Earnings Fall at King Pharma - TheStreet

King Pharmaceuticals


on Thursday released fourth-quarter and full-year results that fell below corresponding periods for 2003.

The Bristol, Tenn.-based drugmaker, whose results were riddled with one-time charges, said it would provide guidance for 2005 during a conference call with financial analysts and investors on April 12.

Investors may need that long to sort through King's latest financial report, which culminates

a long-running process in which King restated earnings for 2002, 2003 and half of 2004.

Excluding special items, King earned $33.8 million, or 14 cents a share, on revenue of $342.6 million for the fourth quarter. Analysts polled by Thomson First Call had expected an EPS of 24 cents.

For the same period in 2003, King earned $67.8 million, or 28 cents a share, on revenue of $366 million, excluding one-time items.

"Our company was required to address two major challenges during 2004," says Brian A. Markison, the chief executive, in a prepared statement. "We needed to aggressively reduce wholesale inventory levels of our products to appropriate levels... We needed to rebase our operations, which included a review of our intangible assets and the disposition of some non-strategic assets."

The strategic revision meant that King incurred "significant charges" during 2004. The reduction of inventory levels caused net sales to fall in 2004 vs. 2003. Markison said the inventory problems, which figured prominently in the restating of previous financial reports, "should be substantially complete" by the end of this month.

King released its financial results after markets had closed and two days after the company originally had said it would publish the information. In regular trading, King's stock dropped 36 cents, or 3.7%, to $9.36. In after-hours trading, the stock fell another 24 cents.

Including one-time items, the company earned $14.7 million, or 6 cents a share, for the three months ended March 31.

For the full year, King lost $160.3 million, or 66 cents a share, on revenue of $1.30 billion, including special items. For 2003, it earned $91.9 million, or 38 cents a share, on revenue of $1.49 billion.

The 2004 loss includes charges for impaired intangible assets, restructuring charges, charges for special legal and professional fees, a Medicaid-related charge, inventory write-offs and losses from discontinued operations.

Except for a brief note on the costs of terminating its planned merger with

Mylan Laboratories

(MYL) - Get Report

, King said nothing about the deal, announced last July, in which Mylan offered 0.9 shares of its stock for each share of King. The two sides

walked away in late February after they couldn't agree on a revised takeover price formula.

Markison says King had taken several other "important strides" toward rebuilding the company, such as expanding its business development group, revising its R&D portfolio and "right-sizing our sales force." He didn't say how many employees lost their jobs.

In addition, King says it failed to maintain "effective controls" for the 2004 year-end financial reporting process because of the loss of certain finance personnel, the pending deal with Mylan, the need to hire new employees and "resource requirements" needed to address financial restatements. King made errors, but these errors "did not result in any audit adjustments or material misstatements," the company says.