BRISTOL, Tenn., May 9 /PRNewswire-FirstCall/ -- King Pharmaceuticals,
Inc. (NYSE: KG) announced today that total revenues increased 31% to $484
million during the first quarter ended March 31, 2006, compared to $369
million in the first quarter of 2005. Including special items, which
primarily consist of an $85 million, or $53 million net of tax,
in-licensing charge related to Arrow International Limited discussed below,
net earnings decreased 28% to $51 million and diluted earnings per share
decreased 28% to $0.21 during the first quarter ended March 31, 2006,
compared to net income of $70 million and diluted earnings per share of
$0.29 in the same period of the prior year. Excluding special items, net
earnings increased 40% to $106 million and diluted earnings per share
increased 42% to $0.44 during the first quarter ended March 31, 2006,
compared to net earnings of $76 million and diluted earnings per share of
$0.31 in the first quarter of 2005.
Brian A. Markison, President and Chief Executive Officer of King,
stated, "We are very pleased with the Company's financial results for the
first quarter of 2006. These results reflect the continued successful
execution of our strategy, including the delivery of significant revenues
from operations, the utilization of business development to enhance our
cardiovascular franchise with the in-licensing of novel formulations of
Altace(R) (ramipril), and the expansion of the number of late-stage
clinical development programs that enhance our prospects for future
growth."
Net revenue from branded pharmaceuticals totaled $418 million for the
first quarter of 2006, a 30% increase from $322 million during the first
quarter of 2005. This increase was primarily due to the effect of last
year's wholesale inventory reductions of some of the Company's branded
pharmaceutical products.
Altace(R) net sales totaled $159 million during the first quarter of
2006, an increase of 85% from $86 million during the first quarter of 2005.
Net sales of Skelaxin(R) (metaxalone) totaled $99 million during the
first quarter of 2006, an increase of 37% compared to $72 million during
the same period of the prior year.
Thrombin-JMI(R) (thrombin, topical, bovine, USP) net sales totaled $58
million during the first quarter of 2006, an 8% decrease from $63 million
during the first quarter of 2005.
Net sales of Sonata(R) (zaleplon) totaled $21 million during the first
quarter of 2006, an increase of 9% compared to $20 million during the first
quarter of the prior year.
Levoxyl(R) (levothyroxine sodium tablets, USP) net sales decreased to
$31 million during the first quarter ended March 31, 2006 from $40 million
during the first quarter of 2005.
King's Meridian Medical Technologies business contributed revenue
totaling $41 million during the first quarter of 2006, an increase of 78%
from $23 million during the same period of the prior year.
Royalty revenues, derived primarily from Adenoscan(R) (adenosine),
totaled $20 million during the first quarter ended March 31, 2006, compared
to $18 million during the first quarter of 2005. During the first quarter
ended March 31, 2006, net revenue from contract manufacturing equaled $6
million.
As of March 31, 2006, the Company's cash and cash equivalents and
investments in debt securities totaled approximately $814 million.
Conference Call Information
King will conduct a conference call today to discuss the Company's
first quarter 2006 results and other matters pertaining to its business.
Interested persons may listen to the conference call on Tuesday, May 9,
2006, at 1:00 p.m., E.D.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://www.kingpharm.com/web_casts.asp
Telephone Audio Conference
Call in to the telephone conference up to 15 minutes early:
Toll free in the United States 800-374-0113
Outside the US 706-758-9607
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/web_casts.asp for not less
than 14 days following the call. A replay of the conference call will also
be available for not less than five days following the call by dialing
800-642- 1687 (US only) or 706-645-9291 (international), passcode 8823517.
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 first quarters ended March
31, 2006 and 2005, 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 Company's planned conference
call to discuss its first-quarter 2006 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 King's ability to
conduct its webcast as currently planned on May 9, 2006. 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, 2005,
which is 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)
March 31, December 31,
2006 2005
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $328,298 $30,014
Investments in debt securities 486,154 494,663
Restricted cash - 130,400
Accounts receivable, net 268,336 223,581
Inventories 217,256 228,063
Deferred income tax assets 75,570 81,777
Prepaid expenses and other
current assets 82,041 59,291
Total current assets 1,457,655 1,247,789
Property, plant and equipment, net 302,162 302,474
Intangible assets, net 972,395 967,194
Goodwill 121,152 121,152
Deferred income tax assets 265,729 231,032
Marketable securities 15,494 18,502
Other assets 82,560 77,099
Total assets $3,217,147 $2,965,242
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $69,369 $84,539
Accrued expenses 440,512 519,620
Income taxes payable 74,959 22,301
Current portion of long-term debt 180,000 345,000
Total current liabilities 764,840 971,460
Long-term debt 400,000 -
Other liabilities 19,857 20,360
Total liabilities 1,184,697 991,820
Commitments and contingencies
Shareholders' equity:
Common shares no par value,
300,000,000 shares authorized,
242,197,054 and 241,802,724
shares issued and outstanding,
respectively 1,224,095 1,213,482
Retained earnings 805,630 754,953
Accumulated other comprehensive
income 2,725 4,987
Total shareholders' equity 2,032,450 1,973,422
Total liabilities and
shareholders' equity $3,217,147 $2,965,242
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2006 2005
REVENUES:
Total revenues $484,235 $368,625
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of
depreciation and amortization
shown below 92,404 73,798
Excess purchase commitment - (1,582)
Total cost of revenues 92,404 72,216
Selling, general and
administrative, exclusive of
co-promotion fees 102,075 89,198
Special legal and professional
fees 2,979 3,652
Mylan transaction costs - 3,277
Co-promotion fees 65,289 34,655
Total selling, general, and
administrative expense 170,343 130,782
Depreciation and amortization 34,365 41,426
Research and development 29,882 11,472
Research and development-
In-process upon acquisition 85,000 -
Restructuring charges - 2,023
Gain on sale of products - (847)
Total operating costs and
expenses 411,994 257,072
OPERATING INCOME 72,241 111,553
OTHER INCOME (EXPENSE):
Interest expense (2,984) (2,701)
Interest income 5,960 2,277
Loss on investment - (6,853)
Gain on early extinguishment of debt 1,022 -
Other, net (510) (249)
Total other income (expense) 3,488 (7,526)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 75,729 104,027
Income tax expense 24,894 36,922
INCOME FROM CONTINUING OPERATIONS 50,835 67,105
DISCONTINUED OPERATIONS
(Loss) income from discontinued
operations (247) 4,682
Income tax (benefit) expense (89) 1,732
Total (loss) income from
discontinued operations (158) 2,950
NET INCOME $50,677 $70,055
Basic net income per common share $0.21 $0.29
Diluted net income per common share $0.21 $0.29
Shares used in basic net income per
share 242,022 241,724
Shares used in diluted net income
per share 242,581 241,803
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING SPECIAL ITEMS - NON GAAP
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2006 2005
REVENUES:
Total revenues $484,235 $368,625
OPERATING COSTS AND EXPENSES:
Cost of revenues, exclusive of
depreciation and amortization
shown below 92,404 73,798
Selling, general and administrative,
exclusive of co-promotion fees 102,075 89,198
Co-promotion fees 65,289 34,655
Total selling, general, and
administrative expense 167,364 123,853
Depreciation and amortization 34,365 41,426
Research and development 29,882 11,472
Total operating costs and
expenses 324,015 250,549
OPERATING INCOME 160,220 118,076
OTHER INCOME (EXPENSE):
Interest expense (2,984) (2,701)
Interest income 5,960 2,277
Other, net (510) (249)
Total other income (expense) 2,466 (673)
INCOME BEFORE INCOME TAXES 162,686 117,403
Income tax expense 56,457 41,326
NET INCOME $106,229 $76,077
Basic net income per common share $0.44 $0.31
Diluted net income per common share $0.44 $0.31
Shares used in basic net income per
share 242,022 241,724
Shares used in diluted net income
per share 242,581 241,803
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 Ended March 31, 2006
(Unaudited) EPS
Net income, excluding special items $106,229
Diluted income per common share,
excluding special items $0.44
SPECIAL ITEMS:
Special legal and professional fees
(selling, general, and
administrative) (2,979) (0.01)
In-process research and development
(other operating costs and
expenses) (85,000) (0.35)
Gain on early extinguishment of
debt (other income (expense)) 1,022 0.00
(Loss) from discontinued operations (247) (0.00)
Income tax benefit from special items 31,652 0.13
Net income $50,677
Diluted income per common share, as
reported under GAAP $0.21
Three Months Ended March 31, 2005
(Unaudited) EPS
Net income, excluding special items $76,077
Diluted income per common share,
excluding special items $0.31
SPECIAL ITEMS:
Excess purchase commitment (cost of
goods sold) 1,582 0.01
Special legal and professional fees
(selling, general, and
administrative) (3,652) (0.01)
Mylan transaction costs (selling,
general, and administrative) (3,277) (0.01)
Restructuring charges (other
operating costs and expenses) (2,023) (0.01)
Gain on sale of products (other
operating costs and expenses) 847 0.00
Loss on investment (other income
(expense)) (6,853) (0.03)
Income from discontinued operations 4,682 0.02
Income tax benefit from special items 2,672 0.01
Net income $70,055
Diluted income per common share, as
reported under GAAP $0.29
KING PHARMACEUTICALS, INC.
Summary Reconciliation of Special Items
for the FIRST quarter ended MARCH 31, 2006
and the FIRST quarter ended MARCH 31, 2005
King recorded special items during the first quarter ended March 31,
2006 resulting in a net charge of $87.2 million, or $55.6 million net of
tax. More specifically, special items during the first quarter of 2006
include the following:
- an $85.0 million charge related to acquired in-process research and
development associated with King's entry into a strategic collaboration
with Arrow and certain of its affiliates to commercialize novel
formulations of Altace(R);
- a $3.0 million charge primarily for professional fees associated with
the OIG and SEC inquiries;
- a $0.2 million charge related to discontinued operations; and
- a $1.0 million gain associated with the Company's repurchase of a
portion of its $345 million of 2 3/4% Convertible Debentures due
November 15, 2021.
During the three months ended March 31, 2005, King recorded special
items resulting in a net charge of $8.7 million, or $6.0 million net of
tax, primarily due to a charge to reflect a decline in the fair value of
the Company's equity investment in Novavax, Inc., which the Company has
since divested.
SOURCE King Pharmaceuticals, Inc.
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Related links:
http://www.kingpharm.com
http://www.kingpharm.com/web_casts.asp
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, Inc.
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