King Pharmaceuticals Reports Year-End and Fourth-Quarter 2008 Financial Results
KG | Quote | Chart | News | PowerRating -- King Pharmaceuticals, Inc. (NYSE:KG) announced today that total revenues
equaled $1.57 billion during the year ended December 31, 2008, compared
to $2.14 billion for 2007. In connection with its acquisition of
Alpharma Inc. on December 29, 2008, King recorded a special charge in
the amount of $590 million for acquired in-process research and
development during the fourth quarter and year ended December 31, 2008.
As result of this special charge, King reported a net loss of $333
million and a diluted loss per share of $1.37 during the year ended
December 31, 2008, compared to net earnings of $183 million and diluted
earnings per share of $0.75 during the prior year. Excluding special
items, net earnings equaled $304 million and diluted earnings per share
equaled $1.24 for the twelve months ended December 31, 2008, compared to
net earnings of $476 million and diluted earnings per share of $1.95 in
2007. More detail regarding special items is provided below.
For the fourth quarter ended December 31, 2008, total revenues equaled
$348 million compared to $533 million in the fourth quarter of 2007.
Also as a result of the special charge mentioned above, King reported a
net loss of $548 million and a diluted loss per share of $2.25 during
the fourth quarter of 2008, compared to net earnings of $43 million and
diluted earnings per share of $0.18 in the same period of the prior
year. Excluding special items, net earnings equaled $59 million and
diluted earnings per share equaled $0.24 during the fourth quarter ended
December 31, 2008, compared to net earnings of $113 million and diluted
earnings per share of $0.46 in the fourth quarter of 2007.
Brian A. Markison, Chairman, President and Chief Executive Officer of
King, stated, "Our 2008 accomplishments are substantial and indicative
of the continued aggressive execution of the strategy for long-term
growth that we initiated a few years ago. These accomplishments include
the successful acquisition of Alpharma and the submission of four New
Drug Applications (NDAs) to the U.S. Food and Drug Administration (FDA)."
"Our acquisition of Alpharma was particularly significant, as it further
diversifies the Company, while strengthening our portfolio and
development pipeline of pain management products, and increases our
capabilities and expertise in this important market," added Mr.
Markison. "We are excited about our development pipeline, as it provides
us with both near-term and long-term revenue opportunities. While FDA
approvals of recently submitted NDAs have not come as quickly as we
would like, we are committed to securing regulatory approval for our
near-term prospects and will work diligently to advance our other
projects."
"Clearly, 2008 was a transformational year for King Pharmaceuticals and
we are now a stronger, more efficient and competitive company, with an
enhanced ability to deliver superior value to our stockholders,"
concluded Mr. Markison.
As of December 31, 2008, the Company's cash and cash equivalents totaled
approximately $940 million. This amount includes approximately $385
million which the Company used to redeem the previously issued Alpharma
convertible bonds during the first quarter of 2009. During the fourth
quarter of 2008 and for the year ended December 31, 2008, the Company
generated cash flow from operations of approximately $141 million and
$491 million, respectively.
Joseph Squicciarino, King's Chief Financial Officer, commented, "We have
made significant advances with respect to our Alpharma integration
initiatives and identified more opportunities for synergies than
originally anticipated. In 2009 we expect to capture synergies of
approximately $60 million from integration activities, primarily in SG&A
and R&D. In addition to these synergies, during the first quarter of
2009 we took further steps to restructure our cost base due to a recent
court decision which has increased the uncertainty regarding the
continued exclusivity of SKELAXIN(R) (metaxalone). Accordingly,
we reduced our workforce and implemented other cost-saving initiatives.
As a result, we expect to generate approximately $90 million in
additional expense reductions from these restructuring initiatives in
2009."
Net revenue from branded pharmaceuticals totaled $277 million for the
fourth quarter of 2008, compared to $469 million for the same period of
the prior year, and equaled $1.26 billion for the year ended December
31, 2008, compared to $1.86 billion for the prior year. The decrease in
revenues in 2008 compared to 2007 was primarily due to the market entry
of generic substitutes for ALTACE(R) (ramipril).
Net sales of SKELAXIN(R) totaled $113 million during the fourth
quarter and $446 million for the year ended December 31, 2008, compared
to $114 million during the fourth quarter and $440 million during the
twelve months ended December 31, 2007.
THROMBIN-JMI(R) (thrombin, topical, bovine, USP) net sales
totaled $57 million during the fourth quarter and $255 million for the
year ended December 31, 2008, compared to $69 million during the fourth
quarter and $267 million during the twelve months ended December 31,
2007. Net sales of THROMBIN-JMI(R) during 2008 were affected by
a higher level of discounting due to increased competition.
Net sales of AVINZA(R) (morphine sulfate extended release)
totaled $33 million during the fourth quarter and $135 million for the
year ended December 31, 2008, compared to $32 million during the fourth
quarter and $109 million during the twelve months ended December 31,
2007. The Company acquired AVINZA(R) on February 26, 2007.
LEVOXYL(R) (levothyroxine sodium tablets, USP) net sales
totaled $20 million during the fourth quarter and $73 million for the
year ended December 31, 2008, compared to $32 million during the fourth
quarter and $100 million during the twelve months ended December 31,
2007.
ALTACE(R) net sales totaled $14 million during the fourth
quarter and $166 million for the year ended December 31, 2008, compared
to $158 million during the fourth quarter and $646 million during the
twelve months ended December 31, 2007.
King's Meridian Auto-Injector business contributed revenue totaling $53
million during the fourth quarter of 2008 and $218 million for the
twelve months ended December 31, 2008, compared to $42 million during
the fourth quarter and $184 million during the twelve months ended
December 31, 2007.
Royalty revenues, derived primarily from ADENOSCAN(R)
(adenosine), totaled $18 million during the fourth quarter of 2008 and
$79 million for the year ended December 31, 2008.
The Company completed its acquisition of Alpharma on December 29, 2008
and the assets and liabilities acquired are included in King's
Consolidated Balance Sheet provided below for year-end 2008. However,
since Alpharma was acquired at the end of 2008, its financial results
from operations are excluded from King's Consolidated Statement of
Operations which is also provided below. The Company will discuss some
specific highlights of Alpharma's financial results for the fourth
quarter and full year 2008 during the conference call scheduled for
later today.
Webcast Information
King will conduct a webcast today which may include discussion of the
Company's marketed products, pipeline, strategy for growth, financial
results and expectations, and other matters relating to its business.
The Company will also discuss some specific highlights of Alpharma's
financial results for the fourth quarter and full year 2008. Interested
persons may listen to the webcast on Thursday, February 26, 2009, at
11:00 a.m., E.S.T., by clicking the following link to register and then
joining the live event with the same URL:
http://www.kingpharm.com/web_casts.asp
If you are unable to participate during the live event, the webcast will
be archived on King's web site at the same link for not less than 30
days after the webcast.
About Special Items
Under Generally Accepted Accounting Principles ("GAAP"), reported "net
earnings" and "diluted earnings per share" include special items. In
addition to the reported results determined in accordance with GAAP,
King provides its net earnings and diluted earnings per share results
for the quarters and twelve months ended December 31, 2008 and 2007,
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 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 reported financial results determined in
accordance with GAAP is provided below.
About King Pharmaceuticals, Inc.
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 and
technologies that complement the Company's focus in specialty-driven
markets, particularly neuroscience and hospital. King is also a leader
in the development, registration, manufacture and marketing of
pharmaceutical products for food producing animals.
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 synergies King expects
to capture from its Alpharma integration initiatives; statements
pertaining to the expected expense reductions associated with King's
restructuring initiatives; and statements pertaining to King's planned
webcast to discuss its fourth-quarter and year-end 2008 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 products; dependence on King's ability to successfully market its
products; dependence on King's ability to achieve the synergies expected
from its integration initiatives of Alpharma; dependence on King's
ability to successfully integrate its acquisitions; dependence on King's
ability to fully realize the benefit of its restructuring initiatives;
dependence on the Company's ability to continue to advance the
development of its pipeline products as planned; dependence on the high
cost and uncertainty of research, clinical trials, and other development
activities involving products in which King has an interest; dependence
on the unpredictability of the duration and results of the FDA's review
of Investigational New Drug applications ("IND"), NDAs, and Abbreviated
New Drug Applications ("ANDA") and/or the review of other regulatory
agencies worldwide that relate to those projects; 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
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 26, 2009;
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, 2007 and Form 10-Q for the quarter ended
September 30, 2008, which are on file with the U.S. Securities and
Exchange Commission. 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,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 940,212 $ 20,009
Investments in debt securities 6,441 1,344,980
Marketable securities 511 1,135
Accounts receivable, net 245,070 183,664
Inventories 258,303 110,308
Deferred income tax assets 89,513 100,138
Income tax receivable - 20,175
Prepaid expenses and other current assets 129,214 39,245
Total current assets 1,669,264 1,819,654
Property, plant and equipment, net 421,321 257,093
Intangible assets, net 934,219 780,974
Goodwill 450,548 129,150
Deferred income tax assets 303,722 343,700
Investments in debt securities 353,848 -
Other assets 124,774 96,251
Total assets $ 4,257,696 $ 3,426,822
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 140,908 $ 76,481
Accrued expenses 411,488 376,604
Income taxes payable 10,448 -
Short-term debt 5,230 -
Current portion of long-term debt 439,047 -
Total current liabilities 1,007,121 453,085
Long-term debt 963,222 400,000
Other liabilities 110,022 62,980
Total liabilities 2,080,365 916,065
Commitments and contingencies
Shareholders' equity:
Common shares no par value, 600,000,000 shares authorized,
246,487,232 and 245,937,709 shares issued and outstanding, 1,313,321 1,283,440
respectively
Retained earnings 892,297 1,225,360
Accumulated other comprehensive (loss) income (28,287 ) 1,957
Total shareholders' equity 2,177,331 2,510,757
Total liabilities and shareholders' equity $ 4,257,696 $ 3,426,822
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
REVENUES:
Total revenues $ 347,732 $ 533,272 $ 1,565,061 $ 2,136,882
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of depreciation, amortization and 93,454 109,424 385,936 458,514
impairments shown below
Excess purchase commitment 5,435 731 8,064 25,363
Contract termination - - - 3,845
Excess inventory reserve 825 21,634 825 78,812
Total cost of revenues 99,714 131,789 394,825 566,534
Selling, general and administrative, exclusive of co-promotion fees 101,587 125,567 413,402 509,168
Special legal and professional fees 266 1,412 (4,447 ) 2,135
Co-promotion fees 3,058 37,278 37,065 179,731
Total selling, general, and administrative expense 104,911 164,257 446,020 691,034
Depreciation and amortization 28,853 59,125 148,116 166,874
Accelerated depreciation 662 1,886 2,597 6,989
Research and development 31,648 44,910 116,823 149,425
Research and development - milestone payments 2,500 - 28,350 -
Research and development-In-process upon acquisition 593,000 32,010 598,500 35,310
Asset impairments 1,566 377 40,995 223,025
Acquisition related costs 1,382 - 1,382 -
Restructuring charges 5,428 49,444 7,098 70,178
Total operating costs and expenses 869,664 483,798 1,784,706 1,909,369
OPERATING (LOSS) INCOME (521,932 ) 49,474 (219,645 ) 227,513
OTHER (EXPENSE) INCOME:
Interest expense (2,473 ) (2,148 ) (7,943 ) (7,818 )
Interest income 5,970 14,030 36,970 42,491
Loss on investment (7,451 ) (1,138 ) (7,451 ) (11,591 )
Other, net (1,784 ) 904 (3,635 ) 223
Total other (expense) income (5,738 ) 11,648 17,941 23,305
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (527,670 ) 61,122 (201,704 ) 250,818
Income tax expense 20,797 18,290 131,359 67,600
(LOSS) INCOME FROM CONTINUING OPERATIONS (548,467 ) 42,832 (333,063 ) 183,218
DISCONTINUED OPERATIONS
Loss from discontinued operations - (18 ) - (369 )
Income tax benefit - (7 ) - (132 )
Total loss from discontinued operations - (11 ) - (237 )
NET (LOSS) INCOME $ (548,467 ) $ 42,821 $ (333,063 ) $ 182,981
Basic net (loss) income per common share $ (2.25 ) $ 0.18 $ (1.37 ) $ 0.75
Diluted net (loss) income per common share $ (2.25 ) $ 0.18 $ (1.37 ) $ 0.75
Shares used in basic net (loss) income per share 243,731 243,162 243,539 242,854
Shares used in diluted net (loss) income per share 243,731 244,091 243,539 244,129
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING SPECIAL ITEMS - NON GAAP
(in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
REVENUES:
Total revenues $ 347,732 $ 533,272 $ 1,565,061 $ 2,136,882
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of depreciation and amortization shown 93,454 109,424 385,936 458,514
below
Selling, general and administrative, exclusive of co-promotion fees 101,587 125,567 413,402 509,168
Co-promotion fees 3,058 37,278 37,065 179,731
Total selling, general, and administrative expense 104,645 162,845 450,467 688,899
Depreciation and amortization 28,853 59,125 148,116 166,874
Research and development 31,648 44,910 116,823 149,425
Research and development - milestone payments 2,500 - 28,350 -
Total operating costs and expenses 261,100 376,304 1,129,692 1,463,712
OPERATING INCOME 86,632 156,968 435,369 673,170
OTHER INCOME:
Interest expense (2,473 ) (2,148 ) (7,943 ) (7,818 )
Interest income 5,970 14,030 36,970 42,491
Other, net (1,784 ) 904 (3,635 ) 223
Total other income 1,713 12,786 25,392 34,896
INCOME BEFORE INCOME TAXES 88,345 169,754 460,761 708,066
Income tax expense 29,449 56,781 156,315 231,726
NET INCOME $ 58,896 $ 112,973 $ 304,446 $ 476,340
Basic net income per common share $ 0.24 $ 0.46 $ 1.25 $ 1.96
Diluted net income per common share $ 0.24 $ 0.46 $ 1.24 $ 1.95
Shares used in basic net income per share 243,731 243,162 243,539 242,854
Shares used in diluted net income per share 246,026 244,091 245,394 244,129
KING PHARMACEUTICALS, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share data)
(Unaudited)
The following tables reconcile Non-GAAP measures to amounts reported
under GAAP:
Three Months Ended December 31, 2008 Twelve Months Ended December 31,
2008
EPS EPS
Net income, excluding special items $ 58,896 $ 304,446
Diluted income per common share, excluding special items $ 0.24 $ 1.24
SPECIAL ITEMS:
Excess purchase commitment (cost of revenues) (5,435 ) (0.02 ) (8,064 ) (0.03 )
Excess inventory reserve (cost of revenues) (825 ) (0.00 ) (825 ) (0.00 )
Special legal and professional fees (selling, general, and (266 ) (0.00 ) 4,447 0.02
administrative)
Accelerated depreciation (other operating costs and expenses) (662 ) (0.00 ) (2,597 ) (0.01 )
Research and development-In-process upon acquisition (other (593,000 ) (2.43 ) (598,500 ) (2.46 )
operating costs and expenses)
Asset impairments (other operating costs and expenses) (1,566 ) (0.01 ) (40,995 ) (0.17 )
Acquisition related costs (other operating costs and expenses) (1,382 ) (0.01 ) (1,382 ) (0.01 )
Restructuring charges (other operating costs and expenses) (5,428 ) (0.02 ) (7,098 ) (0.03 )
Loss on investment (other (expense) income) (7,451 ) (0.03 ) (7,451 ) (0.03 )
Total special items before income taxes (616,015 ) (2.52 ) (662,465 ) (2.72 )
Income tax benefit from special items 8,652 0.03 24,956 0.11
Net loss $ (548,467 ) $ (333,063 )
Diluted loss per common share, as reported under GAAP $ (2.25 ) $ (1.37 )
Three Months Ended December 31, 2007 Twelve Months Ended December 31,
2007
EPS EPS
Net income, excluding special items $ 112,973 $ 476,340
Diluted income per common share, excluding special items $ 0.46 $ 1.95
SPECIAL ITEMS:
Excess purchase commitment (cost of revenues) (731 ) (0.00 ) (25,363 ) (0.10 )
Contract termination (cost of revenues) - - (3,845 ) (0.02 )
Excess inventory reserve (cost of revenues) (21,634 ) (0.09 ) (78,812 ) (0.32 )
Special legal and professional fees (selling, general, and (1,412 ) (0.01 ) (2,135 ) (0.01 )
administrative)
Accelerated depreciation (other operating costs and expenses) (1,886 ) (0.01 ) (6,989 ) (0.03 )
Research and development-In-process upon acquisition (other (32,010 ) (0.13 ) (35,310 ) (0.14 )
operating costs and expenses)
Asset impairments (other operating costs and expenses) (377 ) (0.00 ) (223,025 ) (0.91 )
Restructuring charges (other operating costs and expenses) (49,444 ) (0.20 ) (70,178 ) (0.29 )
Loss on investment (other (expense) income) (1,138 ) (0.00 ) (11,591 ) (0.05 )
Loss from discontinued operations (18 ) (0.00 ) (369 ) (0.00 )
Total special items before income taxes (108,650 ) (0.44 ) (457,617 ) (1.87 )
Income tax benefit from special items 38,498 0.16 164,258 0.67
Net income $ 42,821 $ 182,981
Diluted income per common share, as reported under GAAP $ 0.18 $ 0.75
KING PHARMACEUTICALS, INC.
SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE FOURTH QUARTERS ENDED DECEMBER 31, 2008 AND 2007
King recorded special items during the fourth quarter ended December
31, 2008, resulting in a net charge of $616 million, or $607 million
net of tax, primarily due to a $590 million charge for acquired
in-process research and development associated with King's
acquisition of Alpharma.
During the fourth quarter ended December 31, 2007, King recorded
special items resulting in a net charge of $109 million, or $70
million net of tax, primarily due to (i) a restructuring charge
totaling $49 million, (ii) a $32 million charge for acquired
in-process research and development associated with King's entry
into a strategic collaboration with Acura Pharmaceuticals to develop
and commercialize immediate release opioid products, and (iii)
charges of $22 million primarily related to the impaired value of
raw material inventory and related contracts associated with ALTACE(R).
KING PHARMACEUTICALS, INC.
SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
King recorded special items during the year ended December 31, 2008,
resulting in a net charge of $662 million, or $638 million net of
tax, primarily due to (i) a $590 million charge for acquired
in-process research and development associated with King's
acquisition of Alpharma and (ii) an intangible asset impairment
charge totaling $41 million primarily related to SYNERCID(R)
I.V. Injection.
During the year ended December 31, 2007, King recorded special items
resulting in a net charge of $458 million, or $293 million net of
tax, primarily due to (i) a charge totaling $146 million related to
the impaired value of the intangible assets associated with ALTACE(R),
(ii) charges totaling $104 million primarily related to the impaired
value of raw material inventory and related contracts associated
with ALTACE(R), (iii) a restructuring charge totaling $70
million, (iv) an impairment charge totaling $46 million related to
the Company's sale of its Rochester, Michigan sterile manufacturing
facility and certain legacy branded products, (v) a $35 million
charge for acquired in-process research and development primarily
associated with King's entry into a strategic collaboration with
Acura Pharmaceuticals to develop and commercialize immediate release
opioid products, and (vi) an impairment charge totaling $29 million
related to INTAL(R) and TILADE(R) as a result of
the Company's decision to no longer pursue the development of a new
formulation of INTAL(R) utilizing HFA as a propellant.
SOURCE: King Pharmaceuticals, Inc.
King Pharmaceuticals, Inc.
James E. Green, 423-989-8125
Executive Vice President, Corporate Affairs
or
David E. Robinson, 423-989-7045
Vice President, Investor Relations
For full details on King Pharmaceuticals Inc (KG) KG. King Pharmaceuticals Inc (KG) has Short Term PowerRatings at TradingMarkets. Details on King Pharmaceuticals Inc (KG) Short Term PowerRatings is available at This Link.
For full details on (ALO) ALO. (ALO) has Short Term PowerRatings at TradingMarkets. Details on (ALO) Short Term PowerRatings is available at This Link.
- King Pharmaceuticals Inc (KG) Corporate Event Announcement Notice - 02/09/10
- King Pharmaceuticals Appoints Two New Members to Its Board of Directors - 02/09/10
- King Launches Painbalance(R): Educational Initiative to Help Reduce the Burden of Pain - 02/03/10
- King Launches PainBalance(R): Educational Initiative to Help Reduce the Burden of Pain - 02/03/10
- Alston Ventures Inc. Closes Acquisition of Pembina/Cardium Assets Plus Appoints Jack Donhuysen to Advisory Board - 02/02/10
- More News >>
