Cephalon Announces Strong Third Quarter Financi...(- 12417 (9) Write-off of ...)

Write-off of deferred debt issuance

costs - 13,105 (10)

Gain on extinguishment of debt (5,319)(4) -

Gain on sale of investment (5,791)(5) -

Income taxes (40,459)(6) (44,060)(6) (11)

479,167 92,551

ADJUSTED NET INCOME $243,281 $242,276

BASIC ADJUSTED INCOME PER COMMON

SHARE $3.66 $4.01

DILUTED ADJUSTED INCOME PER COMMON

SHARE $3.09 $3.52

WEIGHTED AVERAGE NUMBER OF COMMON

SHARES OUTSTANDING 66,398 60,415

WEIGHTED AVERAGE NUMBER OF COMMON

SHARES OUTSTANDING-ASSUMING DILUTION 78,814 68,921 Notes to Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income

(1) In 2007, to exclude the on-going amortization of acquired intangible

assets. In 2006, to exclude the reserve for SPARLON capitalized

inventory costs ($8.6 million) and the on-going amortization of

acquired intangible assets ($60.8 million).

(2) In 2007, to exclude charges related to payments for several research

and development collaborations ($26.5 million) and the recognition of

a milestone related to the FDA's acceptance of our NDA filing for

TREANDA ($15.0 million). In 2006, to exclude charges related to

payments for several research and development collaborations.

(3) To exclude the reserve established for the agreement in principle

reached with the U.S. Attorney's Office in Philadelphia.

(4) To exclude the forgiveness of a mortgage loan by the PIDA.

(5) To exclude the pre-tax gain related to the sale of ce
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