Sepracor Reports Fourth Quarter and Full-Year 2008 Operating Results

Financial Highlights

--
Fourth quarter 2008 revenues increased 8.7% to $369.7 million vs.
$340.0 million for the same quarter in 2007

--
Full-year 2008 revenues increased 5.5% to $1,292.3 million vs.
$1,225.2 million for full-year 2007

--
Reported GAAP earnings per share (EPS) for the fourth quarter 2008
were $0.77 per diluted share vs. $(0.05) per diluted share for the
same period in 2007

--
Excluding special items and recurring non-GAAP adjustments, fourth
quarter non-GAAP EPS increased 27.8% to $0.92 per diluted share vs.
$0.72 per diluted share for the same period in 2007*

--
Reported GAAP EPS for full-year 2008 were $4.47 per diluted share
vs. $0.50 per diluted share for the full-year 2007

--
Excluding special items and recurring non-GAAP adjustments,
full-year non-GAAP EPS for 2008 increased 7.4% to $1.60 per diluted
share vs. $1.49 per diluted share for full-year 2007*

--
Cash and short- and long-term investments were $765.8 million at
December 31, 2008

Other Recent Highlights

--
Presented study results of STEDESA(TM) (eslicarbazepine acetate) for
the treatment of epilepsy at the American Epilepsy Society Annual
Meeting

--
Presented study results of ALVESCO(R)
(ciclesonide) HFA Inhalation Aerosol for the treatment of
asthma and OMNARIS(TM) (ciclesonide) in an HFA nasal aerosol for the
treatment of allergic rhinitis at the American College of Allergy,
Asthma & Immunology Annual Meeting

--
In a separate press release issued today, Sepracor announced a
strategic corporate restructuring and workforce reduction plan aimed
at reducing 2009 operating expenses

*See below under the heading "Use of non-GAAP Financial Measures" for a
discussion of Sepracor's use of non-GAAP financial measures. Attached is
a reconciliation of GAAP (U.S. generally accepted accounting principles)
to non-GAAP calculations.

Sepracor Inc. (Nasdaq: SEPR | Quote | Chart | News | PowerRating) today announced its consolidated financial
results for the fourth quarter and full-year ended December 31, 2008.

For the three months ended December 31, 2008, total revenues increased
8.7% to $369.7 million compared to revenues of $340.0 million during the
same quarter in 2007. GAAP net income for the three months ended
December 31, 2008 was $88.4 million, or $0.77 per diluted share,
compared to a net loss of $5.0 million, or $(0.05) per diluted share,
for the same quarter in 2007. Excluding an income tax benefit as a
result of the release of a valuation allowance on our deferred tax
assets, and certain other items detailed in the attached reconciliation
of GAAP to non-GAAP measures, non-GAAP net income for the fourth quarter
of 2008 was $105.2 million, or $0.92 per diluted share. These results
compare with non-GAAP net income of $76.9 million, or $0.72 per diluted
share, in the fourth quarter of 2007.

For the full-year ended December 31, 2008, total revenues increased 5.5%
to $1,292.3 million compared to total revenues of $1,225.2 million
during the same period in 2007. GAAP net income for the full-year ended
December 31, 2008 was $515.1 million, or $4.47 per diluted share,
compared to $58.3 million, or $0.50 per diluted share, for the same
period in 2007. Excluding an income tax benefit as a result of the
release of a valuation allowance on our deferred tax assets, after-tax
in-process research and development charges, an after-tax research and
development milestone payment, and certain other items detailed in the
attached reconciliation of GAAP to non-GAAP measures, non-GAAP net
income for the full-year 2008 was $184.8 million, or $1.60 per diluted
share, compared to $173.1 million, or $1.49 per diluted share, for the
full-year ended December 31, 2007. Included in the results for the
full-year ended December 31, 2007 is an after-tax charge related to a
research and development milestone payment and an after-tax charge
related to a litigation settlement.

"This will be an important year as we implement our new commercial model
and continue to work hard to transform the company into a more efficient
and flexible business that will be better positioned to leverage our
product franchises and advance our exciting research and development
pipeline. We will continue to focus on delivering increased productivity
and improving expense ratios as measured against revenues," said Adrian
Adams, President and Chief Executive Officer. "We began implementation
of cost-savings initiatives in the fourth quarter of 2008 and delivered
strong EPS results, which exceeded our previous guidance. We are
determined to continue to deliver stronger financial performance, EPS
momentum and enhanced shareholder value over time."

In a separate press release issued today, Sepracor announced a strategic
corporate restructuring and workforce reduction plan aimed at reducing
future operating expenses, which the company anticipates will result in
a stronger-performing and more nimble business going forward, and
announced its financial guidance for 2009 stated below. The
restructuring plan has resulted in Sepracor projecting a reduction in
operating expenses of approximately $210 million, of which approximately
$20 million of cost-savings was realized during the fourth quarter of
2008 and approximately $190 million is expected in 2009.

2009 Financial Guidance

--
Projected non-GAAP EPS range for 2009 is $2.10 to $2.70 per diluted
share based on 116 million shares outstanding, a 50.0% increase (using
midpoint range of guidance) compared to non-GAAP EPS for 2008*

--
Projected 2009 full-year revenue range is $1,150.0 million to
$1,250.0 million, a decrease of $92.3 million or 7.1% (using midpoint
range of guidance) compared to 2008. The key contributors to this
reduced revenue projection relate to uncertainties with respect to the
health care and competitive environment, potential increased generic
competition in the markets in which Sepracor competes and a potential
adjustment period as Sepracor strives to become a more efficient and
profitable organization

--
Projected sales, marketing and general administrative expense is
expected to be approximately $600.0 million, a reduction of
approximately $160.0 million, or 21.1%, compared to 2008

--
Projected non-GAAP research and development expense is expected to
be approximately $210.0 million, a reduction of approximately $27.0
million, or 11.4%, compared to 2008*

_____________________________

*See below under the heading "Use of non-GAAP Financial Measures" for a
discussion of Sepracor's use of non-GAAP financial measures. Attached is
a reconciliation of GAAP to non-GAAP calculations. No adjustments have
been made to revenues or sales, marketing and general administrative
expense guidance discussed above.

Commercial Operations

LUNESTA(R) brand eszopiclone, indicated for the treatment of
insomnia, had revenues of $161.9 million for the fourth quarter of 2008
compared to $149.8 million for the same quarter in 2007. Full-year 2008
revenues for LUNESTA were $600.3 million compared to full-year 2007
revenues of $600.9 million.

XOPENEX(R) Inhalation Solution, which is a short-acting
beta-agonist indicated for the treatment or prevention of bronchospasm
in patients suffering from diseases such as asthma and chronic
obstructive pulmonary disease (COPD), accounted for $137.7 million in
revenues for the fourth quarter 2008, compared to $142.4 million for the
same quarter in 2007. Full-year 2008 revenues for XOPENEX Inhalation
Solution were $441.0 million compared to $487.2 million for the
full-year 2007. The reduction in XOPENEX Inhalation Solution revenues
for the full-year 2008 compared to the full-year 2007 was attributable
primarily to the decline in Medicare Part B reimbursement for the
product resulting from implementation by the Centers for Medicare and
Medicaid Services (CMS) of a bundled payment calculation methodology for
XOPENEX Inhalation Solution and generic albuterol inhalation solution,
which was effective July 1, 2007.

XOPENEX HFA(R) brand levalbuterol tartrate Inhalation Aerosol,
a hydrofluoroalkane (HFA) metered-dose inhaler (MDI) formulation of
levalbuterol for the treatment or prevention of bronchospasm in patients
with reversible obstructive airway disease, accounted for $21.5 million
of revenues in the fourth quarter 2008 compared to $24.9 million for the
same period in 2007. Full-year 2008 revenues were $74.2 million compared
to revenues of $74.9 million for the full-year 2007.

BROVANA(R) brand arformoterol tartrate Inhalation Solution, a
long-acting, twice-daily maintenance treatment for bronchoconstriction
in patients with COPD, which was commercially launched in April 2007,
accounted for $19.3 million of revenues in the fourth quarter of 2008 as
compared to revenues of $6.3 million for the same period in 2007.
Full-year 2008 revenues for BROVANA were $57.3 million as compared to
April to December 2007 revenues of $14.3 million.

Sepracor commercially introduced OMNARIS brand ciclesonide Nasal Spray
in April 2008, and the product had revenues of $5.9 million for the
fourth quarter of 2008. Revenues for April to December 2008 were $14.6
million. OMNARIS Nasal Spray is indicated for the treatment of
nasal symptoms associated with seasonal allergic rhinitis in adults and
children 6 years of age and older, and with perennial allergic rhinitis
in adults and adolescents 12 years of age and older.

Sepracor commercially introduced ALVESCO brand ciclesonide HFA
Inhalation Aerosol in September 2008 through a specialist-only launch.
Revenues for September to December 2008 were $16.8 million and the
product had revenues of $(0.3) million for the fourth quarter, which was
primarily due to product returns. ALVESCO HFA Inhalation Aerosol is an
inhaled corticosteroid indicated for maintenance treatment of asthma as
prophylactic therapy in adult and adolescent patients 12 years of age
and older.

Sepracor completed the acquisition of Oryx Pharmaceuticals Inc. in June
2008, which was subsequently renamed Sepracor Pharmaceuticals, Inc.
(SPI). SPI is a specialty pharmaceutical company that markets branded
prescription pharmaceutical products to physician specialists and
hospitals within Canada and is currently focused in the cardiovascular,
central nervous system (CNS) disorders, pain and infectious disease
therapeutic areas. SPI revenues for the fourth quarter of 2008 were $4.5
million and revenues for June to December 2008 were $11.1 million.

Royalty and license fee revenues were $19.2 million for the fourth
quarter of 2008 compared to $16.4 million for the same quarter in 2007.
Full-year 2008 royalty and license fee revenues were $77.0 million
compared to $48.0 million for the full-year 2007. Sepracor continues to
earn royalty revenues on sales of out-licensed antihistamine products,
which primarily include Schering-Plough's CLARINEX(R) brand
desloratadine, sanofi-aventis' ALLEGRA(R) brand fexofenadine
HCl and UCB's XYZAL(R)/XUSAL(TM) brand levocetirizine.

Research and Development

Sepracor's pipeline portfolio continues to progress. SEP-225441, a
modified-release formulation of eszopiclone for the treatment of
generalized anxiety disorder, has completed a large Phase II study and
clinical results are anticipated during the first quarter of 2009.
SEP-225289, a novel triple reuptake inhibitor for the treatment of
depression, is in a Phase II study that is nearing full-recruitment with
clinical results anticipated mid-year 2009. Sepracor submitted a
briefing package to the U.S. Food and Drug Administration (FDA)
regarding the Phase III program for SEP-227162 for the treatment of
depression, and anticipates a response during the first half of 2009.
SEP-0227018, a new LUNESTA formulation being studied for reduced side
effects and potentially improved efficacy, is also now in Phase II clinical
development. Sepracor is also in the process of completing studies of
LUNESTA with an improved coating, and subject to FDA approval,
anticipates commercially launching LUNESTA with this new coating in 2010.

Sepracor is on track to submit a New Drug Application (NDA) to the FDA
during the first quarter of 2009 for STEDESA (eslicarbazepine acetate),
an anti-epileptic compound licensed from Bial-Portela & Ca, S.A.
Sepracor expects to commercially launch STEDESA during the first half of
2010, subject to FDA approval. In December 2008, Phase III
clinical study results of eslicarbazepine acetate for the treatment of
epilepsy were presented at the American Epilepsy Society Annual Meeting
in Seattle. Results of the studies demonstrated that eslicarbazepine
acetate, a novel once-daily anti-epileptic agent, significantly reduced
the frequency of partial seizures in patients with refractory partial
epilepsy, when administered in combination with other anti-epileptic
agents.

In addition to obtaining the exclusive U.S. distribution rights to
OMNARIS Nasal Spray and ALVESCO HFA Inhalation Aerosol, Sepracor
obtained development rights to several ciclesonide line extensions
through its agreement with Nycomed GmbH in early 2008. These ciclesonide
line extension candidates have the potential to broaden Sepracor's
ciclesonide and respiratory franchises. These programs include: OMNARIS
HFA MDI, a candidate in Phase III development; ALVESCO inhalation
solution, a preclinical candidate; and ciclesonide in combination with
BROVANA, which is also in preclinical development. If developed
successfully, OMNARIS HFA MDI could be the first HFA nasal formulation
to be available for patients in the United States.

Sepracor's pipeline portfolio was further enhanced during 2008. During
the year, Sepracor signed a global license and development agreement
with Arrow International Limited (Arrow), a European company, for the
development, commercialization, marketing, sale and distribution of a
levalbuterol (XOPENEX)/ipratropium inhalation solution product, which is
a Phase III-ready asset. In addition, Sepracor signed a global
technology license and development agreement with Arrow for know-how and
intellectual property rights related to stable sterile steroid
suspension formulations as well as other applicable nebule technology
for use in developing ciclesonide, a corticosteroid, in an inhalation
solution. This agreement is intended to facilitate enhanced development
of Sepracor's ciclesonide stand-alone product for the treatment of
asthma as well as Sepracor's planned ciclesonide/BROVANA inhalation
solution combination product for the treatment of COPD. The agreement
also includes rights to Arrow's "U-Bend" packaging technology, which is
designed to allow increased accuracy in dosing through a novel U-Bend
ampule design.

About Sepracor

Sepracor Inc. is a research-based pharmaceutical company dedicated to
treating and preventing human disease by discovering, developing and
commercializing innovative pharmaceutical products that are directed
toward large and growing markets and unmet medical needs. Sepracor's
drug development program has yielded a portfolio of pharmaceutical
products and candidates with a focus on respiratory and central nervous
system disorders. Sepracor's corporate headquarters are located in
Marlborough, Massachusetts.

Use of non-GAAP Financial Measures

In addition to providing financial measurements based on generally
accepted accounting principles in the United States of America (GAAP),
Sepracor is providing additional financial metrics that are not prepared
in accordance with GAAP (non-GAAP). The use of, and emphasis on,
non-GAAP financial metrics are discouraged by governing regulatory
agencies and companies are required to explain why non-GAAP financial
metrics are relevant to management and investors. We believe that the
inclusion of these non-GAAP financial measures in this press release
helps investors to gain a meaningful understanding of our past
performance and future prospects, consistent with how management
measures and forecasts our performance, especially when comparing such
results to previous periods or forecasts. Specifically with respect to
the exclusion of amortization of intangible assets from GAAP net income,
purchased intangible assets relate primarily to core and developed
technology of acquired businesses. We consider these charges non-cash in
nature and unrelated to our core operating performance, and use of this
non-GAAP measure allows comparisons of operating results that are
consistent over time for both the Company's newly acquired and long-held
businesses and with both acquisitive and non-acquisitive peer companies.
Our management uses all of these non-GAAP measures, in addition to GAAP
financial measures, as the basis for measuring our core operating
performance and comparing such performance to that of prior periods.
These measures are also used by management in its financial and
operational decision-making. There are limitations associated with
reliance on these non-GAAP financial metrics because they are specific
to our operations and financial performance, which makes comparisons
with other companies' financial results more challenging. By providing
both GAAP and non-GAAP financial measures, we believe that investors are
able to compare our GAAP results to those of other companies while also
gaining a better understanding of our operating performance as evaluated
by management.

We expect to continue to incur for the foreseeable future significant
expenses similar to the non-GAAP adjustment for amortization of
intangible assets described in the attached reconciliation of GAAP to
non-GAAP measures, as well as imputed interest expense related to
discounted future payments under license agreements which are also
excluded from GAAP net income as described above. In addition, our 2009
EPS guidance is adjusted to exclude interest expense associated with our
0% convertible subordinated notes due 2024, or 2024 Notes, as required
under FASB Staff Position No. APB 14-1, Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement). We also expect to continue to incur this
interest expense for the foreseeable future and exclude it from GAAP net
income as described above. The exclusion of these items from our
non-GAAP financial measures should not be construed as an inference that
these costs are unusual, infrequent or non-recurring. Some of the
material limitations in relying on this non-GAAP financial measure are
that while amortization of intangible assets does not directly affect
our current cash position, such expenses represent the declining value
of technology and other intangible assets we have acquired over their
respective expected economic lives. The expense associated with this
decline in value is excluded from non-GAAP financial measures, and
therefore the non-GAAP financial measures do not reflect the costs of
acquired intangible assets. In addition, while the interest expense on
our 2024 Notes and imputed interest expense that are excluded relate to
non-cash interest charges and do not directly affect our current cash
position, such amounts will eventually be paid by us under the 2024
Notes and relevant license agreements, as the case may be, and are a
necessary element of our costs and ability to generate profits.
Therefore any measure that excludes imputed interest expense and
interest expense on our 2024 Notes has material limitations. We
compensate for these limitations by using the non-GAAP measures that
exclude associated amortization of intangible assets, imputed interest
expense from discounted future payments under license agreements and
interest expense on our 2024 Notes as only one of several comparative
tools, together with GAAP measurements, to assist in the evaluation of
our profitability and operating results.

Forward-Looking Statement

This news release contains forward-looking statements that involve risks
and uncertainties, including statements with respect to the successful
development and commercialization of Sepracor's pharmaceutical products
and product candidates; the safety, efficacy, potential benefits,
possible uses and commercial success of Sepracor's products and product
candidates; the implementation of Sepracor's planned workforce reduction
and new commercial model and transformation of the company into a more
efficient and flexible business; the corporate restructuring plan
resulting in a projected reduction in operating expenses of
approximately $190.0 million; potential increased productivity and
improving expense ratios as measured against product revenues;
delivering stronger financial performance, EPS momentum and enhanced
shareholder value over time; clinical results for SEP-225289 and
SEP-225441 being available in the first half of 2009 and the first
quarter of 2009, respectively; Sepracor's anticipated response from the
FDA during the first half of 2009 regarding its Phase III program for
SEP-227162; the anticipated commercial launch of LUNESTA with an
improved coating in 2010; the anticipated submission of an NDA for
STEDESA in the first quarter of 2009 with a potential product launch in
the first half of 2010; a new LUNESTA formulation with the potential for
reduced side effects and improved efficacy; the potential of the
ciclesonide development rights to broaden Sepracor's ciclesonide and
respiratory franchises; OMNARIS HFA MDI potentially being the first HFA
nasal formulation available for patients in the U.S; Sepracor's expected
future growth and profitability; and 2009 financial guidance with
respect to revenue, EPS and sales, marketing and general administrative
expenses, and research and development expenses. Among the factors that
could cause actual results to differ materially from those indicated by
such forward-looking statements are: Sepracor's ability to fund, and the
results of, further clinical trials with respect to products under
development; the timing of the results of Sepracor's clinical trials;
the timing and success of submission, acceptance, and approval of
regulatory filings, including with respect to STEDESA and OMNARIS HFA
MDI; the scope of Sepracor's trademarks, patents and the patents of
others and the success of challenges by others of Sepracor's patents;
the clinical benefits and commercial success of Sepracor's products;
changes in the use and/or label of Sepracor's products; the outcome of
litigation and regulatory decisions relating to Sepracor's patents,
products and product candidates; Sepracor's ability to successfully
implement its corporate restructuring and workforce reduction plan and
reduce expenses; the impact of the workforce reduction on Sepracor's
business, including a potential adverse impact on revenues and
Sepracor's corporate development and licensing activities; unanticipated
charges not currently contemplated that may occur as a result of the
reduction in workforce and other anticipated cost-saving initiatives
across the organization; private insurers such as managed care
organizations adopting their own coverage restrictions or demanding
price concessions in response to state, Federal or administrative
action; the ability of Sepracor to attract and retain qualified
personnel; the ability of Sepracor to successfully collaborate with
third parties; the performance of Sepracor's licensees and other
collaboration partners and its ability to enter into new licenses and
collaborations; the ability of Sepracor to develop and successfully
launch its newly acquired products and product candidates; the continued
ability of Sepracor to meet its debt obligations when due; and certain
other factors that may affect future operating results, which are
detailed in Sepracor's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2008 filed with the SEC and other reports filed with
the SEC.

In addition, the statements in this press release represent Sepracor's
expectations and beliefs as of the date of this press release. Sepracor
anticipates that subsequent events and developments may cause these
expectations and beliefs to change. However, while Sepracor may elect to
update these forward-looking statements at some point in the future, it
specifically disclaims any obligation to do so. These forward-looking
statements should not be relied upon as representing Sepracor's
expectations or beliefs as of any date subsequent to the date of this
press release.

Lunesta, Xopenex, Xopenex HFA and Brovana are registered trademarks and
Stedesa is a trademark of Sepracor Inc. Omnaris is a trademark and
Alvesco is a registered trademark of Nycomed GmbH. Clarinex is a
registered trademark of Schering Corporation. Allegra is a registered
trademark of Merrell Pharmaceuticals. Xusal is a trademark and Xyzal is
a registered trademark of UCB, Societe Anonyme.

In conjunction with this Fourth Quarter and Full-Year 2008 Operating
Results press release, Sepracor will host a conference call and live
webcast beginning at 8:30 a.m. ET on January 29, 2009. To participate
via telephone, dial (651) 291-0900, referring to access code 982103.
Please call ten minutes prior to the scheduled conference call time. For
live webcasting, go to the Sepracor web site at www.sepracor.com
and access the For Investors section. Click on either the live webcast
link or microphone icon to listen. Please go to the web site at least 15
minutes prior to the call in order to register, download, and install
any necessary software. A PDF of the slides will be available in the For
Investors section of the web site as well as in the left-hand navigation
menu of the webcast viewer just prior to the start of the call. A replay
of the call will be accessible by telephone after 12:00 p.m. ET and will
be available for one week. To replay the call, dial (320) 365-3844,
access code 982103. A replay of the web cast will be archived on the
Sepracor web site in the For Investors section.

Condensed, consolidated statements of operations and consolidated
balance sheets and reconciliation of GAAP to non-GAAP measures follow.

Sepracor Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Product sales, net $ 350,500 $ 323,530 $ 1,215,239 $ 1,177,256
Royalties and license fees 19,192 16,450 77,050 47,974
Total revenues 369,692 339,980 1,292,289 1,225,230
Cost of revenue 39,159 33,587 132,441 117,155
Gross margin 330,533 306,393 1,159,848 1,108,075
Operating expenses:
Research and development 59,271 128,572 246,813 263,756
Research and development - in process upon acquisition - - 89,995 -
Selling, general and administrative 169,932 183,883 760,511 780,711
Amortization of intangible assets 1,496 34 7,368 154
Litigation settlement, net - - - 34,000
Restructuring - 6,921 (566 ) 6,921
Total operating expenses 230,699 319,410 1,104,121 1,085,542
Income (loss) from operations 99,834 (13,017 ) 55,727 22,533
Other income (expense):
Interest income 4,214 11,717 24,124 46,599
Interest expense (3,163 ) (62 ) (8,506 ) (3,020 )
Gain on extinguishment of debt 7,822 - 10,082 -
Other expense, net (2,566 ) (95 ) (11,960 ) (1,002 )
Total other income 6,307 11,560 13,740 42,577
Equity in investee losses (335 ) (66 ) (1,103 ) (507 )
Income (loss) before income taxes 105,806 (1,523 ) 68,364 64,603
Provision for (benefit from) income taxes 17,406 3,478 (446,746 ) 6,270
Net income (loss) $ 88,400 $ (5,001 ) $ 515,110 $ 58,333
Net income (loss) per common share - basic $ 0.82 $ (0.05 ) $ 4.79 $ 0.55
Net income (loss) per common share - diluted $ 0.77 $ (0.05 ) $ 4.47 $ 0.50
Weighted average shares outstanding - basic 107,719 107,498 107,527 106,847
Weighted average shares outstanding - diluted 114,870 107,498 115,260 116,364

Sepracor Inc.
Non-GAAP Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Product sales, net $ 350,500 $ 323,530 $ 1,215,239 $ 1,177,256
Royalties and license fees 19,192 16,450 77,050 47,974
Total revenues 369,692 339,980 1,292,289 1,225,230
Cost of revenue* 37,094 33,587 127,404 117,155
Gross margin 332,598 306,393 1,164,885 1,108,075
Operating expenses*:
Research and development 59,271 53,572 236,813 188,756
Selling, general and administrative 169,932 183,883 760,511 780,711
Amortization of intangible assets 31 34 130 154
Total operating expenses 229,234 237,489 997,454 969,621
Income from operations 103,364 68,904 167,431 138,454
Other income (expense)*:
Interest income 4,214 11,717 24,124 46,599
Interest expense (64 ) (62 ) (242 ) (3,020 )
Other income (expense), net 130 (95 ) (158 ) (1,002 )
Total other income 4,280 11,560 23,724 42,577
Equity in investee losses (335 ) (66 ) (1,103 ) (507 )
Income before income taxes 107,309 80,398 190,052 180,524
Income taxes* 2,096 3,478 5,251 7,423
Net income $ 105,213 $ 76,920 $ 184,801 $ 173,101
Net income per common share - basic $ 0.98 $ 0.72 $ 1.72 $ 1.62
Net income per common share - diluted $ 0.92 $ 0.72 $ 1.60 $ 1.49
Weighted average shares outstanding - basic 107,719 107,498 107,527 106,847
Weighted average shares outstanding - diluted (2) 114,870 107,498 115,260 116,364
* Attached is a reconciliation of GAAP to non-GAAP measures.
(2) For the three months ended 2007, we reported GAAP losses of
$5,001, with weighted average shares outstanding for basic and
diluted at 107,498 shares. For the three months ended 2007, the
non-GAAP gain is calculated at $76,920, with basic weighted
average shares outstanding remaining at 107,498 and diluted
weighted average shares increasing to approximately 115,712.
However, for purposes of the GAAP to non-GAAP reconciliation
included herein, we have used 107,498 diluted weighted average
shares outstanding, which is the same number of shares used for
our GAAP calculations.

Sepracor Inc.
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
(In thousands, except per share amounts)
Three months ended Twelve months ended
December 31, 2008 December 31, 2008
EPS EPS
Non-GAAP net income $ 105,213 $ 184,801
Non-GAAP diluted income per common share $ 0.92 $ 1.60
Special Items:
Valuation allowance release related to taxes (11,887 ) (0.10 ) 451,997 3.92
Research and development milestone payment - - (10,000 ) (0.09 )
Research and development - in process upon acquisition - - (89,995 ) (0.78 )
Impairment loss on investment (5,274 ) (0.05 ) (14,380 ) (0.12 )
Insurance settlement 2,578 0.02 2,578 0.02
Gain on extinguishment of debt 7,822 0.07 10,082 0.09
Restructuring - - 566 -
Recurring non-GAAP adjustment:
Cost of goods sold - amortization of intangible assets (2,065 ) (0.02 ) (5,037 ) (0.04 )
Amortization of intangible assets (1,465 ) (0.01 ) (7,238 ) (0.06 )
Imputed interest on acquired intangible assets (3,099 ) (0.03 ) (8,264 ) (0.07 )
Total special items and recurring non-GAAP adjustment before income (13,390 ) (0.12 ) 330,309 2.87
taxes
Income tax benefit (1) (3,423 ) (0.03 ) - -
Net income, as reported under GAAP $ 88,400 $ 515,110
Diluted income per common share, as reported under GAAP $ 0.77 $ 4.47
Three months ended Twelve months ended
December 31, 2007 December 31, 2007
EPS EPS
Non-GAAP net income $ 76,920 $ 173,101
Non-GAAP diluted income per common share (2) $ 0.72 $ 1.49
Special Items:
Research and development milestone payment (75,000 ) (0.70 ) (75,000 ) (0.65 )
Litigation settlement, net - - (34,000 ) (0.29 )
Restructuring (6,921 ) (0.07 ) (6,921 ) (0.06 )
Total special items before income taxes (81,921 ) (0.77 ) (115,921 ) (1.00 )
Income tax benefit from special items - - 1,153 0.01
Net income, as reported under GAAP $ (5,001 ) $ 58,333
Diluted income per common share, as reported under GAAP $ (0.05 ) $ 0.50
Weighted average shares outstanding - diluted 2008 114,870 115,260
Weighted average shares outstanding - diluted 2007 107,498 116,364
(1) Does not include any impact from the valuation allowance release
related to taxes as noted above under special items.
(2) Non-GAAP diluted income per common share was calculated using
the GAAP weighted average shares outstanding balance at 2007; see
further discussion included with the non-GAAP Consolidated
Statements of Operations.

Sepracor Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31, December 31,
ASSETS 2008 2007
Cash, short- and long-term investments $ 765,830 $ 1,065,619
Accounts receivable, net 177,457 159,644
Inventory, net 69,003 53,125
Property, plant and equipment, net 117,072 87,308
Investment in affiliate 2,873 4,313
Goodwill and intangibles, net 174,834 501
Deferred taxes, net 470,483 -
Other assets 37,523 34,216
Total assets $ 1,815,075 $ 1,404,726
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 166,538 $ 227,426
Deferred taxes 5,577 -
Other liabilities 402,400 277,462
Debt payable 1,468 2,605
Convertible subordinated debt 530,470 720,820
Total stockholders' equity 708,622 176,413
Total liabilities and stockholders' equity $ 1,815,075 $ 1,404,726

Sepracor Inc.
Reconciliation of GAAP to Non-GAAP Guidance Measures
(Unaudited)
(In thousands, except per share amounts)
Twelve months ended
December 31, 2009
Amounts EPS - Low EPS - High
Guidance non-GAAP diluted income per common share 2009 $ 2.10 $ 2.70
Special Items:
Research and development milestone payment* $ (20,000) (0.17) (0.17)
Arrow royalty buyout (61,400) (0.53) (0.53)
Restructuring (23,000) (0.20) (0.20)
Recurring non-GAAP adjustment:
Cost of goods sold - amortization of intangible assets (8,220) (0.07) (0.07)
Amortization of intangible assets (5,858) (0.05) (0.05)
Imputed interest on acquired intangible assets (12,247) (0.11) (0.11)
Interest expense related to FASB Staff Position APB 14-1 (16,397) (0.14) (0.14)
Total special items and recurring non-GAAP adjustment before income $ (147,122) (1.27) (1.27)
taxes
Income tax expense (37,500) - (63,000) (0.32) (0.54)
Guidance diluted income per common share 2009, under GAAP $ 0.51 $ 0.89
Weighted average shares outstanding - diluted 2009 116,000
*2009 GAAP research and development expenses are projected to be
approximately $230.0 million as compared to non-GAAP research and
development expenses of approximately $210.0 million. The
difference is an anticipated $20.0 million milestone payment that
is likely to be made during 2009.

SOURCE: Sepracor

Sepracor Inc.
Jonae R. Barnes, 508-481-6700
Sr. Vice President, Investor Relations and
Corporate Communications

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