King Pharmaceuticals Reports Year-end and Fourth-quarter 2008 Financial Results
February 26, 2009
Document related to this release.
2008 Highlights Include Acquisition of Alpharma and Submission of Four New Drug Applications to the FDA
BRISTOL, TENNESSEE, February 26, 2009 – 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® (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® (ramipril).
Net sales of SKELAXIN® 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® (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® during 2008 were affected by a higher level of discounting due to increased competition.
Net sales of AVINZA® (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® on February 26, 2007.
LEVOXYL® (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® 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® (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.
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Contacts:
Jack Howarth, Vice President, Investor Relations
908-429-8350
Executive Offices:
King Pharmaceuticals
501 Fifth Street
Bristol, Tennessee 37620
