Cephalon's 2007 Results Exceed Full Year Sales and Earning...(severance costs ($7.2 million) an...)

million) and a significant one-time charitable contribution ($4.0

million).

(4) 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.

(5) To exclude the write-off of other acquired in-process research and

development.

(6) To exclude the debt exchange expense associated with the December 2006

exchanges of $337.0 million of zero coupon convertible subordinated

notes and $100.0 million of 2% senior subordinated convertible notes.

(7) 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 February 12, 2007

reflected adjustments of $3.7 million in each of Research and

development and Selling, general and administrative expenses and $2.9

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)

Year Ended

December 31,

2007 2006

GAAP NET INCOME (LOSS) $(191,704) $144,816

Sales adjustments - (13,273)(8)

Cost of sales adjustments 90,542 (1) 90,333 (1)

Research and development adjustments 43,500 (2) 80,500 (2) (13)

Selling, general and administrative

adjustments 11,191 (3) 9,987 (3) (13)

Settlement reserve
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