443

 

$

730,100

 

$

525,977

 

$

186,458

 

$

712,435

 

1

%

6

%

2

%

 

 

 

Six Months Ended

 

%

 

 

 

June 30,

 

Increase

 

 

 

2011

 

2010

 

(Decrease)

 

 

 

United States

 

Europe

 

Total

 

United States

 

Europe

 

Total

 

United
States

 

Europe

 

Total

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CNS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary CNS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROVIGIL

 

$

481,027

 

$

28,515

 

$

509,542

 

$

513,151

 

$

34,130

 

$

547,281

 

(6

)%

(16

)%

(7

)%

NUVIGIL

 

110,608

 

—

 

110,608

 

75,890

 

—

 

75,890

 

46

 

—

 

46

 

GABITRIL

 

19,803

 

2,254

 

22,057

 

19,417

 

2,486

 

21,903

 

2

 

(9

)

1

 

Other Proprietary CNS

 

—

 

4,961

 

4,961

 

—

 

5,658

 

5,658

 

—

 

(12

)

(12

)

Generic CNS

 

—

 

19,765

 

19,765

 

—

 

10,885

 

10,885

 

—

 

82

 

82

 

CNS

 

611,438

 

55,495

 

666,933

 

608,458

 

53,159

 

661,617

 

0

 

4

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FENTORA

 

80,953

 

16,874

 

97,827

 

77,341

 

9,390

 

86,731

 

5

 

80

 

13

 

Other Proprietary Pain

 

—

 

61

 

61

 

—

 

108

 

108

 

—

 

(44

)

(44

)

Generic Pain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIQ

 

30,093

 

28,056

 

58,149

 

29,411

 

32,558

 

61,969

 

2

 

(14

)

(6

)

Generic OTFC

 

15,038

 

—

 

15,038

 

24,314

 

—

 

24,314

 

(38

)

—

 

(38

)

AMRIX

 

36,586

 

—

 

36,586

 

53,683

 

—

 

53,683

 

(32

)

—

 

(32

)

Generic AMRIX

 

11,420

 

—

 

11,420

 

—

 

—

 

—

 

100

 

—

 

100

 

Other Generic Pain

 

—

 

52,090

 

52,090

 

—

 

23,698

 

23,698

 

—

 

120

 

120

 

Pain

 

174,090

 

97,081

 

271,171

 

184,749

 

65,754

 

250,503

 

(6

)

48

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proprietary Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TREANDA

 

243,572

 

—

 

243,572

 

180,989

 

—

 

180,989

 

35

 

—

 

35

 

Other Proprietary Oncology

 

10,520

 

41,433

 

51,953

 

10,808

 

38,960

 

49,768

 

(3

)

6

 

4

 

Generic Oncology

 

—

 

12,366

 

12,366

 

—

 

9,858

 

9,858

 

—

 

25

 

25

 

Oncology

 

254,092

 

53,799

 

307,891

 

191,797

 

48,818

 

240,615

 

32

 

10

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Proprietary

 

10,731

 

4,018

 

14,749

 

8,247

 

1,754

 

10,001

 

30

 

129

 

47

 

Other Generic

 

11,687

 

193,671

 

205,358

 

7,154

 

119,226

 

126,380

 

63

 

62

 

62

 

Other

 

22,418

 

197,689

 

220,107

 

15,401

 

120,980

 

136,381

 

46

 

63

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,062,038

 

$

404,064

 

$

1,466,102

 

$

1,000,405

 

$

288,711

 

$

1,289,116

 

6

%

40

%

14

%

 

6


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2011

 

2010

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

997,476

 

$

1,160,239

 

Receivables, net

 

486,519

 

431,333

 

Inventory, net

 

305,421

 

291,360

 

Deferred tax assets, net

 

206,895

 

213,798

 

Other current assets

 

98,272

 

54,845

 

Total current assets

 

2,094,583

 

2,151,575

 

 

 

 

 

 

 

INVESTMENTS ($505,800 and $155,808 at fair value in 2011 and 2010, respectively)

 

528,067

 

168,494

 

PROPERTY AND EQUIPMENT, net

 

507,152

 

502,856

 

GOODWILL

 

866,272

 

822,071

 

INTANGIBLE ASSETS, net

 

1,724,246

 

1,212,387

 

DEBT ISSUANCE COSTS

 

11,829

 

14,196

 

OTHER ASSETS

 

20,937

 

20,254

 

 

 

$

5,753,086

 

$

4,891,833

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current portion of long-term debt, net

 

$

672,102

 

$

651,997

 

Accounts payable

 

120,128

 

104,477

 

Accrued expenses

 

479,080

 

460,141

 

Total current liabilities

 

1,271,310

 

1,216,615

 

 

 

 

 

 

 

LONG-TERM DEBT

 

405,985

 

391,416

 

DEFERRED TAX LIABILITIES, net

 

237,487

 

172,589

 

OTHER LIABILITIES

 

303,366

 

273,438

 

Total liabilities

 

2,218,148

 

2,054,058

 

 

 

 

 

 

 

REDEEMABLE EQUITY

 

153,600

 

170,183

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

Cephalon Stockholders’ Equity

 

 

 

 

 

Common stock, $0.01 par value

 

813

 

791

 

Additional paid-in capital

 

2,633,913

 

2,428,450

 

Treasury stock, at cost

 

(225,881

)

(225,870

)

Accumulated earnings

 

576,349

 

247,086

 

Accumulated other comprehensive income

 

316,649

 

182,975

 

Total Cephalon stockholders’ equity

 

3,301,843

 

2,633,432

 

Noncontrolling Interest

 

79,495

 

34,160

 

Total equity

 

3,381,338

 

2,667,592

 

 

 

$

5,753,086

 

$

4,891,833

 

 

7


 

CEPHALON, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2011

 

2010

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

326,802

 

$

192,730

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Deferred income tax expense (benefit)

 

52,156

 

(18,059

)

Shortfall tax benefits from stock-based compensation

 

(331

)

(559

)

Depreciation and amortization

 

93,389

 

106,724

 

Stock-based compensation expense

 

16,950

 

21,630

 

Amortization of debt discount and debt issuance costs

 

32,776

 

35,692

 

Changes in fair value of investments

 

(264,208

)

—

 

Loss (gain) on foreign exchange contracts

 

(5,089

)

9,499

 

Impairment and loss (gain) on sale of fixed assets

 

54,056

 

—

 

Other

 

23,090

 

3,752

 

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

(37,532

)

(25,581

)

Inventory

 

5,646

 

18,985

 

Other assets

 

1,207

 

9,474

 

Accounts payable, accrued expenses and deferred revenues

 

(11,445

)

23,955

 

Other liabilities

 

(65,462

)

(189

)

Net cash provided by operating activities

 

222,005

 

378,053

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property and equipment

 

(28,049

)

(22,997

)

Proceeds from sale of property and equipment

 

818

 

—

 

Cash balance from consolidation of variable interest entity

 

15,513

 

—

 

Acquisition of Mepha net of cash acquired

 

 

 

(549,463

)

Acquisition of Gemin X, net of cash acquired

 

(184,198

)

 

 

Acquisition of ChemGenex, net of cash acquired

 

(179,931

)

 

 

Purchases of investments

 

(135,453

)

(60

)

(Cash settlements of) proceeds from foreign exchange contracts

 

7,111

 

(9,499

)

Net cash used for investing activities

 

(504,189

)

(582,019

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from sale of common stock

 

349

 

—

 

Proceeds from exercises of common stock options

 

133,703

 

14,370

 

Windfall tax benefits from stock-based compensation

 

12,060

 

—

 

Acquisition of Ception non-controlling interest

 

—

 

(299,289

)

Acquisition of ChemGenex Ltd. non-controlling interest

 

(6,602

)

 

 

Acquisition of treasury stock

 

—

 

(33

)

Payments on and retirements of long-term debt

 

(35,763

)

(221,478

)

Net cash provided by (used for) financing activities

 

103,747

 

(506,430

)

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

15,674

 

(9,793

)

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

(162,763

)

(720,189

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

1,160,239

 

1,647,635

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

997,476

 

$

927,446

 

 

8