CEPHALON, INC. 
By FRAZER, Pa., Aug. 2, 2011 /PRNewswire/ -- 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 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.
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
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
====== ====== ====== ======
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.
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.
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED SALES DETAIL
(In thousands)
(Unaudited)
Three Months Ended
June 30,
--------
2011
----
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL $237,684 $13,462 $251,146
NUVIGIL 58,576 - 58,576
GABITRIL 8,765 1,165 9,930
Other Proprietary CNS - 2,608 2,608
Generic CNS - 9,990 9,990
--- ----- -----
CNS 305,025 27,225 332,250
Pain
Proprietary Pain
FENTORA 41,910 9,516 51,426
Other Proprietary Pain - - -
Generic Pain
ACTIQ 14,607 15,387 29,994
Generic OTFC 6,015 - 6,015
AMRIX 13,554 - 13,554
Generic AMRIX 11,420 - 11,420
Other Generic Pain - 28,224 28,224
--- ------ ------
Pain 87,506 53,127 140,633
Oncology
Proprietary Oncology
TREANDA 125,847 - 125,847
Other Proprietary
Oncology 5,017 21,699 26,716
Generic Oncology - 6,188 6,188
--- ----- -----
Oncology 130,864 27,887 158,751
Other
Other Proprietary 4,726 1,804 6,530
Other Generic 4,536 87,400 91,936
----- ------ ------
Other 9,262 89,204 98,466
$532,657 $197,443 $730,100
======== ======== ========
Three Months Ended
June 30,
--------
2010
----
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL $268,550 $16,280 $284,830
NUVIGIL 40,968 - 40,968
GABITRIL 11,118 1,024 12,142
Other Proprietary CNS - 2,652 2,652
Generic CNS - 8,574 8,574
--- ----- -----
CNS 320,636 28,530 349,166
Pain
Proprietary Pain
FENTORA 38,861 5,661 44,522
Other Proprietary Pain - 49 49
Generic Pain
ACTIQ 14,471 14,067 28,538
Generic OTFC 11,535 - 11,535
AMRIX 28,548 - 28,548
Generic AMRIX - - -
Other Generic Pain - 21,556 21,556
--- ------ ------
Pain 93,415 41,333 134,748
Oncology
Proprietary Oncology
TREANDA 99,732 - 99,732
Other Proprietary
Oncology 6,253 18,769 25,022
Generic Oncology - 5,704 5,704
--- ----- -----
Oncology 105,985 24,473 130,458
Other
Other Proprietary 2,883 1,754 4,637
Other Generic 3,058 90,368 93,426
----- ------ ------
Other 5,941 92,122 98,063
$525,977 $186,458 $712,435
======== ======== ========
%
Increase
(Decrease)
----------
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL (11%) (17%) (12%)
NUVIGIL 43 - 43
GABITRIL (21) 14 (18)
Other Proprietary CNS - (2) (2)
Generic CNS - 17 17
CNS (5) (5) (5)
Pain
Proprietary Pain
FENTORA 8 68 16
Other Proprietary Pain - (100) (100)
Generic Pain
ACTIQ 1 9 5
Generic OTFC (48) - (48)
AMRIX (53) - (53)
Generic AMRIX 100 - 100
Other Generic Pain - 31 31
Pain (6) 29 4
Oncology
Proprietary Oncology
TREANDA 26 - 26
Other Proprietary
Oncology (20) 16 7
Generic Oncology - 8 8
Oncology 23 14 22
Other
Other Proprietary 64 3 41
Other Generic 48 (3) (2)
Other 56 (3) 0
1% 6% 2%
Six Months Ended
June 30,
--------
2011
----
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL $481,027 $28,515 $509,542
NUVIGIL 110,608 - 110,608
GABITRIL 19,803 2,254 22,057
Other Proprietary CNS - 4,961 4,961
Generic CNS - 19,765 19,765
--- ------ ------
CNS 611,438 55,495 666,933
Pain
Proprietary Pain
FENTORA 80,953 16,874 97,827
Other Proprietary Pain - 61 61
Generic Pain
ACTIQ 30,093 28,056 58,149
Generic OTFC 15,038 - 15,038
AMRIX 36,586 - 36,586
Generic AMRIX 11,420 - 11,420
Other Generic Pain - 52,090 52,090
--- ------ ------
Pain 174,090 97,081 271,171
Oncology
Proprietary Oncology
TREANDA 243,572 - 243,572
Other Proprietary
Oncology 10,520 41,433 51,953
Generic Oncology - 12,366 12,366
--- ------ ------
Oncology 254,092 53,799 307,891
Other
Other Proprietary 10,731 4,018 14,749
Other Generic 11,687 193,671 205,358
------ ------- -------
Other 22,418 197,689 220,107
$1,062,038 $404,064 $1,466,102
========== ======== ==========
Six Months Ended
June 30,
--------
2010
----
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL $513,151 $34,130 $547,281
NUVIGIL 75,890 - 75,890
GABITRIL 19,417 2,486 21,903
Other Proprietary CNS - 5,658 5,658
Generic CNS - 10,885 10,885
--- ------ ------
CNS 608,458 53,159 661,617
Pain
Proprietary Pain
FENTORA 77,341 9,390 86,731
Other Proprietary Pain - 108 108
Generic Pain
ACTIQ 29,411 32,558 61,969
Generic OTFC 24,314 - 24,314
AMRIX 53,683 - 53,683
Generic AMRIX - - -
Other Generic Pain - 23,698 23,698
--- ------ ------
Pain 184,749 65,754 250,503
Oncology
Proprietary Oncology
TREANDA 180,989 - 180,989
Other Proprietary
Oncology 10,808 38,960 49,768
Generic Oncology - 9,858 9,858
--- ----- -----
Oncology 191,797 48,818 240,615
Other
Other Proprietary 8,247 1,754 10,001
Other Generic 7,154 119,226 126,380
----- ------- -------
Other 15,401 120,980 136,381
$1,000,405 $288,711 $1,289,116
========== ======== ==========
%
Increase
(Decrease)
----------
United
States Europe Total
------- ------ -----
Sales:
CNS
Proprietary CNS
PROVIGIL (6%) (16%) (7%)
NUVIGIL 46 - 46
GABITRIL 2 (9) 1
Other Proprietary CNS - (12) (12)
Generic CNS - 82 82
CNS 0 4 1
Pain
Proprietary Pain
FENTORA 5 80 13
Other Proprietary Pain - (44) (44)
Generic Pain
ACTIQ 2 (14) (6)
Generic OTFC (38) - (38)
AMRIX (32) - (32)
Generic AMRIX 100 - 100
Other Generic Pain - 120 120
Pain (6) 48 8
Oncology
Proprietary Oncology
TREANDA 35 - 35
Other Proprietary
Oncology (3) 6 4
Generic Oncology - 25 25
Oncology 32 10 28
Other
Other Proprietary 30 129 47
Other Generic 63 62 62
Other 46 63 61
6% 40% 14%
CEPHALON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
December
June 30, 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
========== ==========
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)
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NET INCREASE IN CASH AND CASH
EQUIVALENTS (162,763) (720,189)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,160,239 1,647,635
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CASH AND CASH EQUIVALENTS, END
OF PERIOD $997,476 $927,446
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SOURCE Cephalon, Inc.
