Exhibit 99.1
PRESS RELEASE
Contact:
Jack Howarth, Vice President, Investor Relations
908-429-8350
Jack Howarth, Vice President, Investor Relations
908-429-8350
FOR IMMEDIATE RELEASE
KING PHARMACEUTICALS REPORTS SECOND-QUARTER 2010 FINANCIAL RESULTS
| • | remoxy® on track for fourth quarter 2010 resubmission | ||
| • | embeda® prescriptions continue to grow | ||
| • | flector® patch prescriptions rebound in june, highest monthly total since december | ||
| • | cash flow from operations $51 million, full year cash flow forecast of $300 million |
BRISTOL, TENNESSEE, August 9, 2010 — King Pharmaceuticals, Inc. (NYSE:KG) announced today that
total revenue for the second quarter ended June 30, 2010 equaled $371 million compared to $445
million in the second quarter of 2009. The Company reported net income of $18.0 million and
diluted earnings per share of $0.07 during the second quarter of 2010, compared to a net income of
$37.9 million and diluted earnings per share of $0.15 in the same period of the prior year.
Excluding certain special items and recurring non-GAAP adjustments, adjusted net earnings equaled
$43.1 million and adjusted diluted earnings per share equaled $0.17 during the second quarter ended
June 30, 2010, compared to adjusted net earnings of $79.9 million and adjusted diluted earnings per
share of $0.32 in the second quarter of 2009.
Brian A. Markison, Chairman, President and Chief Executive Officer of King, stated, “I’m pleased to
report that in the second quarter Embeda® prescriptions showed continued growth
while Flector® Patch prescriptions showed improvement. In June, Flector® recorded its highest number of
total prescriptions since December 2009, and it grew five percent sequentially over the first
quarter of this year.” He continued, “In addition to the progress we are making on the commercial
side of the business, our products in development continue to track well against our previously
stated timelines. Both Remoxy® and Acurox® remain on track for FDA
submission, with Remoxy® scheduled for the end of this year and Acurox®
scheduled for the first quarter of 2011. Finally, later this year we expect to begin enrollment in
the phase three safety and efficacy studies for Oxycodone NT, a product specifically designed to
resist certain common methods of misuse and abuse. We are very optimistic about the potential for
success of our development programs, and look forward to working closely with the Food and Drug
Administration toward approval of these novel and important formulations.”
Joseph Squicciarino, King’s Chief Financial Officer, commented, “Second quarter financial results
were in line with our revised expectations. The Company reported cash flow from operations of $51
million, and we continue to believe that we will be able to generate approximately $300 million for
the full year.” He continued, “King’s overall liquidity profile remains strong as evidenced by the
recent establishment of a new $500 million dollar, five year revolving credit facility. In
addition, we remain confident in our ability to deliver against our previously stated financial
guidance for 2010.”
Net revenue from branded pharmaceuticals totaled $162 million for the second quarter of 2010,
compared to $275 million for the same period of the prior year. Branded pharmaceuticals revenue for
the quarter did not include approximately $26 million in royalties recorded for the sales of an
authorized SKELAXIN® generic.
Net sales of SKELAXIN® (metaxalone) totaled $5 million during the second quarter of
2010, compared to $102 million for the same period of the prior year. Early in the second quarter
of 2010, two generic forms of SKELAXIN® were launched.
THROMBIN-JMI® (thrombin, topical, bovine, USP) net sales totaled $37 million during the
second quarter of 2010, compared to $49 million in the second quarter of 2009.
Net sales of AVINZA® (morphine sulfate extended release) totaled $25 million during the
second quarter of 2010, compared to $29 million in the second quarter of 2009.
Net sales of FLECTOR® PATCH (diclofenac epolamine topical patch) 1.3% totaled $35
million during the second quarter of 2010, compared to $39 million in the second quarter of 2009.
Net sales of EMBEDA® (morphine sulfate and naltrexone hydrochloride) Extended Release
Capsules totaled $15 million during the second quarter of 2010, up $6 million sequentially from the
first quarter of 2010. Wholesaler inventory levels now stand at approximately 3 weeks.
King’s Meridian Auto-Injector business contributed revenue totaling $83 million during the second
quarter of 2010, compared to $72 million in the second quarter of 2009. The increase was primarily
due to price increases, higher unit sales and royalties from the next generation EpiPen®
auto-injector partially offset by lower sales to government agencies.
Net revenue from the Alpharma Animal Health business totaled $85 million during the second quarter
of 2010, compared to $83 million in the second quarter of 2009.
As of June 30, 2010, the Company’s cash and cash equivalents totaled approximately $573 million.
Conference Call and Web Cast Information
King management will conduct a conference call at 11:00 am ET today. This call 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 call will be open to all interested
parties and may be accessed by using the following information:
Conference Call Access
Domestic Dial In: (866) 393-6640
International Dial In: (706) 643-2643
Domestic Dial In: (866) 393-6640
International Dial In: (706) 643-2643
Participants will be required to provide a passcode before being joined to the conference. The
event passcode is 89476496. Interested parties may also listen to the web cast by clicking the
following link to register and then joining the live event with the same URL:
http://www.kingpharm.com/Investors/Webcasts.cfm
If you are unable to participate during the live event, the replay number is 800-642-1687, or
706-645-9291 if you are calling from outside the USA. The replay code is 89476496. The web cast of
our call on August 9th will be archived on King’s web site, accessible through the link above, for
not less than 14 days.
About Adjusted Financial Results
In addition to financial results determined in accordance with Generally Accepted Accounting
Principles (“GAAP”), King provides adjusted net earnings and adjusted diluted earnings per share
results. These non-GAAP financial measures exclude the effect of amortization of intangible assets
and non-cash imputed interest expense associated with the Company’s $400 million 11/4% Convertible
Senior Notes, as well as special items. Special items 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, and 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 and gains and losses resulting from the
divestiture of assets. King believes that providing adjusted financial results 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 exclude an item from adjusted financial
results involves judgments by King’s management. A reconciliation of adjusted financial results 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’s wholly owned subsidiary, Alpharma, LLC, 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 Company’s plans
to resubmit to the Food and Drug Administration (“FDA”) the New Drug Application (“NDA”) for
Remoxy®; the Company’s plans to submit to the FDA an NDA for Acurox® ; the
Company’s forecast for 2010 cash flow from operations and the accomplishment of other financial
goals; the timing of clinical studies and the potential outcomes of product development programs;
the Company’s plans for interaction with the FDA; and statements pertaining to King’s planned
webcast to discuss its second quarter 2010 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: the future net sales of King’s products;
King’s ability to market its products successfully; King’s ability to advance the development of
products as planned; the high cost and uncertainty of research, clinical trials, and other
development activities involving products in which King has an interest; the unpredictability of
the FDA’s review and approval processes, including the unpredictability of the duration and results
of the FDA’s review of Investigational New Drug Applications, NDAs, and Abbreviated New Drug
Applications, as well as reviews by other regulatory agencies worldwide; the availability and cost
of raw materials; any material interruptions in supply by contract manufacturers of King’s products
or suppliers or raw materials; the potential effects on sales of the Company’s products as a
result of the availability of competing products; the potential effects of future acquisitions and
other transactions pursuant to the Company’s growth strategy, and the integration of any
acquisitions; King’s compliance with FDA and other government regulations that relate to the
Company’s business; King’s ability to conduct its webcast as currently planned on August 9, 2010;
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,
2009, and the Company’s form 10-Q for the quarter ended March 31, 2010, 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.
# # #
EXECUTIVE OFFICES
KING PHARMACEUTICALS, INC.
501 FIFTH STREET, BRISTOL, TENNESSEE 37620
KING PHARMACEUTICALS, INC.
501 FIFTH STREET, BRISTOL, TENNESSEE 37620
KING PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 573,062 | $ | 545,312 | ||||
Investments in debt securities |
16,346 | 29,258 | ||||||
Marketable securities |
1,022 | 2,100 | ||||||
Accounts receivable, net |
209,585 | 210,256 | ||||||
Inventories |
195,614 | 182,291 | ||||||
Deferred income tax assets |
72,494 | 83,675 | ||||||
Income taxes receivable |
13,341 | 16,091 | ||||||
Prepaid expenses and other current assets |
29,323 | 60,860 | ||||||
Total current assets |
1,110,787 | 1,129,843 | ||||||
Property, plant and equipment, net |
377,298 | 391,839 | ||||||
Intangible assets, net |
719,862 | 794,139 | ||||||
Goodwill |
466,283 | 467,613 | ||||||
Deferred income tax assets |
259,579 | 264,162 | ||||||
Investments in debt securities |
169,777 | 218,608 | ||||||
Other assets |
58,748 | 56,496 | ||||||
Assets held for sale |
5,890 | 5,890 | ||||||
Total assets |
$ | 3,168,224 | $ | 3,328,590 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 74,176 | $ | 86,692 | ||||
Accrued expenses |
228,747 | 320,992 | ||||||
Short-term debt |
3,506 | 3,662 | ||||||
Current portion of long-term debt |
— | 85,550 | ||||||
Total current liabilities |
306,429 | 496,896 | ||||||
Long-term debt |
341,735 | 339,016 | ||||||
Other liabilities |
126,604 | 123,371 | ||||||
Total liabilities |
774,768 | 959,283 | ||||||
Commitments and contingencies |
||||||||
Shareholders’ equity: |
||||||||
Common shares no par value, 600,000,000 shares authorized,
249,664,513 and 248,444,711 shares issued and outstanding, respectively |
1,433,533 | 1,421,489 | ||||||
Retained earnings |
986,077 | 963,620 | ||||||
Accumulated other comprehensive loss |
(26,154 | ) | (15,802 | ) | ||||
Total shareholders’ equity |
2,393,456 | 2,369,307 | ||||||
Total liabilities and shareholders’ equity |
$ | 3,168,224 | $ | 3,328,590 | ||||
(more)
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
REVENUES: |
||||||||||||||||
Total revenues |
$ | 370,903 | $ | 444,988 | $ | 751,758 | $ | 874,045 | ||||||||
OPERATING COSTS AND EXPENSES: |
||||||||||||||||
Cost of revenues , exclusive of depreciation and amortization shown below |
119,027 | 140,034 | 246,081 | 269,448 | ||||||||||||
Acquisition related inventory step-up |
— | 16,059 | — | 37,584 | ||||||||||||
Total cost of revenues |
119,027 | 156,093 | 246,081 | 307,032 | ||||||||||||
Selling, general and administrative |
129,979 | 120,631 | 268,804 | 259,165 | ||||||||||||
Litigation settlement |
1,850 | — | 3,500 | — | ||||||||||||
Acquisiton related costs |
— | 2,944 | — | 6,733 | ||||||||||||
Total selling, general, and administrative expenses |
131,829 | 123,575 | 272,304 | 265,898 | ||||||||||||
Depreciation |
15,690 | 14,422 | 31,528 | 28,621 | ||||||||||||
Intangible amortization |
38,213 | 38,149 | 79,650 | 76,327 | ||||||||||||
Accelerated depreciation |
— | 291 | — | 1,263 | ||||||||||||
Research and development |
33,174 | 21,202 | 61,498 | 48,458 | ||||||||||||
Restructuring charges |
4,852 | 1,475 | 5,114 | 49,525 | ||||||||||||
Total operating costs and expenses |
342,785 | 355,207 | 696,175 | 777,124 | ||||||||||||
OPERATING INCOME |
28,118 | 89,781 | 55,583 | 96,921 | ||||||||||||
OTHER INCOME (EXPENSE): |
||||||||||||||||
Interest expense |
(2,722 | ) | (23,160 | ) | (6,785 | ) | (41,909 | ) | ||||||||
Noncash convertible debt interest expense |
(4,757 | ) | (4,432 | ) | (9,430 | ) | (8,786 | ) | ||||||||
Interest income |
487 | 1,506 | 896 | 4,294 | ||||||||||||
Gain on Kadian |
12,500 | — | 12,500 | — | ||||||||||||
Gain (loss) on investment |
249 | (524 | ) | (623 | ) | (1,347 | ) | |||||||||
Loss on early extinguishment of debt |
(2,252 | ) | — | (2,252 | ) | — | ||||||||||
Other, net |
(1,753 | ) | 4,112 | (1,956 | ) | 1,333 | ||||||||||
Total other income (expense) |
1,752 | (22,498 | ) | (7,650 | ) | (46,415 | ) | |||||||||
INCOME BEFORE INCOME TAXES |
29,870 | 67,283 | 47,933 | 50,506 | ||||||||||||
Income tax expense |
11,882 | 29,348 | 25,476 | 23,293 | ||||||||||||
NET INCOME |
$ | 17,988 | $ | 37,935 | $ | 22,457 | $ | 27,213 | ||||||||
Basic net income per common share |
$ | 0.07 | $ | 0.16 | $ | 0.09 | $ | 0.11 | ||||||||
Diluted net income per common share |
$ | 0.07 | $ | 0.15 | $ | 0.09 | $ | 0.11 | ||||||||
Shares used in basic net income per share |
245,787 | 244,693 | 245,496 | 244,291 | ||||||||||||
Shares used in diluted net income per share |
249,375 | 247,207 | 249,621 | 246,922 | ||||||||||||
(more)
KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING NON-GAAP ITEMS
(in thousands, except per share data)
(Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING NON-GAAP ITEMS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
REVENUES: |
||||||||||||||||
Total revenues |
$ | 370,903 | $ | 444,988 | $ | 751,758 | $ | 874,045 | ||||||||
OPERATING COSTS AND EXPENSES: |
||||||||||||||||
Cost of revenues, exclusive of depreciation shown below |
119,027 | 140,034 | 246,081 | 269,448 | ||||||||||||
Selling, general and administrative |
129,979 | 120,631 | 268,804 | 259,165 | ||||||||||||
Depreciation |
15,690 | 14,422 | 31,528 | 28,621 | ||||||||||||
Research and development |
33,174 | 21,202 | 61,498 | 48,458 | ||||||||||||
Total operating costs and expenses |
297,870 | 296,289 | 607,911 | 605,692 | ||||||||||||
OPERATING INCOME |
73,033 | 148,699 | 143,847 | 268,353 | ||||||||||||
OTHER EXPENSE: |
||||||||||||||||
Interest expense |
(2,722 | ) | (23,160 | ) | (6,785 | ) | (41,909 | ) | ||||||||
Interest income |
487 | 1,506 | 896 | 4,294 | ||||||||||||
Other, net |
(1,753 | ) | 4,112 | (1,956 | ) | 1,333 | ||||||||||
Total other expense |
(3,988 | ) | (17,542 | ) | (7,845 | ) | (36,282 | ) | ||||||||
INCOME BEFORE INCOME TAXES |
69,045 | 131,157 | 136,002 | 232,071 | ||||||||||||
Income tax expense |
25,995 | 51,284 | 57,274 | 88,186 | ||||||||||||
NET INCOME |
$ | 43,050 | $ | 79,873 | $ | 78,728 | $ | 143,885 | ||||||||
Basic net income per common share |
$ | 0.18 | $ | 0.33 | $ | 0.32 | $ | 0.59 | ||||||||
Diluted net income per common share |
$ | 0.17 | $ | 0.32 | $ | 0.32 | $ | 0.58 | ||||||||
Shares used in basic net income per share |
245,787 | 244,693 | 245,496 | 244,291 | ||||||||||||
Shares used in diluted net income per share |
249,375 | 247,207 | 249,621 | 246,922 | ||||||||||||
(more)
KING PHARMACEUTICALS, INC.
RECONCILIATION OF NON-GAAP ITEMS
(in thousands, except per share data)
(Unaudited)
RECONCILIATION OF NON-GAAP ITEMS
(in thousands, except per share data)
(Unaudited)
The following tables reconcile Non-GAAP items to amounts reported under GAAP:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Diluted income per common share, as reported under GAAP |
$ | 0.07 | $ | 0.15 | $ | 0.09 | $ | 0.11 | ||||||||
Effect of non-GAAP items |
0.10 | 0.17 | 0.23 | 0.47 | ||||||||||||
Diluted income per common share, excluding non-GAAP items |
$ | 0.17 | $ | 0.32 | $ | 0.32 | $ | 0.58 | ||||||||
NON-GAAP ITEMS: |
||||||||||||||||
Acquisition related inventory step-up (cost of revenues) |
$ | — | $ | 16,059 | $ | — | $ | 37,584 | ||||||||
Litigation settlement (selling, general, and administrative) |
1,850 | — | 3,500 | — | ||||||||||||
Acquisition related costs (selling, general, and administrative) |
— | 2,944 | — | 6,733 | ||||||||||||
Intangible amortization (other operating costs and expenses) |
38,213 | 38,149 | 79,650 | 76,327 | ||||||||||||
Accelerated depreciation (other operating costs and expenses) |
— | 291 | — | 1,263 | ||||||||||||
Restructuring charges (other operating costs and expenses) |
4,852 | 1,475 | 5,114 | 49,525 | ||||||||||||
Noncash convertible debt interest expense (other income (expense)) |
4,757 | 4,432 | 9,430 | 8,786 | ||||||||||||
Gain on Kadian (other income (expense)) |
(12,500 | ) | — | (12,500 | ) | — | ||||||||||
Gain (loss) on investment (other income (expense)) |
(249 | ) | 524 | 623 | 1,347 | |||||||||||
Loss on early extinguishment of debt (other income (expense)) |
2,252 | — | 2,252 | — | ||||||||||||
Total non-GAAP items before income taxes |
39,175 | 63,874 | 88,069 | 181,565 | ||||||||||||
Income tax benefit from non-GAAP items |
(14,113 | ) | (21,936 | ) | (31,798 | ) | (64,893 | ) | ||||||||
Increase in net income |
$ | 25,062 | $ | 41,938 | $ | 56,271 | $ | 116,672 | ||||||||
Effect of non-GAAP items on diluted income per common share |
$ | 0.10 | $ | 0.17 | $ | 0.23 | $ | 0.47 | ||||||||