FRAZER, Pa., May 1 /PRNewswire-FirstCall/ -- Cephalon, Inc. today reported first quarter 2007 sales of $423.9 million, a 23 percent increase compared to first quarter 2006 sales of $345.6 million. Basic income per common share for the quarter was $1.14. Excluding amortization expense and certain other items, basic adjusted income per common share was $1.45, an 86 percent increase over the comparable figure of $0.78 in the first quarter of 2006 and exceeding by $0.45 the high end of the company’s guidance issued in February 2007.
Central nervous system (CNS) franchise sales increased 35 percent to $217.5 million and pain franchise sales increased 12 percent to $131.4 million. Sales of other products were $74.9 million, an increase of 12 percent.
“We delivered remarkable earnings performance in the first quarter of 2007 as we continue to effectively execute across all aspects of our business,” said Frank Baldino, Jr., Ph.D., Chairman and CEO. “We held year-over-year operating expenses largely steady, while driving double digit growth of both PROVIGIL and our European sales and continuing the successful transition of our pain franchise from ACTIQ to FENTORA. This year and beyond, we have substantial opportunities in each of our product franchises to further enhance stockholder value.”
Cephalon is reiterating its recently increased full-year 2007 guidance. The company anticipates total sales of $1.675-$1.725 billion. This includes CNS franchise sales of $925-$950 million, pain franchise sales of $425-$450 million and other product sales of $300-$325 million. SG&A and R&D guidance for 2007 are $685-$715 million and $315-$335 million, respectively.
Full-year 2007 net income guidance is $292-$298 million and basic adjusted income per common share guidance is $4.40-$4.50.
For the second quarter of 2007, the company is introducing sales guidance of $415-$425 million, adjusted net income guidance of $69-$76 million and guidance for basic adjusted income per common share of $1.05-$1.15.
Basic adjusted income per common share guidance for the second quarter of 2007 and full-year 2007 is reconciled below and is subject to the assumptions set forth therein.
Cephalon’s management will discuss the company’s first quarter 2007 performance in a conference call with investors beginning at 5:00 p.m. U.S. EDT on Tuesday, May 1, 2007. To participate in the conference call, dial +1-913-981-4911 and refer to conference code number 8754971. Investors can listen to the call live by logging on to the company’s website at http://www.cephalon.com and clicking on “Newsroom,” then “Webcast.” The conference call will be archived and available to investors for one week after the call.
Cephalon, Inc.
Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products in four core therapeutic areas: central nervous system, pain, oncology and addiction. 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’s European headquarters are located in Maisons-Alfort, France.
The company currently markets six proprietary products in the United States: PROVIGIL(R) (modafinil) Tablets [C-IV], FENTORA(R) (fentanyl buccal tablet) [C-II], TRISENOX(R), VIVITROL(R) (naltrexone for extended-release injectable suspension), GABITRIL(R) (tiagabine hydrochloride), ACTIQ(R) (oral transmucosal fentanyl citrate) [C-II], and 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 second quarter and full-year 2007; and other statements regarding matters that are not historical facts, including the Company’s position and expected performance in 2007. 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,” “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.
CEPHALON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended March 31, 2007 2006 REVENUES: Sales $423,879 $345,587 Other revenues 13,155 11,356 437,034 356,943 COSTS AND EXPENSES: Cost of sales 86,546 77,939 Research and development 83,958 109,461 Selling, general and administrative 152,454 151,751 322,958 339,151 INCOME FROM OPERATIONS 114,076 17,792 OTHER INCOME (EXPENSE): Interest income 6,576 5,042 Interest expense (4,595) (4,536) Write-off of deferred debt issuance costs - (13,105) Other income (expense), net 2,756 (852) 4,737 (13,451) INCOME BEFORE INCOME TAXES 118,813 4,341 INCOME TAX EXPENSE 43,628 774 NET INCOME $75,185 $3,567 BASIC INCOME PER COMMON SHARE $1.14 $0.06 DILUTED INCOME PER COMMON SHARE $0.99 $0.05 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 65,806 59,734 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION 75,835 73,508 Certain reclassifications of prior year amounts have been made to conform to the current year presentation. Amounts reported in prior periods as amortization are included now as a component of cost of sales; amounts previously reported as depreciation (other than depreciation related to facilities used in the production of commercial inventory and previously included in cost of sales) are included as a component of research and development or selling, general and administrative, as appropriate. CEPHALON, INC. AND SUBSIDIARIES Reconciliation of GAAP Net Income to Adjusted Net Income (Unaudited) Three Months Ended March 31, 2007 2006 GAAP NET INCOME $75,185 $3,567 Cost of sales adjustments 20,965 (1) 19,046 (1) Research and development adjustments 10,000 (2) 30,000 (2) (6) Selling, general and administrative adjustments - 6,555 (4) (6) Write-off of deferred debt issuance costs adjustment - 13,105 (5) Income tax adjustment (10,982)(3) (25,561)(3) (6) 19,983 43,145 ADJUSTED NET INCOME $95,168 $46,712 BASIC ADJUSTED INCOME PER COMMON SHARE $1.45 $0.78 DILUTED ADJUSTED INCOME PER COMMON SHARE $1.25 $0.63 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 65,806 59,734 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-ASSUMING DILUTION 75,835 73,631 (6) Notes to Reconciliation of GAAP Net Income to Adjusted Net Income (1) To exclude the on-going amortization of acquired intangible assets. (2) To exclude charges related to payments for several research and development collaborations. (3) 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 and other changes in liabilities. (4) To exclude charges associated with the settlement of the PROVIGIL patent litigation ($4.0 million) and employee severance costs associated with the European integration and restructuring ($2.6 million). (5) To exclude the write-off of deferred debt issuance costs related to the Zero Coupon convertible subordinated notes. (6) The impact of Financial Accounting Standards Board Statement No. 123(R) “Share Based Payment” (“SFAS 123(R)”) is no longer excluded as in the press release issued May 2, 2006 for comparability of the financial statements presented. Therefore, 2006 adjustments include $3.4 million in Research and development and Selling, general and administrative expenses, respectively, $2.4 million in Income tax expense and 471 thousand shares in Weighted average number of common shares outstanding-assuming dilution. CEPHALON, INC. AND SUBSIDIARIES CONSOLIDATED SALES DETAIL (In thousands) (Unaudited) Three Months Ended March 31, 2007 United States Europe Total Sales: CNS $202,611 $14,898 $217,509 ACTIQ 57,157 8,571 65,728 Generic OTFC 34,020 - 34,020 FENTORA 31,690 - 31,690 Pain 122,867 8,571 131,438 Other 17,172 57,760 74,932 $342,650 $81,229 $423,879 Three Months Ended March 31, 2006 United States Europe Total Sales: CNS $150,907 $10,438 $161,345 ACTIQ 112,334 5,168 117,502 Generic OTFC - - - FENTORA - - - Pain 112,334 5,168 117,502 Other 15,070 51,670 66,740 $278,311 $67,276 $345,587 % Increase (Decrease) United States Europe Total Sales: CNS 34% 43% 35% ACTIQ (49%) 66% (44%) Generic OTFC 100% 0% 100% FENTORA 100% 0% 100% Pain 9% 66% 12% Other 14% 12% 12% 23% 21% 23% CEPHALON, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) March 31, December 31, 2007 2006 CURRENT ASSETS: Cash and cash equivalents $567,430 $496,512 Investments 11,983 25,212 Receivables, net 307,494 270,045 Inventory, net 189,885 174,300 Deferred tax assets, net 194,040 184,518 Other current assets 53,338 47,278 Total current assets 1,324,170 1,197,865 PROPERTY AND EQUIPMENT, net 457,784 453,010 GOODWILL 468,062 467,167 INTANGIBLE ASSETS, net 774,034 793,037 DEFERRED TAX ASSETS, net 112,397 118,192 OTHER ASSETS 21,511 16,226 $3,157,958 $3,045,497 CURRENT LIABILITIES: Current portion of long-term debt $1,023,284 $1,023,312 Accounts payable 77,035 90,586 Accrued expenses 245,835 263,478 Total current liabilities 1,346,154 1,377,376 LONG-TERM DEBT 224,294 224,992 DEFERRED TAX LIABILITIES, net 68,955 72,491 OTHER LIABILITIES 103,559 61,178 Total liabilities 1,742,962 1,736,037 STOCKHOLDERS’ EQUITY: Common stock, $0.01 par value 682 678 Additional paid-in capital 1,811,271 1,780,749 Treasury stock, at cost (151,196) (151,068) Accumulated deficit (357,239) (425,256) Accumulated other comprehensive income 111,478 104,357 Total stockholders’ equity 1,414,996 1,309,460 $3,157,958 $3,045,497 CEPHALON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $75,185 $3,567 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Deferred income tax expense (benefit) 11,629 (745) Shortfall tax benefits from stock-based compensation (83) - Depreciation and amortization 30,592 29,238 Amortization of debt issuance costs 60 129 Write-off of debt issuance costs associated with convertible subordinated notes - 13,105 Stock-based compensation expense 11,699 9,856 Changes in operating assets and liabilities: Receivables (36,850) (25,868) Inventory (14,585) (12,020) Other assets (12,523) (27,677) Accounts payable, accrued expenses and deferred revenues (9,160) (21,583) Other liabilities 2,584 (1,767) Net cash provided by (used for) operating activities 58,548 (33,765) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (21,384) (31,759) Acquisition of intangible assets - (5,000) Sales and (purchases) of investments, net 13,237 27,040 Net cash used for investing activities (8,147) (9,719) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercises of common stock options 17,479 107,738 Windfall tax benefits from stock-based compensation 1,431 21,633 Acquisition of treasury stock (128) (407) Payments on and retirements of long-term debt (953) (922) Net cash provided by financing activities 17,829 128,042 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2,688 (531) NET INCREASE IN CASH AND CASH EQUIVALENTS 70,918 84,027 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 496,512 205,060 CASH AND CASH EQUIVALENTS, END OF PERIOD $567,430 $289,087 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 June 30, 2007 December 31, 2007 Projected GAAP basic income per common share $0.85 -- $0.95 $3.48 -- $3.58 Amortization of current intangibles $0.32 -- $0.32 $1.28 -- $1.28 Research and development collaboration agreement $- -- $- $0.15 -- $0.15 Tax effect of pre-tax adjustments at the applicable tax rates $(0.12)--$(0.12) $(0.51)--$(0.51) Basic adjusted income per common share guidance $1.05 -- $1.15 $4.40 -- $4.50
The company’s guidance is being issued based on certain assumptions including:
-- Adjusted effective tax rate of approximately 36 percent for 2007; and -- Weighted average number of common shares outstanding of 66.0 million shares for the three months ended June 30, 2007 and 66.3 million shares for the twelve months ended December 31, 2007.
Cephalon, Inc.
CONTACT: Media, Sheryl Williams, +1-610-738-6493, swilliam@cephalon.com ,or Investors, Robert (Chip) Merritt, +1-610-738-6376, cmerritt@cephalon.com, both of Cephalon, Inc.
Web site: http://www.cephalon.com/
Company News On-Call: http://www.prnewswire.com/comp/134563.html /
