This excerpt taken from the CEPH 10-Q filed Nov 5, 2008.
Commitments and Contingencies
There have been no material changes to the Contractual Obligations Table, presented in our Annual Report on Form 10-K for the year ended December 31, 2007. The table excludes unrecognized tax benefits, which totaled $79.6 million as of January 1, 2008 and $85.9 million as of September 30, 2008. We also expect to timely settle any federal tax assessments as a result of certain tax audits. During the twelve months ending September 30, 2009, we expect to make $9.9 million cash tax payments related to unrecognized tax benefits recorded at September 30, 2008.
As of the filing date of this report, as discussed in Note 16 to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, we paid a total of $423.1 million plus $11.3 million interest from cash and cash equivalents on hand in October 2008 relating to the USAO settlement. The remaining settlement payments of $1.9 million plus interest related to the USAO settlement are expected to be paid during the fourth quarter of 2008.
This excerpt taken from the CEPH 10-K filed Mar 15, 2005.
Commitments and Contingencies
For a complete description of legal proceedings, see Part I, Item 3, "Legal Proceedings."
Cephalon Clinical Partners, L.P.
In August 1992, we exclusively licensed our rights to MYOTROPHIN for human therapeutic use within the United States, Canada and Europe to Cephalon Clinical Partners, L.P. (CCP). A subsidiary of Cephalon is the sole general partner of CCP. We developed MYOTROPHIN on behalf of CCP under a research and development agreement. Under this agreement, CCP granted an exclusive license to us to manufacture and market MYOTROPHIN for human therapeutic use within the United States, Canada and Europe, and we agreed to make royalty payments equal to a percentage of product sales and a milestone payment of approximately $16.0 million upon regulatory approval. We have a contractual option, but not an obligation, to purchase all of the limited partnership interests of CCP, which is exercisable upon the occurrence of certain events following the first commercial sale of MYOTROPHIN. If, and only if, we decide to exercise this purchase option, we would make an advance payment of approximately $40.3 million in cash or, at our election, approximately $42.4 million in shares of common stock or a combination thereof. If we discontinue development of MYOTROPHIN, or if we do not exercise this purchase option, our license will terminate and all rights to manufacture or market MYOTROPHIN in the United States, Canada and Europe will revert to CCP, which may then commercialize MYOTROPHIN itself or license or assign its rights to a third party. In that event, we would not receive any benefits from such commercialization, license or assignment of rights.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities." Subsequently, in December 2003, the FASB issued a revised version of FIN 46 (FIN 46R). FIN 46 and FIN 46R require a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. FIN 46 and FIN 46R also require disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 and FIN 46R apply immediately to variable interest entities created after January 31, 2003 and to existing special purpose entities in the first fiscal year or interim period ending after December 15, 2003. For all other entities, the requirements of FIN 46 and FIN 46R apply in the first period ending after March 15, 2004. As a result of the adoption of the standards, CCP has been consolidated in our financial statements at December 31, 2003 and 2004. This consolidation did not have a material impact on our financial statements.
Other Commitments and Contingencies
The following table summarizes our obligations to make future payments under current contracts (in thousands):
The convertible notes in the table include $374.7 million and $374.9 million of zero coupon convertible notes that are due in "4 5 years" and "More than 5 years," respectively. This classification is based on the date that such notes are first putable to us by holders. These notes also contain restrictions on a holder's ability to convert such notes into a mixture of cash and stock. If these restrictions on conversion are satisfied, we would classify the then-aggregate outstanding principal balance of such notes as a current liability on our balance sheet. As of December 31, 2004, these restrictions have not been met.
In addition to the above, we have committed to make potential future "milestone" payments to third parties as part of our in-licensing and development programs primarily in the area of research and development agreements. Payments generally become due and payable only upon the achievement of certain developmental, regulatory and/or commercial milestones. Because the achievement of these milestones is neither probable nor reasonably estimable, we have not recorded a liability on our balance sheet for any such contingencies. As of December 31, 2004, the potential milestone and other contingency payments due under current contractual agreements are approximately $196 million.