King Pharmaceuticals Reports Third-Quarter 2007 Financial Results

Business Wire, Nov 8, 2007

Highlights Shift In Strategic Focus

BRISTOL, Tenn. -- King Pharmaceuticals, Inc. (NYSE:KG) announced today that total revenues increased 11% to $545 million during the third quarter ended September 30, 2007, compared to $492 million in the third quarter of 2006. As a result of the special charges detailed below, the reported net loss equaled $41 million and diluted loss per share equaled $0.17 during the third quarter of 2007, compared to net earnings of $90 million and diluted earnings per share of $0.37 in the third quarter of the prior year. Excluding special items, net earnings equaled $128 million and diluted earnings per share equaled $0.52 during the third quarter ended September 30, 2007, compared to net earnings of $106 million and diluted earnings per share of $0.44 in the third quarter of 2006.

Brian A. Markison, Chairman, President and Chief Executive Officer of King, stated, "We are pleased with the Company's continued strong quarterly revenue and cash flow from operations. In light of recent developments, we have moved quickly to accelerate our planned strategic shift to emphasize our neuroscience, hospital and acute care medicine platforms. As a result, we recorded a number of special items in the third quarter. This included a restructuring of our organization, particularly our sales force, to best support our strategic priorities."

Mr. Markison added, "Consistent with the strategic shift initiated in 2005, we have sharpened our focus on specialty driven markets where we have a strong presence and a demonstrated commitment to meeting the needs of our customers. By leveraging King's solid financial position, we will continue to enhance our presence in our targeted markets and opportunistically expand into other attractive specialty markets. Our recently announced alliance with Acura Pharmaceuticals to develop and commercialize ACUROX([TM]) Tablets and other products utilizing Acura's Aversion([R]) Technology platform exemplifies this strategy, significantly strengthening King's pain management franchise."

Mr. Markison concluded, "We are confident that our focus on specialty driven markets will maximize King's potential for long-term growth, enabling us to deliver on the expectations of our shareholders."

As of September 30, 2007, the Company's cash and cash equivalents and investments in debt securities totaled approximately $1.1 billion. The Company generated cash flow from operations of $174 million during the third quarter of 2007.

Net revenue from branded pharmaceuticals totaled $472 million for the third quarter of 2007, a 9% increase from $433 million during the third quarter of 2006.

ALTACE([R]) (ramipril) net sales totaled $169 million during the third quarter of 2007, compared to $159 million during the third quarter of 2006.

Net sales of SKELAXIN([R]) (metaxalone) totaled $106 million during each of the third quarters of 2007 and 2006.

THROMBIN-JMI([R]) (thrombin, topical, bovine, USP) net sales totaled $69 million during the third quarter of 2007, compared to $70 million during the third quarter of 2006.

Net sales of AVINZA([R]) (morphine sulfate extended release) totaled $32 million during the third quarter of 2007. The Company acquired AVINZA([R]) in February 2007.

Net sales of SONATA([R]) (zaleplon) totaled $18 million during the third quarter of 2007, compared to $19 million during the third quarter of the prior year.

LEVOXYL([R]) (levothyroxine sodium tablets, USP) net sales decreased to $21 million during the third quarter ended September 30, 2007 from $25 million during the third quarter of 2006.

King's Meridian Medical Technologies business contributed revenue totaling $48 million during the third quarter of 2007, compared to $37 million during the same period of the prior year.

Royalty revenues, derived primarily from ADENOSCAN([R]) (adenosine), totaled $20 million during the third quarter ended September 30, 2007. For the third quarter ended September 30, 2007, net revenue from contract manufacturing equaled $2 million.

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 Thursday, November 8, 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 30 days after the webcast.

About Special Items

Under Generally Accepted Accounting Principles ("GAAP"), reported "net earnings" and "diluted earnings per share" include special items. In addition to the reported results determined in accordance with GAAP, King provides its net earnings and diluted earnings per share results for the third quarters and nine months ended September 30, 2007 and 2006, 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.