King Pharma Reduces Restatement Plan

Updated from 3:13 p.m. EST

King Pharmaceuticals(KG) said Tuesday that it remains uncertain about the prospects of being acquired by Mylan Laboratories(MYL).

The company's brief comment came amid an announcement that King won't have to restate financial results prior to 2002. Previously, King restated earnings for other fiscal years, and that represents a technical violation of the merger agreement between the companies, though Mylan has said King's financial woes aren't an automatic deal-breaker.

"The King board of directors has not yet determined whether to proceed with a transaction with Mylan on or after March 1, 2005 and, if so, on what terms," said King, the first time it has commented on the Mylan bid since Dec. 8. "King intends to make a definitive decision regarding the outcome of the merger with Mylan as promptly as practicable, but there can be no assurance as to whether a decision will be reached by Feb. 28."

Mylan offered no immediate comment Tuesday.

In mid-January, Mylan said that King's financial problems would make the original deal deadline of Feb. 28 unachievable and the original deal price untenable. Mylan's bid, worth about $4 billion at the time, called for paying 0.9 shares of Mylan stock for each share of King's stock. Mylan and King announced the deal in late July.

King is restating results for 2002, 2003 and the first half of 2004 "due to methodological flaws concerning the timing of expense recognition for product returns," the company said Tuesday. Previously, King said it might have to restate results for 2001 and/or 2000.

"The errors in King's reserve for product returns resulted from policies adopted in good faith," the company said. These errors are unrelated to investigations of King by the Securities and Exchange Commission and the Office of the Inspector General of the Department of Health and Human Services.