Cephalon Announces Strong Third Quarter Financi...(4) To exclude the forgiveness of a mortg...)

Industrial Development Board ("PIDA").

(5) 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 tax assets and

liabilities.

(6) To exclude the U.S. Department of Defense ("DoD") Tricare program

reversal as a result of the U.S. Court of Appeals September 2006

ruling.

(7) To exclude charges associated with the settlement of the PROVIGIL

patent litigation.

(8) Amounts shown no longer exclude the impact of Financial Accounting

Standards Board Statement No. 123(R) "Share Based Payment" ("SFAS

123(R)"). The earnings press release issued on November 2, 2006

reflected adjustments of $3.4 million in each of Research and

development and Selling, general and administrative expenses and $2.8

million in Income tax expense related to SFAS 123(R).

CEPHALON, INC. AND SUBSIDIARIES

Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income

(Unaudited)

Nine Months Ended

September 30,

2007 2006

GAAP NET INCOME (LOSS) $(235,886) $149,725

Sales adjustments - (13,273)(7)

Cost of sales adjustments 64,236 (1) 69,375 (1)

Research and development adjustments 41,500 (2) 45,000 (2) (11)

Selling, general and administrative

adjustments - 9,987 (8) (11)

Settlement reserve 425,000 (3) -

Impairment charge
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