EXHIBIT 99.1
N E W S R E L E A S E
(KING PHARMACEUTICALS LOGO)
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
KING PHARMACEUTICALS REPORTS
PRELIMINARY THIRD-QUARTER 2004 FINANCIAL RESULTS
BRISTOL, TENNESSEE, October 28, 2004 - King Pharmaceuticals, Inc. (NYSE:KG)
today announced the following preliminary financial results for the third
quarter ending September 30, 2004. Total revenues equaled $353.5 million during
the third quarter ending September 30, 2004, a 28% increase in comparison to
$275.1 million during the second quarter ending June 30, 2004 and a 22% increase
in comparison to $290.6 million during the first quarter ending March 31, 2004.
Brian M. Markison, President and Chief Executive Officer of King, stated, "We
are very pleased with our preliminary financial results during the third quarter
of 2004. Net sales of our branded pharmaceutical products during the third
quarter ending September 30, 2004 increased significantly in comparison to that
which we reported during the first two quarters of 2004. Accordingly, net sales
of our branded pharmaceutical products during the third quarter of 2004 more
closely reflect prescription demand. This improvement is a direct result of the
successful implementation of our inventory management agreements with key
customers earlier this year. As we go forward we believe our inventory
management agreements should enable us to achieve financial results that even
more closely reflect demand-based sales of our products and, as a result,
provide a higher degree of predictability for our shareholders."
As of September 30, 2004, four of King's key branded pharmaceutical products,
Altace(R) (ramipril), Skelaxin(R) (metaxalone), Levoxyl(R) (levothyroxine sodium
tablets, USP) and Sonata(R) (zaleplon), had an average wholesale inventory level
of approximately 2.1 months of prescription demand based on data obtained
through the Company's inventory management agreements and IMS America
prescription data, a decrease from an average level of approximately 2.4 months
of prescription demand as of the end of the second quarter of 2004.
Mr. Markison also noted, "During the third quarter of 2004 we continued to
successfully execute our strategies for future long-term growth by expanding our
product pipeline through a strategic alliance with Palatin Technologies, Inc. to
jointly develop, obtain regulatory approvals for, and commercialize Palatin's
PT-141 for the treatment of male and potentially female sexual dysfunction. We
believe the unique mechanism of action of PT-141 may offer important benefits
over currently available products and satisfy the unmet medical needs of
patients in this vast market."
James R. Lattanzi, Chief Financial Officer of King, emphasized, "Our financial
results during the third quarter of 2004 produced impressive cash flows from
operations totaling approximately $140.0 million. Accordingly, King's cash, cash
equivalents, and marketable securities, which do not include restricted cash,
totaled $248.2 million as of September 30, 2004." Mr. Lattanzi added, "In
connection with the successful implementation of our inventory management
agreements, we have experienced a high level of product returns. Considering
this high level of returns, we have determined that a thorough evaluation of our
returns reserve is prudent before we formally close the third quarter of 2004.
Accordingly, the financial results that we are reporting today are preliminary
and subject to the results of the Company's ongoing evaluation of its returns
reserve. We plan to complete this process promptly. Moreover, we believe the
Company has established an acceptable level of inventory for our products at
this time, which
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has already led to a more normal level of product returns. With these things in
mind, we believe King is fundamentally well positioned for growth with an
acceptable level of inventory in the channel and continued strong cash flow."
The Company is now considering whether any of its returns reserve accrued during
the first nine months of 2004 should have been recognized in years prior to 2004
and, if so, the relevant amounts and the materiality of those amounts. If
material, such amounts would likely result in a restatement of previously issued
financial statements and revisions of the preliminary financial results for the
third quarter and first nine months of 2004 discussed herein. Under the
Company's merger agreement with Mylan, it is a condition to Mylan's obligation
to consummate the merger that no restatement of any of the Company's financial
statements shall have occurred, and no restatement of any of the Company's
financial statements shall be reasonably likely to occur. These issues involve
the proper application of generally accepted accounting principles to King's
reserve estimates and are unrelated to the ongoing investigations of the Company
by the U.S. Securities and Exchange Commission ("SEC") and the Office of the
Inspector General ("OIG") of the Department of Health and Human Services.
Notwithstanding these issues, King has a high degree of confidence that its
ending returns reserve balance as of September 30, 2004 is fairly stated based
on the Company's ongoing review and data provided by its customers pursuant to
inventory management agreements.
As stated above, total revenues equaled $353.5 million during the third quarter
ending September 30, 2004, a decrease of 16% from $423.1 million during the
third quarter of 2003. Net earnings during the third quarter ending September
30, 2004, including special items, decreased 74% to $27.6 million and diluted
earnings per share decreased 75% to $0.11 per diluted share in comparison to net
earnings of $106.1 million and diluted earnings per share of $0.44 in the same
period of the prior year. Excluding special items, net earnings during the third
quarter ending September 30, 2004 totaled $47.7 million, or $0.20 per diluted
share, decreasing 53% and 52%, respectively, in comparison to net earnings of
$101.7 million and diluted earnings per share of $0.42 during the third quarter
of 2003.
For the nine months ending September 30, 2004, total revenues decreased 19% to
$919.2 million compared to $1,128.6 million during the first nine months of
2003. During the nine months ending September 30, 2004, including special items,
King incurred a net loss of $147.0 million, or a loss of $0.61 per diluted
share, in comparison to net earnings of $63.9 million and diluted earnings per
share of $0.26 in the same period of the prior year. Excluding special items,
net earnings decreased 68% to $85.1 million and diluted earnings per share
decreased 68% to $0.35 during the nine months ending September 30, 2004, from
net earnings of $266.6 million and diluted earnings per share of $1.10 during
the first nine months of 2003.
King recorded special items during the third quarter ending September 30, 2004,
the net of which resulted in a charge totaling $28.5 million, or $20.0 million
net of tax. More specifically, special items during the third quarter of 2004
include i) a charge of $17.1 million for in-process research and development
associated with King's entry into a strategic alliance with Palatin; ii) a
charge of $4.7 million primarily associated with the Company's decision to
discontinue some relatively insignificant products associated with the Company's
Meridian Medical Technologies business; iii) a charge of $2.8 million for
professional fees and expenses associated with the Company's previously
announced plan to merge with Mylan Laboratories Inc.; iv) a charge of $2.2
million resulting from discontinued operations; v) a $2.3 million charge
primarily for professional fees associated with ongoing government
investigations of the Company; vi) a $3.6 million charge primarily related to
excess purchase commitments for Procanbid(R) (procainamide hydrochloride
extended-release tablets); and vii) income in the amount of $4.2 million
primarily due to a gain on the sale of all rights to Estrasorb(TM) and all
convertible notes of Novavax, Inc. previously held by the Company. King recorded
special items during
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the third quarter ending September 30, 2003, the net of which resulted in income
totaling $6.8 million, or $4.3 million net of tax. Special items during the
third quarter of 2003 were attributable primarily to a gain on the sale of the
Company's animal health products, income resulting from a decrease in the
valuation allowance for Novavax convertible notes then held by the Company, and
a charge for professional fees associated with ongoing government investigations
of the Company. During the six month period ending June 30, 2004, King recorded
special charges totaling $294.7 million, or $212.0 million net of tax, primarily
due to a loss from discontinued operations that resulted from the Company's
decision to divest many of its women's health products, and a charge
representing the Company's current best estimate of the interest, costs, fines,
penalties and all other amounts in excess of the amount King previously accrued
for purposes of resolving the ongoing government investigations of the Company.
During the six month period ending June 30, 2003, King recorded special charges
totaling $310.5 million, or $207.0 million net of tax, primarily due to charges
for acquired in-process research and development, professional fees associated
with ongoing government investigations of the Company, a product recall, a
decrease in the valuation allowance for Novavax convertible notes then held by
the Company, and an intangible asset impairment charge.
Preliminary net revenue from branded pharmaceuticals, including royalty income,
totaled $313.9 million during the third quarter of 2004, a 17% decrease from the
third quarter of 2003. Meridian Medical Technologies, our wholly owned
subsidiary, contributed $33.9 million of net revenue in the third quarter of
2004 compared to $38.4 million during the same period of the prior year. Net
revenue from contract manufacturing during the third quarter of 2004 equaled
$5.7 million.
Altace(R) net sales equaled $133.3 million in the third quarter of 2004, a 6%
increase from $125.4 million during the third quarter of 2003.
Net sales of Thrombin-JMI(R) totaled $53.4 million during the third quarter
ending September 30, 2004, an increase of 32% from $40.4 million during third
quarter of 2003.
Sonata(R) net sales equaled $25.8 million during the third quarter of 2004, a
26% increase compared to $20.5 million during the third quarter ending September
30, 2003.
Net sales of Skelaxin(R) totaled $43.0 million during the third quarter of 2004,
a 51% decrease compared to $87.9 million during the third quarter of 2003.
Levoxyl(R) net sales equaled $18.6 million during the third quarter ending
September 30, 2004, a 29% decrease compared to $26.3 million during the third
quarter of 2003.
Royalty revenues, derived primarily from Adenoscan(R) (adenosine), totaled $20.3
million in the third quarter of 2004, a 25% increase from $16.3 million during
the same period of the prior year.
As part of King's continuing discussions with governmental agencies pertaining
to the previously announced ongoing investigations of the Company by the SEC and
the OIG, King has continued to discuss the possibility of settling these
matters. King has not yet reached any agreements or understandings with respect
to the terms of such a settlement and may not ever be able to reach such an
agreement. However, based on the status of the discussions to date, the Company
now believes that it is reasonably likely that it will be able to achieve a
comprehensive settlement with all relevant governmental parties on the following
terms:
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o As of June 30, 2004, King had accrued $130.4 million in
respect of the Company's estimated underpayments to Medicaid
and other government pricing programs, and estimated
settlement costs with all relevant governmental parties.
King's current expectation is that the aggregate cost to
settle with the governmental authorities should not materially
exceed the amounts already accrued.
o With respect to the matters being investigated by the staff of
the SEC, King currently anticipates that the Company would
settle, without admitting or denying, one or more charges that
the Company failed to maintain adequate books and records and
internal controls. King anticipates that the action to be
settled would not include charges that the Company's past or
present public filings contained material misstatements or
omissions, and the Company does not anticipate being required
to restate any past or present financial statements as a
result of the pending investigation.
o King expects that the Company will be required to enter into a
Corporate Integrity Agreement with the Department of Health
and Human Services, which would require the Company to submit
to audits relating to its Medicaid rebate calculations over a
five year period. King does not expect that the resolution of
the pending investigations will result in any prohibitions on
the Company's sales to Medicaid or any related state or
Federal program, nor does King expect any other material
restriction on the Company's ability to conduct its business,
although the Company would be required to incur consultant
fees and other expenses in order to comply with the Corporate
Integrity Agreement.
o King does not expect that any criminal charges will be
asserted against the Company or against any present or former
director, officer or employee in connection with the matters
being investigated.
King's ability to achieve a settlement on these or other terms is subject to
substantial uncertainties. The Company's discussions to date have been conducted
with the staffs of various agencies and other governmental authorities. King
does not yet have any agreements or understandings with any of them. Even if the
Company were to reach such an agreement or understanding with staff personnel,
it would be subject to the approval of numerous more senior representatives of
the governmental parties, including the members of the Securities and Exchange
Commission, the United States Attorney for the Eastern District of Pennsylvania,
senior officials in the Departments of Justice, Health and Human Services and
Veterans Affairs, and senior officials in most or all of the States. King
expects that the Company's agreements with the various governmental parties
would also require that those governmental parties reach numerous agreements
among themselves, and that the consummation of the Company's agreement with each
governmental party would be dependent on consummation of the Company's
agreements with other governmental parties. King also expects that some aspects
of a comprehensive settlement would require court approval.
In light of these uncertainties, King stresses that the Company may not be able
to reach a settlement with the governmental parties, whether on the terms
described above or at all. As a result, the ultimate amount that the Company
will actually have to pay to resolve these matters could be materially more than
the amount accrued to date, and the terms could otherwise be materially less
favorable than those described above. Because of these uncertainties and the
complexity of completing a comprehensive resolution, King is not yet able to
estimate with reasonable confidence the amount of time that will be required to
enter into and consummate comprehensive settlement agreements. The possible
settlement described above would not apply to the related pending class actions
and derivative suits or any other
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claims by private plaintiffs. While King denies any liability, the Company is
unable to predict the outcome of the class actions and derivative suits or
reasonably estimate the range of loss, if any.
CONFERENCE CALL
King will provide a live webcast of its conference call scheduled for today at
9:00 a.m., E.S.T., pertaining to the matters addressed in this press release,
including King's preliminary financial results for the third quarter of 2004, at
http://phx.corporate-ir.net/playerlink.zhtml?c=93939&s=wm&e=958718 or by dialing
800-223-9488 (US only) or 785-832-0201 (international), passcode KG. If you are
unable to participate during the live webcast, the call will be archived on
King's web site www.kingpharm.com for not less than 30 days following the call.
A replay of the conference call will also be available for not less than 30 days
following the call by dialing 800-934-5786 (US only) or 402-220-1439
(international).
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. As previously reported, Mylan
Laboratories Inc. and King have signed a definitive agreement under which Mylan
will acquire King in a stock-for-stock transaction, creating a leading
diversified specialty pharmaceutical company. The transaction is subject to
customary closing conditions and shareholder approvals.
ABOUT GAAP
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 third quarter and nine months ending
September 30, 2004 excluding special items. These non-GAAP financial measures
exclude special items which King considers to be those items that do not relate
to the Company's ongoing, underlying business, are non-recurring, or are not
generally predictable. These 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; revenues and expenses
associated with discontinued operations; and gains and losses resulting from the
divestiture of assets. King believes the identification of special items
enhances an analysis of the Company's ongoing, underlying business and an
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 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 future financial results and their
predictability; statements pertaining to the potential benefits of PT-141;
statements pertaining to the future level of anticipated product returns;
statements pertaining to the Company's anticipated final financial results for
the third quarter of 2004; statements pertaining to the future growth and cash
flows of King; statements pertaining to the potential settlement of ongoing
government investigations of the Company; statements pertaining to the
anticipated completion and
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results of the Company's ongoing evaluation of its returns reserve; and
statements pertaining to Mylan's anticipated acquisition of King. 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 growth of future net
sales of King's key branded pharmaceutical products, particularly Altace(R),
Skelaxin(R), Thrombin-JMI(R), and Sonata(R); dependence on royalty revenues from
Adenoscan(R); dependence on King's and Wyeth Pharmaceuticals' ability to
successfully market Altace(R) under the co-promotion agreement between King and
Wyeth; dependence on King's ability to successfully market Skelaxin(R),
Thrombin-JMI(R), and Sonata(R); dependence on the availability and cost of raw
materials; dependence on the accuracy of King's estimate of wholesale inventory
levels of its products; dependence on no material interruptions in supply by
contract manufacturers of King's products; dependence on the affect of generic
substitution for Levoxyl(R); dependence on the potential effect on sales of
King'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 whether King's customers order
pharmaceutical products in excess of normal quantities during any quarter which
could cause sales of King's branded pharmaceutical products to be lower in a
subsequent quarter than they would otherwise have been; dependence on the
successful development and commercial acceptance of PT-141; dependence on King's
ability to successfully market PT-141 once approved; dependence on the actual
outcome of the ongoing government investigations of the Company, including but
not limited to the uncertainties related thereto that are set forth above;
dependence on the results of the Company's ongoing evaluation of its returns
reserve and whether it results in any restatement; dependence on the extent to
which Inventory Management Agreements facilitate enhanced management of
wholesale channel inventories of our products going forward; dependence on the
occurrence of all contingencies necessary to complete the closing of Mylan's
acquisition of King; dependence on the potential effect of future acquisitions
and other transactions pursuant to King's growth strategies; dependence on
management of King's growth and integration of its acquisitions; dependence on
the extent to which OIG and other governmental agencies concur with King's best
estimate of the extent to which it underpaid amounts due under Medicaid and
other governmental pricing programs and King's determination of the reasons for
such underpayments; dependence on any determination or final outcome arising out
of the previously announced investigations of the Company by the SEC and OIG;
dependence on whether King is able to prevail in pending shareholder securities
litigation; dependence on the extent to which any governmental sanctions are
imposed due to King's underpayment of amounts due under Medicaid and other
governmental pricing programs; dependence on King's ability to continue to
acquire branded products, including products in development; dependence on the
high cost and uncertainty of research, clinical trials, and other development
activities involving pharmaceutical products, including, but not limited to,
King Pharmaceuticals Research and Development's pre-clinical and clinical
pharmaceutical product development projects, 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"), supplemental New Drug Applications ("sNDA"), and Abbreviated New Drug
Applications ("ANDA") and/or the review of other regulatory agencies worldwide;
dependence on King's ability to maintain effective patent protection for
Altace(R) and Skelaxin(R); dependence on the ability of the Company's dedicated
field sales force representatives to successfully market King's branded
pharmaceutical products; dependence on our compliance with FDA and other
government regulations that relate to our business; and dependence on changes in
general economic and business conditions; changes in current pricing levels;
changes in federal and state laws and regulations; 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, 2003 and Form 10-Q for the second quarter ended June 30, 2004 which
are on file with the 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.
# # #
CONTACT:
James E. Green, Executive Vice President, Corporate Affairs - 423-989-8125
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KING PHARMACEUTICALS, INC.
PRELIMINARY CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
-------------------------- --------------------------
REVENUES:
Total revenues $ 353,454 $ 423,137 $ 919,238 $ 1,128,573
----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of revenues 85,513 89,182 249,876 254,470
Excess purchase commitment 3,621 -- 7,797 --
Writeoff of acquisition related inventory step-up/recall -- 663 4,586 6,459
----------- ----------- ----------- -----------
Total cost of revenues 89,134 89,845 262,259 260,929
----------- ----------- ----------- -----------
Selling, general and administrative 95,709 79,170 275,751 181,940
Special legal and professional fees 2,266 7,912 12,951 22,208
Co-promotion fees 47,532 46,109 95,859 163,049
----------- ----------- ----------- -----------
Total selling, general, and administrative 145,507 133,191 384,561 367,197
----------- ----------- ----------- -----------
Depreciation and amortization 38,843 36,926 116,627 75,199
Research and development 16,280 8,758 49,781 29,487
Research and development - In-process upon acquisition 17,145 -- 17,145 193,000
Medicaid related charge -- -- 65,000 --
Merger related costs 2,787 -- 5,913 --
Intangible asset impairment -- -- 34,936 110,970
Restructuring charges 4,674 -- 10,827 --
Special gains on disposition (4,202) (10,312) (8,481) (10,312)
----------- ----------- ----------- -----------
Total operating costs and expenses 310,168 258,408 938,568 1,026,470
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 43,286 164,729 (19,330) 102,103
OTHER (EXPENSES) INCOME:
Interest expense (3,147) (3,669) (9,518) (10,137)
Interest income 1,124 1,037 3,259 5,729
Valuation (charge) benefit - convertible notes receivable -- 9,338 (2,487) 24,952
Other expenses (776) (36) (311) (134)
----------- ----------- ----------- -----------
Total other (expenses) income (2,799) 6,670 (9,057) 20,410
----------- ----------- ----------- -----------
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 40,487 171,399 (28,387) 122,513
Income tax expense 11,149 62,630 10,253 54,654
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 29,338 108,769 (38,640) 67,859
----------- ----------- ----------- -----------
DISCONTINUED OPERATIONS
Loss from discontinued operations, including expected loss
on disposal (2,216) (4,323) (170,126) (6,367)
Income tax benefit (473) (1,641) (61,762) (2,387)
----------- ----------- ----------- -----------
Total loss from discontinued operations (1,743) (2,682) (108,364) (3,980)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 27,595 $ 106,087 $ (147,004) $ 63,879
=========== =========== =========== ===========
Basic income (loss) per common share $ 0.11 $ 0.44 $ (0.61) $ 0.27
=========== =========== =========== ===========
Diluted income (loss) per common share $ 0.11 $ 0.44 $ (0.61) $ 0.26
=========== =========== =========== ===========
Shares used in basic net income (loss) per share 241,551 241,066 241,411 240,932
Shares used in diluted net income (loss) per share 241,759 241,583 241,411 241,499
PRELIMINARY: SUBJECT TO RESOLUTION OF THE COMPANY'S ONGOING
RETURN'S RESERVE ANALYSIS.
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KING PHARMACEUTICALS, INC.
PRELIMINARY CONSOLIDATED STATEMENT OF OPERATIONS
EXCLUDING SPECIAL ITEMS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
-------------------------- -------------------------
REVENUES:
Total revenues $ 353,454 $ 423,137 $ 919,238 $ 1,128,573
----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of revenues 85,513 89,182 249,876 254,470
----------- ----------- ----------- -----------
Selling, general and administrative 95,709 79,170 275,751 181,940
Co-promotion fees 47,532 46,109 95,859 163,049
----------- ----------- ----------- -----------
Total selling, general, and administrative 143,241 125,279 371,610 344,989
----------- ----------- ----------- -----------
Depreciation and amortization 38,843 36,926 116,627 75,199
Research and development 16,280 8,758 49,781 29,487
----------- ----------- ----------- -----------
Total operating costs and expenses 283,877 260,145 787,894 704,145
----------- ----------- ----------- -----------
OPERATING INCOME 69,577 162,992 131,344 424,428
OTHER (EXPENSES) INCOME:
Interest expense (3,147) (3,669) (9,518) (10,137)
Interest income 1,124 1,037 3,259 5,729
Other expenses (776) (36) (311) (134)
----------- ----------- ----------- -----------
Total other expenses (2,799) (2,668) (6,570) (4,542)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 66,778 160,324 124,774 419,886
Income tax expense 19,129 58,581 39,718 153,321
----------- ----------- ----------- -----------
NET INCOME $ 47,649 $ 101,743 $ 85,056 $ 266,565
=========== =========== =========== ===========
Basic income per common share $ 0.20 $ 0.42 $ 0.35 $ 1.11
=========== =========== =========== ===========
Diluted income per common share $ 0.20 $ 0.42 $ 0.35 $ 1.10
=========== =========== =========== ===========
Shares used in basic net income per share 241,551 241,066 241,411 240,932
Shares used in diluted net income per share 241,759 241,583 241,756 241,499
PRELIMINARY:SUBJECT TO RESOLUTION OF THE COMPANY'S ONGOING
RETURN'S RESERVE ANALYSIS.
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KING PHARMACEUTICALS, INC.
PRELIMINARY 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 Ending Nine Months Ending
September 30, 2004 September 30, 2004
---------------------- -----------------------
EPS EPS
--- ---
Net income, excluding special charges $ 47,649 $ 85,056
Diluted income per common share, excluding special items $ 0.20 $ 0.35
SPECIAL ITEMS:
Excess purchase commiment (cost of goods sold) (3,621) (0.02) (7,797) (0.03)
Writeoff of acquisition related inventory step-up/recall (cost of
goods sold) -- -- (4,586) (0.02)
Special legal and professional fees (selling, general, and administrative) (2,266) (0.01) (12,951) (0.06)
In-process research and development (other operating costs and expenses) (17,145) (0.07) (17,145) (0.07)
Medicaid related charge(other operating costs and expenses) -- -- (65,000) (0.27)
Merger related costs (other operating costs and expenses) (2,787) (0.01) (5,913) (0.03)
Intangible asset impairment (other operating costs and expenses) -- -- (34,936) (0.14)
Restructuring charges (other operating costs and expenses) (4,674) (0.02) (10,827) (0.04)
Special gains on disposition (other operating costs and expenses) 4,202 0.02 8,481 0.03
Valuation charge - convertible notes receivable (other expenses) -- -- (2,487) (0.01)
Loss from discontinued operations (2,216) (0.01) (170,126) (0.71)
Income tax benefit 8,453 0.03 91,227 0.38
--------- ---------
Net income (loss) $ 27,595 $(147,004)
========= --------- ========= ---------
Diluted loss per common share, as reported under GAAP $ 0.11 $ (0.61)
========= =========
Three Months Ending Nine Months Ending
September 30, 2004 September 30, 2004
---------------------- -----------------------
EPS EPS
--- ---
Net income, excluding special charges $ 101,743 $266,565
Diluted income per common share, excluding special items $ 0.42 $ 1.10
SPECIAL ITEMS:
Writeoff of acquisition related inventory step-up/recall (cost of
goods sold) (663) (0.00) (6,459) (0.03)
Special legal and professional fees (selling, general, and administrative) (7,912) (0.03) (22,208) (0.09)
In-process research and development (other operating costs and expenses) -- -- (193,000) (0.80)
Intangible asset impairment (other operating costs and expenses) -- -- (110,970) (0.46)
Special gains on disposition (other operating costs and expenses) 10,312 0.04 10,312 0.04
Valuation benefit - convertible notes receivable (other income) 9,338 0.04 24,952 0.10
Loss from discontinued operations (4,323) (0.02) (6,367) (0.02)
Income tax (expense) benefit (2,408) (0.01) 101,054 0.42
--------- --------
Net income $ 106,087 $ 63,879
========= ------ ======== ------
Diluted income per common share, as reported under GAAP $ 0.44 $ 0.26
====== ======
PRELIMINARY: SUBJECT TO RESOLUTION OF THE COMPANY'S
ONGOING RETURN'S RESERVE ANALYSIS.
(more)
KING PHARMACEUTICALS, INC.
PRELIMINARY CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(unaudited)
September 30, December 31,
ASSETS 2004 2003
----------- -----------
Current assets:
Cash, cash equivalents and marketable securities $ 248,151 $ 146,053
Restricted cash 113,685 133,969
Accounts receivable, net 245,982 246,417
Inventory 246,777 260,886
Deferred income taxes 172,297 124,930
Prepaid expenses and other assets 52,582 30,036
Assets related to discontinued operations 717 4,012
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Total current assets 1,080,191 946,303
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Property, plant and equipment, net 279,223 257,659
Intangible assets, net 1,415,937 1,552,492
Goodwill 134,892 121,355
Deferred income tax assets 47,798 19,307
Other assets 29,943 76,117
Assets related to discontinued operations 25,400 204,501
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Total assets $ 3,013,384 $ 3,177,734
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ -- $ 97
Accounts payable 56,220 83,078
Accrued expenses 621,913 506,033
Income taxes payable 16,227 79,641
----------- -----------
Total current liabilities 694,360 668,849
----------- -----------
Long-term debt:
Convertible Debentures 345,000 345,000
Other long-term liabilities 78,992 121,705
----------- -----------
Total liabilities 1,118,352 1,135,554
----------- -----------
Shareholders' equity:
Common shares no par value, 300,000,000 shares authorized,
241,645,606 and 241,190,852 shares issued and outstanding, respectively 1,210,190 1,205,970
Retained earnings 688,093 835,097
Other comprehensive income (3,251) 1,113
----------- -----------
Total shareholders' equity 1,895,032 2,042,180
----------- -----------
Total liabilities and shareholders' equity $ 3,013,384 $ 3,177,734
=========== ===========
PRELIMINARY: SUBJECT TO RESOLUTION OF THE COMPANY'S
ONGOING RETURN'S RESERVE ANALYSIS.
EXECUTIVE OFFICES
KING PHARMACEUTICALS 501 FIFTH STREET, BRISTOL, TENNESSEE 37620