King Pharmaceuticals 8-K King Pharmaceuticals Reports Year-end and Fourth-quarter 2006 Financial Results

EXHIBIT 99.1	PRESS RELEASE
	Contacts:
	James E. Green, Executive Vice President, Corporate Affairs
	423-989-8125
	David E. Robinson, Senior Director, Corporate Affairs
	423-989-7045

FOR IMMEDIATE RELEASE

KING PHARMACEUTICALS REPORTS
YEAR-END AND FOURTH-QUARTER 2006 FINANCIAL RESULTS

BRISTOL, TENNESSEE, February 28, 2007 — King Pharmaceuticals, Inc. (NYSE:KG) announced today that total revenues increased 12% to a record high $1.99 billion during the year ended December 31, 2006, compared to $1.77 billion for 2005. Reported net income equaled $289 million and diluted earnings per share equaled $1.19 during the year ended December 31, 2006, compared to net income of $118 million and diluted earnings per share of $0.49 during the prior year. Excluding special items, net earnings increased to $423 million and diluted earnings per share increased to $1.74 for the twelve months ended December 31, 2006, from net earnings of $400 million and diluted earnings per share of $1.66 in 2005. Net income and diluted earnings per share, as reported and excluding special items, also achieved record highs in 2006.

For the fourth quarter ended December 31, 2006, total revenues increased 21% to $513 million compared to $423 million in the fourth quarter of 2005. Reported net income equaled $37 million and diluted income per share equaled $0.15 during the fourth quarter of 2006, compared to a net loss of $95 million and diluted loss per share of $0.39 in the same period of the prior year. Excluding special items, net earnings equaled $99 million and diluted earnings per share equaled $0.41 during the fourth quarter ended December 31, 2006, compared to net earnings of $92 million and diluted earnings per share of $0.38 in the fourth quarter of 2005.

Brian A. Markison, President and Chief Executive Officer of King, stated, “During 2006, King Pharmaceuticals achieved many important accomplishments which we believe are representative of the successful execution of our strategy for growth. Most notably, we continued to maximize the value of our existing products as evidenced by our record high total revenues of $1.99 billion. We also successfully focused our resources and talents on strengthening our product portfolio, particularly through our acquisition of AVINZA^® (morphine sulfate extended release), a true once-a-day formulation of morphine.” Mr. Markison continued, “More recently, we expanded our THROMBIN-JMI^® (thrombin, topical, bovine, USP) franchise with our acquisition of an exclusive license to Vascular Solutions’ hemostatic products, enabling King to offer physicians an even wider array of means to administer our topical hemostatic agent.”

Mr. Markison added, “2006 was a productive year for our R&D organization. As previously announced, Dr. Eric Carter joined the Company as Chief Science Officer and we look forward to his leadership as we continue to advance our portfolio of compounds in development.”

King’s Phase III products are led by REMOXY™, an abuse-deterrent formulation of long-acting oxycodone, which the Company is developing with Pain Therapeutics, Inc. Other Phase III products include our ramipril/hydrochlorothiazide combination product, VANQUIX^®, a diazepam-filled auto-injector for breakthrough epileptic seizures, and binodenoson, the

Company’s second generation cardiac stress imaging agent. King’s Phase II compounds include bremelanotide, a treatment for sexual dysfunction in both men and women, which is the subject of the Company’s collaboration with Palatin Technologies, Inc. and MRE-0094, a wound healing agent for the treatment of diabetic foot ulcers. The Company is also developing T-62, a potential major advance in the treatment of neuropathic pain, which is expected to enter Phase II clinical trials during the first half of this year.

As of December 31, 2006, the Company’s cash and cash equivalents and investments in debt securities totaled approximately $1.0 billion. During the fourth quarter of 2006 and for the year ended December 31, 2006, the Company generated cash flow from operations of approximately $168 million and $466 million, respectively.

Joseph Squicciarino, King’s Chief Financial Officer, stated, “Our 2006 accomplishments provide us with a solid foundation for the coming year. In 2007, we will continue to prudently invest in research and development and focus our business development initiatives on expanding our development pipeline, as we work to add value for our shareholders. Accordingly, we plan to invest more in research and development this year than we did in 2006.”

Net revenue from branded pharmaceuticals totaled $455 million for the fourth quarter of 2006, a 25% increase from the fourth quarter of 2005, and equaled $1.7 billion for the year ended December 31, 2006, a 12% increase from $1.5 billion during the prior year.

ALTACE^® (ramipril) net sales totaled $181 million during the fourth quarter and $653 million for the year ended December 31, 2006, compared to $150 million during the fourth quarter and $554 million during the twelve months ended December 31, 2005.

Net sales of SKELAXIN^â (metaxalone) totaled $113 million during the fourth quarter and $415 million for the year ended December 31, 2006, compared to $70 million during the fourth quarter and $345 million during the twelve months ended December 31, 2005.

THROMBIN-JMI^Ò net sales totaled $56 million during the fourth quarter and $247 million for the year ended December 31, 2006, compared to $51 million during the fourth quarter and $221 million during the twelve months ended December 31, 2005.

Net sales of SONATA^â (zaleplon) totaled $22 million during the fourth quarter and $86 million for the year ended December 31, 2006, compared to $25 million during the fourth quarter and $83 million during the twelve months ended December 31, 2005.

LEVOXYL^Ò (levothyroxine sodium tablets, USP) net sales totaled $27 million during the fourth quarter and $112 million for the year ended December 31, 2006, compared to $22 million during the fourth quarter and $140 million during the twelve months ended December 31, 2005.

Wholesale inventories of King’s key branded products were all below one month as of December 31, 2006.

King’s Meridian Medical Technologies business contributed revenue totaling $32 million during the fourth quarter of 2006 and $165 million for the twelve months ended December 31, 2006, compared to $32 million during the fourth quarter and $129 million during the twelve months ended December 31, 2005.

Royalty revenues, derived primarily from ADENOSCAN^Ò (adenosine), totaled $20 million during the fourth quarter of 2006 and $80 million for the year ended December 31, 2006. For the fourth quarter and twelve months ended December 31, 2006, net revenue from contract manufacturing equaled $3 million and $17 million, respectively.

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. Interested persons may listen to the webcast on Wednesday, February 28, 2007, 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 14 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, 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 reported 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 expected advances in the Company’s development pipeline, including advances with respect to the development of T-62; statements pertaining to the Company’s expected investment in research and development for 2007; statements pertaining to the Company’s business development initiatives; statements pertaining to the Company’s planned use of cash; and statements pertaining to the Company’s planned webcast to discuss its fourth quarter and year-end 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 continue to acquire branded products, including products in development; 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 King’s ability to successfully integrate its acquisitions; 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 pharmaceutical products in which King has an interest; 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 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 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 whether King incurs research and development expenses as planned; 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, 2007; 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, 2005 and Form 10-Q for the quarter ended September 30, 2006, 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,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	113,777		$	30,014
Investments in debt securities		890,185			494,663
Restricted cash		—			130,400
Accounts receivable, net		265,467			223,581
Inventories		215,458			228,063
Deferred income tax assets		81,991			81,777
Prepaid expenses and other current assets		106,595			59,291
Total current assets		1,673,473			1,247,789
Property, plant and equipment, net		307,036			302,474
Intangible assets, net		851,391			967,194
Goodwill		121,152			121,152
Deferred income tax assets		271,554			231,032
Marketable securities		11,578			18,502
Other assets		93,347			77,099
Total assets	$	3,329,531		$	2,965,242
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	77,158		$	84,539
Accrued expenses		510,137			519,620
Income taxes payable		30,501			22,301
Current portion of long-term debt		—			345,000
Total current liabilities		617,796			971,460
Long-term debt		400,000			—
Other liabilities		23,129			20,360
Total liabilities		1,040,925			991,820
Commitments and contingencies
Shareholders’ equity:
Common shares no par value, 600,000,000 shares authorized, 243,151,223 and 242,493,416 shares issued and outstanding, respectively		1,244,986			1,213,482
Retained earnings		1,043,902			754,953
Accumulated other comprehensive income		(282	)		4,987
Total shareholders’ equity		2,288,606			1,973,422
Total liabilities and shareholders’ equity	$	3,329,531		$	2,965,242

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KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
REVENUES:
Total revenues	$	512,914		$	423,285		$	1,988,500		$	1,772,881
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of depreciation, amortization and impairments shown below		113,883			74,305			419,808			331,564
Excess purchase commitment		—			(4,527	)		—			(6,109	)
Writeoff of acquisition related inventory step-up/recall		—			(2,470	)		—			(2,470	)
Total cost of revenues		113,883			67,308			419,808			322,985
Selling, general and administrative, exclusive of co-promotion fees		130,465			97,029			450,982			389,672
Special legal and professional fees		1,142			6,511			105			19,779
Arbitration settlement		45,128			—			45,128			—
Mylan transaction costs		—			—			—			3,898
Co-promotion fees		55,135			60,546			217,750			223,134
Total selling, general, and administrative expense		231,870			164,086			713,965			636,483
Depreciation and amortization		35,318			34,351			144,591			147,049
Accelerated depreciation		1,486			—			2,958			—
Research and development		40,665			20,994			143,596			74,015
Research and development-In-process upon acquisition		—			188,711			110,000			188,711
Intangible asset impairment		47,563			94,131			47,842			221,054
Restructuring charges		—			1,577			3,194			4,180
Gain on sale of products		—			(217	)		—			(1,675	)
Total operating costs and expenses		470,785			570,941			1,585,954			1,592,802
OPERATING INCOME (LOSS)		42,129			(147,656	)		402,546			180,079
OTHER INCOME (EXPENSE):
Interest expense		(1,932	)		(3,055	)		(9,857	)		(11,931	)
Interest income		9,310			6,712			32,152			18,175
Loss on investment		—			—			—			(6,182	)
(Loss) gain on early extinguishment of debt		(70	)		—			628			—
Other, net		(544	)		21			(1,157	)		(2,026	)
Total other income (expense)		6,764			3,678			21,766			(1,964	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		48,893			(143,978	)		424,312			178,115
Income tax expense (benefit)		11,799			(49,817	)		135,730			61,485
INCOME (LOSS) FROM CONTINUING OPERATIONS		37,094			(94,161	)		288,582			116,630
DISCONTINUED OPERATIONS:
(Loss) income from discontinued operations		(203	)		(731	)		572			1,876
Income tax (benefit) expense		(73	)		(316	)		205			673
Total (loss) income from discontinued operations		(130	)		(415	)		367			1,203
NET INCOME (LOSS)	$	36,964		$	(94,576	)	$	288,949		$	117,833
Basic net income (loss) per common share	$	0.15		$	(0.39	)	$	1.19		$	0.49
Diluted net income (loss) per common share	$	0.15		$	(0.39	)	$	1.19		$	0.49
Shares used in basic net income (loss) per share		242,298			241,794			242,196			241,751
Shares used in diluted net income (loss) per share		243,062			241,794			242,799			241,903

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KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF INCOME
EXCLUDING SPECIAL ITEMS — NON GAAP
(in thousands, except per share data)
(Unaudited)

	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
	2006			2005				2006			2005
REVENUES:
Total revenues	$	512,914		$	423,285			$	1,988,500		$	1,772,881
OPERATING COSTS AND EXPENSES:							��
Cost of revenues , exclusive of depreciation and amortization shown below		113,883			74,305				419,808			331,564
Selling, general and administrative, exclusive of co-promotion fees		130,465			97,029				450,982			389,672
Co-promotion fees		55,135			60,546				217,750			223,134
Total selling, general, and administrative expense		185,600			157,575				668,732			612,806
Depreciation and amortization		35,318			34,351				144,591			147,049
Research and development		40,665			20,994				143,596			74,015
Total operating costs and expenses		375,466			287,225				1,376,727			1,165,434
OPERATING INCOME		137,448			136,060				611,773			607,447
OTHER INCOME (EXPENSE):
Interest expense		(1,932	)		(3,055	)			(9,857	)		(11,931	)
Interest income		9,310			6,712				32,152			18,175
Other, net		(544	)		21				(1,157	)		(2,026	)
Total other income		6,834			3,678				21,138			4,218
INCOME BEFORE INCOME TAXES		144,282			139,738				632,911			611,665
Income tax expense		45,532			47,419				210,222			211,186
NET INCOME	$	98,750		$	92,319			$	422,689		$	400,479
Basic net income per common share	$	0.41		$	0.38			$	1.75		$	1.66
Diluted net income per common share	$	0.41		$	0.38			$	1.74		$	1.66
Shares used in basic net income per share		242,298			241,794				242,196			241,751
Shares used in diluted net income per share		243,062			242,121				242,799			241,903

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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, 2006						Twelve Months Ending December 31, 2006
				EPS						EPS
Net income, excluding special items	$	98,750					$	422,689
Diluted income per common share, excluding special items				$	0.41					$	1.74
SPECIAL ITEMS:
Special legal and professional fees (selling, general, and administrative)		(1,142	)		(0.00	)		(105	)		(0.00	)
Arbitration settlement (selling, general, and administrative)		(45,128	)		(0.19	)		(45,128	)		(0.19	)
Accelerated depreciation (other operating costs and expenses)		(1,486	)		(0.01	)		(2,958	)		(0.01	)
Research and development -In-process upon acquisition (other operating costs and expenses)		—			—			(110,000	)		(0.45	)
Intangible asset impairment (other operating costs and expenses)		(47,563	)		(0.20	)		(47,842	)		(0.20	)
Restructuring charges (other operating costs and expenses)		—			—			(3,194	)		(0.01	)
(Loss) gain on early extinguishment of debt (other income (expense))		(70	)		(0.00	)		628			0.00
(Loss) income from discontinued operations		(203	)		(0.00	)		572			0.00
Total special items before income taxes		(95,592	)		(0.40	)		(208,027	)		(0.86	)
Income tax benefit from special items		33,806			0.14			74,287			0.31
Net income	$	36,964					$	288,949
Diluted income per common share, as reported under GAAP				$	0.15					$	1.19

	Three Months Ended December 31, 2005						Twelve Months Ending 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	)
Research and development -In-process upon acquisition (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
Total special items before income taxes		(284,447	)		(1.17	)		(431,674	)		(1.78	)
Income tax benefit from special items		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

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KING PHARMACEUTICALS, INC.

SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE FOURTH QUARTERS ENDED DECEMBER 31, 2006 AND 2005

King recorded special items during the fourth quarter ended December 31, 2006, resulting in a net charge of $96 million, or $62 million net of tax, primarily due to (i) an intangible asset impairment charge totaling $48 million related to Intal^® and Tilade^®, and (ii) a $45 million charge for an arbitration award liability arising from the Company’s termination of a Sonata^® development agreement.

During the fourth quarter ended December 31, 2005, King recorded special items resulting in a net charge of $284 million, or $187 million net of tax, primarily due to (i) a $189 million charge for acquired in-process research and development associated with King’s entry into a strategic collaboration with Pain Therapeutics, Inc. regarding Remoxy™ and up to three additional abuse-deterrent opioid painkillers, and (ii) intangible asset impairment charges totaling $94 million primarily related to Sonata^® and Corzide^®.

KING PHARMACEUTICALS, INC.
SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

King recorded special items during the year ended December 31, 2006, resulting in a net charge of $208 million, or $134 million net of tax, primarily due to (i) a $110 million charge for 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 ramipril, (ii) an intangible asset impairment charge totaling $48 million related to Intal^® and Tilade^®, and (iii) a $45 million charge for an arbitration award liability arising from the Company’s termination of a Sonata^® development agreement.

During the year ended December 31, 2005, King recorded special items resulting in a net charge of $432 million, or $283 million net of tax, primarily due to (i) intangible asset impairment charges totaling $221 million primarily related to Sonata^® and Corzide^®, (ii) a $189 million charge for acquired in-process research and development associated with King’s entry into a strategic collaboration with Pain Therapeutics, Inc. regarding Remoxy™ and up to three additional abuse-deterrent opioid painkillers, and (iii) a charge of $20 million primarily related to professional fees associated with government inquiries and private plaintiff securities litigation.

EXECUTIVE OFFICES

KING PHARMACEUTICALS, INC.
501 FIFTH STREET, BRISTOL, TENNESSEE 37620