BRISTOL, Tenn., Feb. 28 /PRNewswire-FirstCall/ -- King Pharmaceuticals,
Inc. (NYSE: KG) announced today that total revenues increased 36% to $1.77
billion during the year ended December 31, 2005 compared to $1.30 billion for
2004. Including special items, net income equaled $117.8 million and diluted
earnings per share equaled $0.49 during the year ended December 31, 2005,
compared to a net loss of $160.3 million and a diluted loss per share of $0.66
during the prior year. Excluding special items, net earnings increased to
$400.5 million and diluted earnings per share increased to $1.66 for the
twelve months ended December 31, 2005 from net earnings of $157.6 million and
diluted earnings per share of $0.65 in 2004.
Brian A. Markison, President and Chief Executive Officer of King, stated,
"King achieved many significant milestones in 2005, as we refocused all
aspects of our business and made tremendous progress toward resolving our
previously existing challenges. Evidencing these achievements is our record
high total revenues for the year ended December 31, 2005, totaling
approximately $1.8 billion." Mr. Markison continued, "A particularly
significant accomplishment during 2005 is our strategic collaboration with
Pain Therapeutics, Inc. to develop and commercialize Remoxy(TM) and up to
three other abuse-resistant opioid painkillers, which exemplifies the
continued successful execution of our growth strategy. With this
collaboration, we believe we have significantly strengthened our development
pipeline providing greater potential to deliver long-term value for our
Company."
Mr. Markison added, "We plan to continue implementing our strategy for
long-term growth during 2006, focusing on our key therapeutic areas of
cardiovascular/metabolics, neuroscience, and hospital/acute care. Relying on
our best in class commercial operations capability, we expect to maximize the
potential of our existing portfolio of branded pharmaceutical products. Our
research and development team, in collaboration with our partners, will
continue to advance a significant number of development projects in our
pipeline. This currently includes three products in Phase III and two
products in Phase II clinical trials. With a focus on our key therapeutic
areas, we also expect to further expand our development pipeline as we
continue to implement our disciplined, systematic business development process
leveraging our core strengths."
Joseph Squicciarino, King's Chief Financial Officer, stated, "King
continued to generate very strong cash flows from operations, totaling $519.5
million during the year ended December 31, 2005. With such strong cash flows,
our unrestricted cash and investments in debt securities as of December 31,
2005 totaled approximately $524.7 million. Our cash position and cash flows
from operations allow us to invest in products and commit to programs that are
consistent with our strategy for long-term growth."
For the fourth quarter ended December 31, 2005, total revenues increased
24% to $423.3 million compared to $342.6 million in the fourth quarter of
2004. Including special items, the Company had a net loss of $94.6 million
and diluted loss per share of $0.39 during the fourth quarter of 2005 compared
to net earnings of $14.7 million and diluted earnings per share of $0.06 in
the same period of the prior year. Excluding special items, net earnings
increased to $92.3 million and diluted earnings per share increased to $0.38
during the fourth quarter ended December 31, 2005 from net earnings of $33.8
million and diluted earnings per share of $0.14 in the fourth quarter of 2004.
During the fourth quarter of 2005, net sales of the Company's key branded
products were adversely affected by approximately $30 million resulting from
changes in wholesaler buying patterns. The data upon which the Company relied
and based its original third-quarter 2005 estimates of wholesale inventory
levels was incorrect due to reporting errors made by two of the Company's
major wholesale customers. Inventory levels of Skelaxin(R) (metaxalone) and
Altace(R) (ramipril) were each slightly higher than one month of estimated
end-user demand as of the end of the third quarter. King estimates that
inventory levels of these products were subsequently reduced during the fourth
quarter of 2005. Accordingly, fourth-quarter 2005 net sales of Skelaxin(R)
and Altace(R) were adversely affected by $17 million and $13 million,
respectively.
King recorded special items during the fourth quarter ended December 31,
2005 that resulted in a net charge of $284.4 million, or $186.9 million net of
tax. More specific information regarding special items is provided below.
Net revenue from branded pharmaceuticals totaled $365.5 million for the
fourth quarter of 2005, a 27% increase from the fourth quarter of 2004, and
equaled $1.5 billion for the year ended December 31, 2005, a 36% increase from
$1.1 billion during the prior year. These increases were primarily due to
higher unit sales of the Company's branded pharmaceutical products and a lower
rate of reserves for returns for some of these products during the fourth
quarter and year ended December 31, 2005 as a result of the effect of a higher
level of wholesale channel inventory reductions and actual returns of some of
these products during 2004.
Altace(R) net sales equaled $150.3 million in the fourth quarter and
$554.4 million during the twelve months ended December 31, 2005, increases of
64% and 60%, respectively, from $91.7 million in the fourth quarter and $347.3
million during the twelve months ended December 31, 2004.
Net sales of Skelaxin(R) totaled $70.0 million during the fourth quarter
of 2005, a decrease of 14% from $81.1 million in the fourth quarter of 2004.
For the twelve months ended December 31, 2005, net sales of Skelaxin(R)
increased 44% to $344.6 million compared to $238.6 million during the same
period in 2004.
Thrombin-JMI(R) (thrombin, topical, bovine, USP) net sales equaled $50.7
million during the fourth quarter of 2005 compared to $50.5 million during the
same period of the prior year. During the twelve months ended December 31,
2005, Thrombin-JMI(R) net sales increased 26% to $220.6 million from $174.6
million during the same period of the prior year.
Net sales of Sonata(R) (zaleplon) equaled $24.8 million in the fourth
quarter and $83.1 million during the twelve months ended December 31, 2005,
increases of 125% and 38%, respectively, from $11.0 million during the fourth
quarter and $60.4 million during the twelve months ended December 31, 2004.
Levoxyl(R) (levothyroxine sodium tablets, USP) net sales totaled $22.1
million during the fourth quarter of 2005 compared to $21.3 million during the
fourth quarter of 2004. During the twelve months ended December 31, 2005, net
sales of Levoxyl(R) totaled $139.5 million, an increase of 33% from $104.7
million for the same period of the prior year.
Royalty revenues, derived primarily from Adenoscan(R) (adenosine), totaled
$18.2 million during the fourth quarter and $78.1 million during the twelve
months ended December 31, 2005 compared to $20.3 million during the fourth
quarter and $78.5 million during the twelve months ended December 31, 2004.
King's Meridian Medical Technologies business contributed $32.3 million to
the Company's net revenue in the fourth quarter of 2005 and $129.3 million
during the year ended December 31, 2005, compared to $27.2 million during the
fourth quarter and $123.3 million during the twelve months ended December 31,
2004.
During the fourth quarter and year ended December 31, 2005, revenue from
contract manufacturing equaled $6.2 million and $22.2 million, respectively,
compared to $7.5 million during the fourth quarter and $26.0 million during
the twelve months ended December 31, 2004.
The Company reported yesterday in a press release that it has entered into
an agreement with Aventis Pharma Deutschland GmbH (now known as Sanofi-Aventis
Deutschland GmbH) and Cobalt Pharmaceuticals, Inc. to dismiss the pending
litigation relating to the enforcement of patents pertaining to Altace(R).
Conference Call Information
King will conduct a conference call today to discuss the Company's
year-end and fourth-quarter 2005 results and other matters pertaining to its
business. Interested persons may listen to the conference call on Tuesday,
February 28, 2006, at 1:00 p.m., E.S.T. by one of the following means:
Internet Webcast
Click the following link to register and then join the live event with the
same URL: http://hpbroadband.com/program.cfm?key=KingPharmaQ4Earnings
Telephone Audio Conference
Call in to the telephone conference up to 15 minutes early:
Toll free in the United States 800-903-0258
Outside the US 785-832-1508
Passcode: 7HP6312
Can't Make the Live Event? Listen "On-Demand"
If you are unable to participate during the live event, the call will be
archived on King's web site http://www.kingpharm.com for not less than 14 days
following the call.
About Special Items
Under Generally Accepted Accounting Principles ("GAAP"), "net earnings"
and "diluted earnings per share" include special items. In addition to the
results determined in accordance with GAAP, King provides its net earnings and
diluted earnings per share results for the fourth quarters and years ended
December 31, 2005 and 2004, excluding special items. These non-GAAP financial
measures exclude special items which are those particular material income or
expense items that King considers to be unrelated to the Company's ongoing,
underlying business, non-recurring, or not generally predictable. Such items
include, but are not limited to, merger and restructuring expenses; non-
capitalized expenses associated with acquisitions, such as in-process research
and development charges and one-time inventory valuation adjustment charges;
charges resulting from the early extinguishment of debt; asset impairment
charges; expenses of drug recalls; and gains and losses resulting from the
divestiture of assets. King believes the identification of special items
enhances the analysis of the Company's ongoing, underlying business and the
analysis of the Company's financial results when comparing those results to
that of a previous or subsequent like period. However, it should be noted that
the determination of whether to classify an item as a special item involves
judgments by King's management. A reconciliation of non-GAAP financial
measures referenced herein and King's financial results determined in
accordance with GAAP is provided below.
About King Pharmaceuticals
King, headquartered in Bristol, Tennessee, is a vertically integrated
branded pharmaceutical company. King, an S&P 500 Index company, seeks to
capitalize on opportunities in the pharmaceutical industry through the
development, including through in-licensing arrangements and acquisitions, of
novel branded prescription pharmaceutical products in attractive markets and
the strategic acquisition of branded products that can benefit from focused
promotion and marketing and product life-cycle management.
Forward-looking Statements
This release contains forward-looking statements which reflect
management's current views of future events and operations, including, but not
limited to, statements pertaining to the potential of the Company's
development pipeline to provide long-term growth; statements pertaining to the
implementation of the Company's strategy for growth; statements pertaining to
the Company's plan to maximize the potential of its existing portfolio of
branded pharmaceutical products; statements pertaining to the Company's
continued development of products in its pipeline; statements pertaining to
Company's plans to further expand its development pipeline in 2006; and
statements pertaining to the Company's planned conference call to discuss its
year-end and fourth-quarter 2005 results. These forward-looking statements
involve certain significant risks and uncertainties, and actual results may
differ materially from the forward-looking statements. Some important factors
which may cause actual results to differ materially from the forward-looking
statements include: dependence on the future level of demand for and net sales
of King's branded pharmaceutical products, in particular, Altace(R), Thrombin-
JMI(R), Sonata(R), Skelaxin(R) and Levoxyl(R); dependence on the successful
marketing of King's products, including, but not limited to, Altace(R),
Thrombin-JMI(R), Sonata(R), Skelaxin(R) and Levoxyl(R); dependence on the
future effect of generic substitution for Levoxyl(R); dependence on royalty
revenues from Adenoscan(R); dependence on management of King's growth and
integration of its acquisitions; dependence on the Company's compliance with
the five-year corporate integrity agreement with the Office of the Inspector
General ("OIG") of the Department of Health and Human Services; dependence on
the final results of any ongoing government investigations of the Company or
any related individuals; dependence on whether King is able to prevail in
pending private plaintiff securities litigation; dependence on King's ability
to continue to acquire branded products, including products in development;
dependence on the high cost and uncertainty of research, clinical trials, and
other development activities involving pharmaceutical products, including, but
not limited to, King Pharmaceuticals Research and Development's pre-clinical
and clinical pharmaceutical product development projects, including
Remoxy(TM), binodenoson, PT-141 (now known as bremelanotide), and an
Altace(R)/diuretic combination product and other potential formulations
involving ramipril; dependence on the unpredictability of the duration and
results of the U. S. Food and Drug Administration's ("FDA") review of
Investigational New Drug applications ("IND"), New Drug Applications ("NDA"),
and Abbreviated New Drug Applications ("ANDA") and/or the review of other
regulatory agencies worldwide; dependence on King's ability to maintain
effective patent protection for AltaceR, Skelaxin(R), Sonata(R) and
Adenoscan(R) and successfully defend against any challenge with respect to the
enforceability of patents relating to the products; dependence on whether
Skelaxin(R) continues as an exclusive product; dependence on whether King's
customers order pharmaceutical products in excess of normal quantities during
any quarter which could cause the Company's sales of branded pharmaceutical
products to be lower in a subsequent quarter than they would otherwise have
been; dependence on the accuracy of King's estimate of wholesale inventory
levels of its products; dependence on the extent to which Inventory Management
Agreements facilitate effective management of wholesale channel inventories of
the Company's products and the accuracy of information provided to the Company
pursuant to such agreements and by other third parties; dependence on King's
ability to continue to successfully execute the Company's strategy and to
continue to capitalize on strategic opportunities in the future for sustained
long-term growth; dependence on the availability and cost of raw materials;
dependence on no material interruptions in supply by contract manufacturers of
King's products; dependence on the potential effect on sales of the Company's
existing branded pharmaceutical products as a result of the potential
development and approval of a generic substitute for any such product or other
new competitive products; dependence on the potential effect of future
acquisitions and other transactions pursuant to the Company's growth strategy;
dependence on King's compliance with FDA and other government regulations that
relate to the Company's business; dependence on King's ability to conduct its
webcast as currently planned on February 28, 2006; and dependence on changes
in general economic and business conditions; changes in current pricing
levels; changes in federal and state laws and regulations; changes in
competition; unexpected changes in technologies and technological advances;
and manufacturing capacity constraints. Other important factors that may cause
actual results to differ materially from the forward-looking statements are
discussed in the "Risk Factors" section and other sections of King's Form 10-K
for the year ended December 31, 2004 and Form 10-Q for the third quarter ended
September 30, 2005, which are on file with the U.S. Securities and Exchange
Commission ("SEC"). King does not undertake to publicly update or revise any
of its forward-looking statements even if experience or future changes show
that the indicated results or events will not be realized.
KING PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, December 31,
ASSETS 2005 2004
Current assets:
Cash and cash equivalents $30,014 $192,656
Investments in debt securities 494,663 149,430
Restricted cash 130,400 97,730
Marketable securities - 16,498
Accounts receivable, net 223,581 180,963
Inventories 228,063 274,412
Deferred income tax assets 81,777 153,979
Prepaid expenses and other current
assets 59,291 61,395
Total current assets 1,247,789 1,127,063
Property, plant and equipment, net 302,474 280,731
Intangible assets, net 967,194 1,285,961
Goodwill 121,152 121,152
Deferred income tax assets 231,032 92,931
Marketable securities 18,502 -
Other assets 77,099 16,318
Total assets $2,965,242 $2,924,156
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $84,539 $92,920
Accrued expenses 519,620 596,010
Income taxes payable 22,301 -
Current portion of long-term debt 345,000 -
Total current liabilities 971,460 688,930
Long-term debt - 345,000
Other liabilities 20,360 41,436
Total liabilities 991,820 1,075,366
Commitments and contingencies
Shareholders' equity:
Common shares no par value,
300,000,000 shares authorized,
241,802,724 and 241,706,583
shares issued and outstanding,
respectively 1,213,482 1,210,647
Retained earnings 754,953 637,120
Accumulated other comprehensive
income 4,987 1,023
Total shareholders' equity 1,973,422 1,848,790
Total liabilities and
shareholders' equity $2,965,242 $2,924,156
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
REVENUES:
Total revenues $423,285 $342,619 $1,772,881 $1,304,364
OPERATING COSTS AND
EXPENSES:
Cost of revenues,
exclusive of
depreciation,
amortization and
impairments shown
below 74,305 86,850 331,564 339,450
Excess purchase
commitment (4,527) - (6,109) 8,902
Writeoff of
acquisition related
inventory step-
up/recall (2,470) - (2,470) 4,586
Total cost of
revenues 67,308 86,850 322,985 352,938
Selling, general and
administrative,
exclusive of co-
promotion fees 97,029 109,629 389,672 385,002
Special legal and
professional fees 6,511 5,609 19,779 19,773
Legal settlement - 5,000 - 5,000
Medicaid related
charge - - - 65,000
Mylan transaction
costs - 3,149 3,898 9,062
Co-promotion fees 60,546 29,357 223,134 111,604
Total selling,
general, and
administrative
expense 164,086 152,744 636,483 595,441
Depreciation and
amortization 34,351 45,488 147,049 162,115
Research and
development 20,994 18,158 74,015 67,939
Research and
development-In-
process upon
acquisition 188,711 (845) 188,711 16,300
Intangible asset
impairment 94,131 17,336 221,054 149,592
Restructuring charges 1,577 - 4,180 10,827
Gain on sale of
products (217) - (1,675) (9,524)
Total operating
costs and
expenses 570,941 319,731 1,592,802 1,345,628
OPERATING (LOSS)
INCOME (147,656) 22,888 180,079 (41,264)
OTHER (EXPENSE)
INCOME:
Interest expense (3,055) (3,070) (11,931) (12,588)
Interest income 6,712 2,715 18,175 5,974
Valuation charge -
convertible notes
receivable - - - (2,887)
Loss on investment - - (6,182) (6,520)
Other, net 21 (574) (2,026) (749)
Total other income
(expense) 3,678 (929) (1,964) (16,770)
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES (143,978) 21,959 178,115 (58,034)
Income tax (benefit)
expense (49,817) 6,961 61,485 (7,412)
(LOSS) INCOME FROM
CONTINUING OPERATIONS (94,161) 14,998 116,630 (50,622)
DISCONTINUED
OPERATIONS
(Loss) income from
discontinued
operations,
including loss on
impairment (731) (441) 1,876 (172,750)
Income tax (benefit)
expense (316) (170) 673 (63,084)
Total (loss)
income from
discontinued
operations (415) (271) 1,203 (109,666)
NET (LOSS) INCOME $(94,576) $14,727 $117,833 $(160,288)
Basic net (loss)
income per common
share $(0.39) $0.06 $0.49 $(0.66)
Diluted net (loss)
income per common
share $(0.39) $0.06 $0.49 $(0.66)
Shares used in basic
net (loss) income per
share 241,794 241,666 241,751 241,475
Shares used in diluted
net (loss) income per
share 241,794 241,808 241,903 241,475
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
EXCLUDING SPECIAL ITEMS - NON GAAP
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
REVENUES:
Total revenues $423,285 $342,619 $1,772,881 $1,304,364
OPERATING COSTS AND EXPENSES:
Cost of revenues, exclusive
of depreciation,
amortization and
impairments shown below 74,305 86,850 331,564 339,450
Selling, general and
administrative, exclusive
of co-promotion fees 97,029 109,629 389,672 385,002
Co-promotion fees 60,546 29,357 223,134 111,604
Total selling, general,
and administrative
expense 157,575 138,986 612,806 496,606
Depreciation and
amortization 34,351 45,488 147,049 162,115
Research and development 20,994 18,158 74,015 67,939
Total operating costs
and expenses 287,225 289,482 1,165,434 1,066,110
OPERATING INCOME 136,060 53,137 607,447 238,254
OTHER INCOME (EXPENSE):
Interest expense (3,055) (3,070) (11,931) (12,588)
Interest income 6,712 2,715 18,175 5,974
Other, net 21 (574) (2,026) (749)
Total other income
(expense) 3,678 (929) 4,218 (7,363)
INCOME BEFORE INCOME TAXES 139,738 52,208 611,665 230,891
Income tax expense 47,419 18,426 211,186 73,323
NET INCOME $92,319 $33,782 $400,479 $157,568
Basic net income per common
share $0.38 $0.14 $1.66 $0.65
Diluted net income per common
share $0.38 $0.14 $1.66 $0.65
Shares used in basic net
income per share 241,794 241,666 241,751 241,475
Shares used in diluted net
income per share 242,121 241,808 241,903 241,920
KING PHARMACEUTICALS, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share data)
The following tables reconcile Non-GAAP measures to amounts reported
under GAAP:
Three Months Ending Twelve Months Ending
December 31, 2005 December 31, 2005
EPS EPS
Net income, excluding
special items $92,319 $400,479
Diluted income per
common share,
excluding special
items $0.38 $1.66
SPECIAL ITEMS:
Excess purchase
commitment (cost of
goods sold) 4,527 0.02 6,109 0.03
Writeoff of
acquisition related
inventory step-
up/recall (cost of
goods sold) 2,470 0.01 2,470 0.01
Special legal and
professional fees
(selling, general,
and administrative) (6,511) (0.03) (19,779) (0.08)
Mylan transaction
costs (selling,
general, and
administrative) - - (3,898) (0.02)
In-process research
and development
(other operating
costs and expenses) (188,711) (0.78) (188,711) (0.78)
Intangible asset
impairment (other
operating costs and
expenses) (94,131) (0.39) (221,054) (0.91)
Restructuring charges
(other operating
costs and expenses) (1,577) 0.00 (4,180) (0.02)
Gain on sale of
products (other
operating costs and
expenses) 217 0.00 1,675 0.01
Loss on investment
(other income
(expense)) - - (6,182) (0.03)
(Loss) income from
discontinued
operations (731) (0.00) 1,876 0.01
Income tax expense 97,552 0.40 149,028 0.61
Net (loss) income $(94,576) $117,833
Diluted (loss) income
per common share, as
reported under GAAP $(0.39) $0.49
Three Months Ending Twelve Months Ending
December 31, 2004 December 31, 2004
EPS EPS
Net income, excluding
special items $33,782 $157,568
Diluted income per
common share,
excluding special
items $0.14 $0.65
SPECIAL ITEMS:
Excess purchase
commitment (cost of
goods sold) - - (8,902) (0.04)
Writeoff of
acquisition related
inventory step-
up/recall (cost of
goods sold) - - (4,586) (0.02)
Special legal and
professional fees
(selling, general,
and administrative) (5,609) (0.02) (19,773) (0.08)
Legal settlement
(selling, general,
and administrative) (5,000) (0.02) (5,000) (0.02)
Medicaid related
charge (selling,
general, and
administrative) - - (65,000) (0.27)
Mylan transaction
costs (selling,
general, and
administrative) (3,149) (0.01) (9,062) (0.04)
In-process research
and development
(other operating
costs and expenses) 845 0.00 (16,300) (0.07)
Intangible asset
impairment (other
operating costs and
expenses) (17,336) (0.07) (149,592) (0.62)
Restructuring charges
(other operating
costs and expenses) - - (10,827) (0.04)
Gain on sale of
products (other
operating costs and
expenses) - - 9,524 0.04
Valuation charge -
convertible notes
receivable (other
income (expense)) - - (2,887) (0.01)
Loss on investment
(other income
(expense)) - - (6,520) (0.03)
(Loss) income from
discontinued
operations (441) (0.00) (172,750) (0.72)
Income tax expense 11,635 0.04 143,819 0.61
Net income (loss) $14,727 $(160,288)
Diluted income (loss)
per common share, as
reported under GAAP $0.06 $(0.66)
KING PHARMACEUTICALS, INC.
Summary Reconciliation of Special Items
For the Fourth Quarter Ended December 31, 2005
And the Fourth Quarter Ended December 31, 2004
King recorded special items during the fourth quarter ended December 31,
2005, the net of which resulted in a charge totaling $284.4 million, or $186.9
million net of tax. More specifically, special items during the fourth
quarter of 2005 include:
-- a $188.7 million charge related to in-process research and development
primarily associated with King's entry into a strategic collaboration
with Pain Therapeutics, Inc. regarding Remoxy(TM) and up to three
additional abuse-resistant opioid painkillers;
-- intangible asset impairment charges of $94.1 million primarily related
to Sonata(R) and Corzide(R) (nadolol & bendroflumethiazide tablets);
-- a $6.5 million charge primarily for professional fees associated with
the OIG and SEC inquiries;
-- a $1.6 million restructuring charge primarily related to the decision
to reduce the Company's work force to improve efficiencies in
operations;
-- a $0.4 million charge resulting from discontinued operations;
-- $4.5 million of income derived from the reversal of previously accrued
excess purchase commitments for certain products as a result of a
change in estimate;
-- income in the amount of $2.5 million related to the reversal of
previously accrued expenses associated with voluntary recalls of
certain products in prior years; and
-- $0.2 million of income primarily due to special gains on the
disposition of assets.
During the fourth quarter ended December 31, 2004, King recorded special
items resulting in a net charge of $30.7 million, or $19.1 million net of tax,
primarily due to a $17.3 million charge related to the Company's decision to
discontinue the Sonata(R) MR clinical development program.
KING PHARMACEUTICALS, INC.
Summary Reconciliation of Special Items
For the Year Ended December 31, 2005
And the Year Ended December 31, 2004
King recorded special items during the year ended December 31, 2005, the
net of which resulted in a charge totaling $431.7 million, or $282.6 million
net of tax. More specifically, special items during the year ended December
31, 2005 include:
-- intangible asset impairment charges totaling $221.1 million primarily
related to Sonata and Corzide(R);
-- a $188.7 million charge related to in-process research and development
primarily associated with King's entry into a strategic collaboration
with Pain Therapeutics, Inc. regarding Remoxy(TM) and up to three
additional abuse-resistant opioid painkillers;
-- a charge of $19.8 million primarily related to professional fees
associated with the OIG and SEC inquiries;
-- a $6.2 million charge to reflect a loss on the Company's divested
equity investment in Novavax, Inc.;
-- a $4.2 million charge primarily due to the decision to reduce the
Company's work force to improve efficiencies in operations and the
discontinuation of some relatively insignificant products associated
with the Company's Meridian business;
-- a $3.9 million charge for professional fees and expenses primarily
associated with the Company's terminated merger agreement with Mylan;
-- $6.1 million of income derived from the reversal of previously accrued
excess purchase commitments for certain products as a result of a
change in estimate;
-- income in the amount of $2.5 million related to the reversal of
previously accrued expenses associated with voluntary recalls of
certain products in prior years;
-- $1.7 million of income primarily due to special gains on the
disposition of assets; and
-- income in the amount of $1.2 million primarily derived from
-- discontinued operations due to a reduction in reserves for returns and
rebates previously accrued for divested products as a result of changes
in estimates.
During the year ended December 31, 2004, King recorded special items
resulting in a net charge of $461.7 million, or $317.9 million net of tax,
primarily due to discontinued operations resulting from the Company's decision
to divest two of its women's health products, intangible asset impairment
charges primarily related to the Company's decision to discontinue the
Sonata(R) MR clinical development program, and the Company's then best
estimate of the interest, costs, penalties and all other amounts in excess of
the previously accrued $65.4 million for purposes of resolving the OIG and SEC
inquiries.
SOURCE King Pharmaceuticals, Inc.
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Related links:
http://www.kingpharm.com
Company News On-Call:
http://www.prnewswire.com/comp/120319.html
CONTACT:
James E. Green, Executive Vice President,
Corporate Affairs, +1-423-989-8125, or David E. Robinson, Senior
Director, Corporate Affairs, +1-423-989-7045, both of King
Pharmaceuticals
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