King Pharmaceuticals Reports Second Quarter 2009 Financial Results
BRISTOL, Tenn.--(BUSINESS WIRE)--Aug 6, 2009 - King Pharmaceuticals, Inc. (NYSE:KG) announced today that total revenues were $445 million during the second quarter ended June 30, 2009, compared to $397 million in the second quarter of 2008. The Company reported a net income of $38 million and diluted earnings per share of $0.15 during the second quarter of 2009, compared to net income of $41 million and diluted earnings per share of $0.17 in the second quarter of the prior year. Excluding certain special items and recurring non-GAAP adjustments, adjusted net income equaled $80 million and adjusted diluted earnings per share equaled $0.32 during the second quarter ended June 30, 2009, compared to adjusted net income of $87 million and adjusted diluted earnings per share of $0.35 in the second quarter of 2008.
Similar to its financial reporting in prior years, King reports financial results determined in accordance with Generally Accepted Accounting Principles (“GAAP”) and also adjusted financial results. However, beginning with the first quarter of 2009, King's adjusted financial results exclude the amortization of intangible assets and non-cash imputed interest expense associated with the Company's $400 million 1¼% Convertible Senior Notes, as well as special items. For more information, see the “About Adjusted Financial Results” paragraph below.
Brian A. Markison, Chairman, President and Chief Executive Officer of King, stated, “Today's announcement of strong second quarter earnings underscores the successful and rapid integration of the Alpharma acquisition.” Mr. Markison continued, "More importantly, we believe we are moving closer to an EMBEDA™ approval and recently defined a clear regulatory path forward for REMOXY®. We also remain excited about the prospects for ACUROX®, and look forward to meeting with the FDA next month. We believe that all three of these products represent a potential first in class opioid formulation designed to deter some of the more common forms of misuse and abuse.”
Joseph Squicciarino, King's Chief Financial Officer, stated, “We continue to execute on our growth strategy for the company and remain on target to deliver results consistent with our previously stated guidance. Of particular importance, the Company repaid a total of $152 million of principal during the second quarter on the $625 million of long-term debt we incurred in connection with the Alpharma acquisition, bringing the total debt repayment thus far to $200 million. Our cash flow from operations was $101 million during the second quarter of 2009 despite $44 million in restructuring payments made during the quarter, and we are on track to achieve $80 million in synergies this year from the Alpharma acquisition. These synergies, achieved earlier than anticipated, will allow us to reduce this year's selling, general and administrative expense by $20 million to a range of $540 to $560 million.”
As of June 30, 2009, the Company's cash and cash equivalents totaled approximately $442 million.
Net revenue from branded pharmaceuticals totaled $275 million for the second quarter of 2009, compared to $316 million during the second quarter of 2008. The decrease in revenues was primarily due to the market entry of generic substitutes for ALTACE® (ramipril) beginning in December 2007.
Net sales of SKELAXIN® (metaxalone) totaled $102 million during the second quarter of 2009, compared to $107 million during the same period of the prior year.
THROMBIN-JMI® (thrombin, topical, bovine, USP) net sales totaled $49 million during the second quarter of 2009, compared to $64 million during the second quarter of 2008.
Net sales of AVINZA® (morphine sulfate extended release) totaled $29 million during the second quarter of 2009, compared to $35 million during the second quarter of 2008.
Net sales of FLECTOR® PATCH (diclofenac epolamine topical patch) 1.3% totaled $39 million during the second quarter of 2009. The Company added FLECTOR® PATCH as a result of its acquisition of Alpharma on December 29, 2008. As previously reported, the wholesale inventory levels of FLECTOR® PATCH exceeded King's normal level as of the end of the fourth quarter of 2008. During the first quarter, wholesale inventory levels were fully adjusted and therefore net sales in the second quarter more closely reflected actual prescription demand.
Revenues from the Animal Health business were $83 million for the second quarter ended June 30, 2009. The Company added the Animal Health business as a result of its acquisition of Alpharma.
King's Meridian Auto-Injector business contributed revenue totaling $72 million during the second quarter of 2009, compared to $55 million during the second quarter of 2008.
Royalty revenues, derived primarily from ADENOSCAN® (adenosine), totaled $15 million during the second quarter of 2009.
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: (888) 674-0224
International Dial In: (201) 604-0502
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:
If you are unable to participate during the live event, the replay number is 888-632-8973 and the replay code is 79482704. The web cast of today's call 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 1¼% 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; expenses of drug recalls; 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 Inc., is also a leader in the development, registration, manufacture and marketing of pharmaceutical products for food producing animals.
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 expectations regarding the FDA's review and potential approval of the New Drug Application ("NDA") related to EMBEDA™; statements relating to the Company's plan to discuss with the FDA the recent Complete Response Letter related to the ACUROX® NDA; statements pertaining to the regulatory review and approval process related to REMOXY®; statements pertaining to the potential market performance of the Company's novel opioid medicines in development; statements pertaining to the Company's expectations for and uses of cash flow from operations for the remainder of 2009; statements pertaining to potential synergies and reductions in selling, general and administrative expenses related to the integration of Alpharma operations; statements pertaining to the continuing applicability of certain previously issued guidance regarding the Company's anticipated performance; statements pertaining to net sales and wholesale inventory levels of FLECTOR® PATCH; and statements pertaining to King's planned webcast to discuss its second-quarter 2009 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 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 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, NDAs, and Abbreviated New Drug Applications 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 August 6, 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, 2008 and Form 10-Q for the quarter ended March 31, 2009, which are on file with the U.S. Securities and Exchange Commission. King does not undertake to publicly update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.
KING PHARMACEUTICALS, INC.
501 FIFTH STREET, BRISTOL, TENNESSEE 37620
|KING PHARMACEUTICALS, INC.|
|CONSOLIDATED BALANCE SHEETS|
|(in thousands, except share data)|
|June 30,||December 31,|
|Cash and cash equivalents||$||442,192||$||940,212|
|Investments in debt securities||41,064||6,441|
|Accounts receivable, net||209,266||245,070|
|Deferred income tax assets||125,243||89,513|
|Income tax receivable||12,357||-|
|Prepaid expenses and other current assets||120,078||129,214|
|Total current assets||1,175,696||1,669,264|
|Property, plant and equipment, net||405,778||417,259|
|Intangible assets, net||859,521||934,219|
|Deferred income tax assets||248,786||267,749|
|Investments in debt securities||294,166||353,848|
|Assets held for sale||7,900||11,500|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Income taxes payable||-||10,448|
|Current portion of long-term debt||159,410||439,047|
|Total current liabilities||519,983||1,007,121|
|Commitments and contingencies|
|Common shares no par value, 600,000,000 shares authorized, 248,129,768 and 246,487,232 shares issued and outstanding, respectively|
|Accumulated other comprehensive loss||(23,756||)||(28,287||)|
|Total shareholders' equity||2,278,463||2,232,432|
|Total liabilities and shareholders' equity||$||3,498,530||$||4,227,213|
|KING PHARMACEUTICALS, INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(in thousands, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|OPERATING COSTS AND EXPENSES:|
|Cost of revenues, exclusive of depreciation, amortization and impairments shown below||140,034||99,556||269,448||191,017|
|Excess purchase commitment||-||2,629||-||2,629|
|Acquisition related inventory step-up||16,059||-||37,584||-|
|Total cost of revenues||156,093||102,185||307,032||193,646|
|Selling, general and administrative, exclusive of co-promotion fees||119,434||102,735||256,570||211,776|
|Special legal and professional fees||-||(825||)||-||2,035|
|Acquisiton related costs||2,944||-||6,733||-|
Posted: August 2009