##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 001-15875
 King Pharmaceuticals,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Tennessee

54-1684963(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)501 Fifth Street, 
    Bristol, TN

37620(Zip Code)(Address of principal executive
    offices)  (423) 989-8000
 (Registrants telephone
    number, including area code)
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ




---



##### 





Table of
    Contents
   
 PagePART I  Financial
    Information


2Item 1.

Financial Statements


2Condensed Consolidated Balance Sheets


2Condensed Consolidated Statements of
    Operations


3Condensed Consolidated Statements of Changes in
    Shareholders Equity and Other Comprehensive Income


4Condensed Consolidated Statements of Cash
    Flows


5Notes to Condensed Consolidated Financial
    Statements


6Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


29Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk


51Item 4.

Controls and Procedures


51PART II  Other
    Information


52Item 1.

Legal Proceedings


52Item 1A.

Risk Factors


52Item 6.

Exhibits


52Signatures


53EX-10.5EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements KING
    PHARMACEUTICALS, INC.



CONDENSED
    CONSOLIDATED BALANCE SHEETS

(In
    thousands)

(Unaudited)  March 31,


December 31,2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
471,763


$
545,312Investments in debt securities


27,127



29,258Marketable securities


1,476



2,100Accounts receivable, net of allowance of $3,262 and $3,401


207,062



210,256Inventories


188,644



182,291Deferred income tax assets


79,196



83,675Income taxes receivable


18,258



16,091Prepaid expenses and other current assets


49,903



60,860Total current assets


1,043,429



1,129,843Property, plant and equipment, net


381,370



391,839Intangible assets, net


755,261



794,139Goodwill


467,613



467,613Deferred income tax assets


256,828



264,162Investments in debt securities


204,785



218,608Other assets (includes restricted cash of $15,903 and $15,900)


59,584



56,496Assets held for sale


5,890



5,890Total assets

$
3,174,760


$
3,328,590LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
89,794


$
86,692Accrued expenses


244,853



320,992Short-term debt


3,369



3,662Current portion of long-term debt






85,550Total current liabilities


338,016



496,896Long-term debt


336,978



339,016Other liabilities


128,238



123,371Total liabilities


803,232



959,283Commitments and contingencies (Note 9)Shareholders equity


2,371,528



2,369,307Total liabilities and shareholders equity

$
3,174,760


$
3,328,590    2




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.



CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS

(In
    thousands, except per share data)

(Unaudited)  Three Months EndedMarch 31,2010


2009Revenues:Net sales

$
373,065


$
414,299Royalty revenue


7,790



14,758Total revenues


380,855



429,057Operating costs and expenses:Cost of revenues, exclusive of depreciation and amortization
    shown below


127,054



150,939Selling, general and administrative


140,475



138,534Acquisition related costs






3,789Total selling, general and administrative expense


140,475



142,323Research and development


28,324



27,256Depreciation and amortization


57,275



53,349Restructuring charges (Note 13)


262



48,050Total operating costs and expenses


353,390



421,917Operating income


27,465



7,140Other income (expense):Interest income


409



2,788Interest expense


(8,736
)


(23,103
)Loss on investments


(872
)


(823
)Other, net


(203
)


(2,779
)Total other expense


(9,402
)


(23,917
)Income (loss) before income taxes


18,063



(16,777
)Income tax expense (benefit)


13,594



(6,055
)Net income (loss)

$
4,469


$
(10,722
)Net income per common share:Basic net income (loss) per common share

$
0.02


$
(0.04
)Diluted net income (loss) per common share

$
0.02


$
(0.04
)    3




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
    SHAREHOLDERS EQUITY
    AND OTHER COMPREHENSIVE INCOME
    (In thousands, except share data)

(Unaudited)  AccumulatedOtherCommon Stock


Retained


ComprehensiveShares


Amount


Earnings


Income (Loss)


TotalBalance at December 31, 2008


246,487,232


$
1,391,065


$
871,021


$
(28,287
)

$
2,233,799Comprehensive income:Net (loss)










(10,722
)






(10,722
)Net unrealized gain on marketable securities, net of taxes of $43














70



70Net unrealized loss on interest rate swap, net of taxes of $202














(329
)


(329
)Net unrealized loss on investments in debt securities, net of
    taxes of $1,634














(2,666
)


(2,666
)Foreign currency translation














(5,026
)


(5,026
)Total comprehensive income


















(18,673
)Stock-based award activity


1,326,589



5,413











5,413Balance at March 31, 2009


247,813,821


$
1,396,478


$
860,299


$
(36,238
)

$
2,220,539Balance at December 31, 2009


248,444,711


$
1,421,489


$
963,620


$
(15,802
)

$
2,369,307Comprehensive income:Net income










4,469







4,469Reclassification of unrealized losses on investments in debt
    securities, net of taxes of $268














428



428Net unrealized loss on marketable securities, net of taxes of
    $240














(384
)


(384
)Net unrealized gain on investments in debt securities, net of
    taxes of $89














142



142Foreign currency translation














(5,642
)


(5,642
)Total comprehensive income


















(987
)Stock-based award activity


1,158,404



3,208











3,208Balance at March 31, 2010


249,603,115


$
1,424,697


$
968,089


$
(21,258
)

$
2,371,528    4




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.



CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS

(In
    thousands)

(Unaudited)  Three Months Ended March 31,2010


2009Cash flows (used in) provided by operating activities

$
(1,801
)

$
11,334Cash flows from investing activities:Transfers to restricted cash


(3
)


(65
)Proceeds from maturities and sales of investments in debt
    securities


16,810



8,000Purchases of property, plant and equipment


(7,793
)


(6,892
)Proceeds from sale of property and equipment


73



Proceeds from the sale of
    Kadian®


20,000



Acquisition of Alpharma






(69,706
)Acquisition of
    Avinza®






(1
)Forward foreign exchange contracts






5,406Purchases of intellectual property and product rights


(504
)


(548
)Net cash provided by (used in) investing activities


28,583



(63,806
)Cash flows from financing activities:Proceeds from exercise of stock options


742



36Net (payments) proceeds related to
    stock-based
    activity


(3,905
)


(2,000
)Payments on debt


(92,554
)


(433,249
)Debt issuance costs






(1,220
)Net cash used in financing activities


(95,717
)


(436,433
)Effect of exchange rate changes on cash


(4,614
)


(14,514
)Decrease in cash and cash equivalents


(73,549
)


(503,419
)Cash and cash equivalents, beginning of period


545,312



940,212Cash and cash equivalents, end of period

$
471,763


$
436,793    5




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.



NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31,
    2010 and 2009

(In thousands, except share and per share data)

(Unaudited) 1.
    General  Form 10-Q Rule 10-01 Regulation S-X Form 10-K
      2.
    Earnings
    Per Share    Three Months Ended March 31,2010

2009Basic net income (loss) per common share:Weighted average common shares


245,205,560



243,888,839Diluted net income (loss) per common share:Weighted average common shares


245,205,560



243,888,839Effect of stock options


663,897



Effect of dilutive share awards


3,997,330



Weighted average common shares


249,866,787



243,888,839     1 4
 6




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Fair
    Value Measurements  Cash and Cash Equivalents.
  Derivatives. non-U.S. cash
      Gain or (Loss) in

Gain or (Loss)Other

Reclassified fromComprehensive

Accumulated Other

Gain or (Loss)Income on

Comprehensive

RecordedDerivative

Income into Income

in IncomeDerivatives in Cash Flow Hedging Relationships

(Effective Portion)

(Effective Portion)

(Ineffective Portion)Interest rate swap

$
(531
)

$



$
   Gain or (Loss)Recognizedin Income on DerivativeDerivatives not Designated as Hedging Instruments

Location

AmountForeign currency contracts


Other income (expense
)

$
3,545   Marketable Securities.
  Investments in Debt Securities.
 7




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale Other-than-temporary other-than-temporary
      other-than-temporary, other-than-temporary. net-of-tax) other-than-temporary
     8




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale
      Fair Value Measurements at March 31, 2010 UsingQuoted Prices in


Significant Other


SignificantTotal


Active Markets for


Observable


UnobservableFair Value at


Identical Assets


Inputs


InputsDescription

3/31/2010


(Level 1)


(Level 2)


(Level 3)Assets:Money Market Funds

$
446,394


$
446,394


$



$
U.S. Government Securities


4,138



4,138







Marketable Securities


1,476



1,476







Investments in Debt Securities


231,912







3,750



228,162Right to Sell Debt Securities


2,425











2,425Total Assets

$
686,345


$
452,008


$
3,750


$
230,587   Fair Value Measurements at December 31, 2009 UsingQuoted Prices in


Significant Other


SignificantTotal


Active Markets for


Observable


UnobservableFair Value at


Identical Assets


Inputs


InputsDescription

12/31/2009


(Level 1)


(Level 2)


(Level 3)Assets:Money Market Funds

$
518,950


$
518,950


$



$
U.S. Government Securities


4,138



4,138







Marketable Securities


2,100



2,100







Investments in Debt Securities


247,866











247,866Right to Sell Debt Securities


3,226











3,226Total Assets

$
776,280


$
525,188


$



$
251,092        9




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2010


2009Beginning balance, January 1

$
251,092


$
361,913Total gains or losses (realized/unrealized)Included in earnings


(872
)


(823
)Included in other comprehensive income (loss)


927



(4,300
)Settlements


(16,810
)


(8,000
)Transfers in and/or out of Level 3


(3,750
)


1,700Ending balance, March 31

$
230,587


$
350,490   4.
    Inventories    March 31,


December 31,2010


2009Raw materials

$
70,664


$
62,054Work-in-process


37,267



29,979Finished goods (including $2,590 and $3,908 of sample inventory,
    respectively)


121,012



126,705228,943



218,738Inventory valuation allowance


(40,299
)


(36,447
)Total inventories

$
188,644


$
182,291   5.
    Property,
    Plant and Equipment     10




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Acquisitions,
    Dispositions, Co-Promotions and Alliances  ® ® ® ®
  ®
  Maximum PurchasePrice PaymentFirst Quarter 2009

$
30,000Second Quarter 2009

$
25,000Third Quarter 2009

$
25,000Fourth Quarter 2009

$
20,000First Quarter 2010

$
20,000Second Quarter 2010

$
7,500   ® ®
  7.
    Intangible
    Assets and Goodwill    March 31, 2010


December 31, 2009Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationBranded prescription pharmaceuticals

$
1,265,929


$
801,177


$
1,264,250


$
764,327Animal Health


169,923



12,041



170,000



9,633Meridian Auto-Injector


184,206



51,789



183,249



49,621Royalties and other


3,731



3,521



3,731



3,510Total intangible assets

$
1,623,789


$
868,528


$
1,621,230


$
827,091  11




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ® ® ® ® ® ® ®
    Branded


Animal Health


MeridianSegment


Segment


Segment


TotalGoodwill at December 31, 2009

$
267,024


$
92,179


$
108,410


$
467,613Goodwill at March 31, 2010

$
267,024


$
92,179


$
108,410


$
467,613   8.
    Long-Term
    Debt    March 31,


December 31,2010


2009Convertible senior notes

$
336,978


$
332,305Senior secured revolving credit facility






92,261Total long-term debt


336,978



424,566Less current portion






85,550Long-term portion

$
336,978


$
339,016   Convertible
    Senior Notes
      March 31,


December 31,2010


2009Gross carrying amount

$
400,000


$
400,000Unamortized debt cost


63,022



67,695Net carrying amount

$
336,978


$
332,305  12




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Senior
    Secured Revolving Credit Facility
          Senior
    Secured Term Facility
    Alpharma
    Convertible Senior Notes
    9.
    Commitments
    and Contingencies  Intellectual
    Property Matters
  Skelaxin®
  ® ® ® non-infringement, non-infringement
 13




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ®
  ®
  30-month 30-month
  ®
 14




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ®
    ® ®
  ® ® ® ®
  ® ® ® ® ®
 15




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Avinza®
  ® ®
      ® ® ®
  EpiPen®
  ®
 16




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Embeda®
  and/or ®
  ®
    Average
    Wholesale Price Litigation
  In re:
    Pharmaceutical Industry Average Wholesale Pricing Litigation
   17




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Fen-Phen
    Litigation
  In re Fen-Phen Litigation. and/or
   18




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ®
  ®
    Hormone
    Replacement Therapy
  In re: Prempro
    Products Liability Litigation
 19




---



##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Alpharma
    Matters
  and/or
  Department
    of Justice Investigation
  ® ®
    Chicken
    Litter Litigation
       20




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  AWP
    Litigation
  ®
  
    Superior Court for the State of Alaska, Third Judicial District
    of Anchorage;
    Second Judicial Court in and for Leon County, Florida;
    Circuit Court of Cook County, Illinois, County Department,
    Chancery Division; and
    Court of Common Pleas, for the Fifth Judicial District, State of
    South Carolina, County of Richland.      Environmental
    Matters
    10.
    Accounting
    Developments     21




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    11.
    Income
    Taxes      12.
    Segment
    Information  ®
   22




---



##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months EndedMarch 31,2010


2009Total revenues:Branded prescription pharmaceuticals

$
241,541


$
277,704Animal Health


81,314



79,835Meridian Auto-Injector


49,827



56,607Royalties and other


8,644



16,147Eliminations


(471
)


(1,236
)Total revenues

$
380,855


$
429,057Segment profit:Branded prescription pharmaceuticals(1)

$
63,177


$
105,317Animal Health(1)


17,463



33Meridian Auto-Injector


23,841



26,885Royalties and other


7,369



13,218Corporate Costs


(26,848
)


(33,125
)Acquisition related costs






(3,789
)Depreciation and amortization


(57,275
)


(53,349
)Restructuring charges


(262
)


(48,050
)Other income (expense)


(9,402
)


(23,917
)Income (loss) before tax

$
18,063


$
(16,777
)     (1)
    
    The segment profit for branded prescription pharmaceuticals and
    Animal Health for the first quarter of 2009 includes additional
    costs of $1,015 and $20,509, respectively, related to the mark
    up of inventory upon acquisition of Alpharma, which the Company
    recognized as the related inventory was sold.    Three Months EndedMarch 31,2010


2009Total revenues:Neuroscience

$
155,697


$
157,101Hospital


39,955



51,959Legacy:Cardiovascular/metabolic


28,150



44,968Other


17,739



23,676Consolidated branded prescription pharmaceutical revenues

$
241,541


$
277,704   13.
    Restructuring
    Activities  First
    Quarter of 2009 Action
  ® ® ® ®
 23




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Fourth
    Quarter of 2008 Action
      Third
    Quarter of 2006 Action
  ®
    Accrued











AccruedBalance at


Income








Balance atDecember 31,


Statement


Cash


Non-Cash


March 31,2009


Impact


Payments


Costs


2010Third quarter of 2009 actionEmployee separation payments

$
1,080


$
51


$
996


$



$
135First quarter of 2009 actionEmployee separation payments


314



18



283







49Accelerated depreciation(1)






(45
)






(45
)


Fourth quarter of 2008 actionEmployee separation payments


16,177



(95
)


5,448



(353
)


10,987Contract termination


9,193



459



724



(252
)


9,180Other


182



(182
)










Third quarter of 2006 actionEmployee separation payments


1,185



11



15



11



1,170$
28,131


$
217


$
7,466


$
(639
)

$
21,521     (1)
    
    Included in depreciation and amortization on the Condensed
    Consolidated Statements of Operations.   24




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Stock-Based
    Compensation            15.
    Guarantor
    Financial Statements     25




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
    CONDENSED CONSOLIDATING BALANCE SHEETS
    (In thousands)
    (Unaudited)
  March 31, 2010


December 31, 2009Non














NonGuarantor


Guarantor


Eliminating


King





Guarantor


Guarantor


Eliminating


KingKing


Subsidiaries


Subsidiaries


Entries


Consolidated


King


Subsidiaries


Subsidiaries


Entries


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$
201,115


$
36,836


$
233,812


$



$
471,763


$
277,603


$
30,779


$
236,930


$



$
545,312Investments in debt securities


27,127















27,127



29,258















29,258Marketable securities


1,476















1,476



2,100















2,100Accounts receivable, net


2,509



170,560



33,993







207,062



2,467



174,713



33,076







210,256Inventories


42,451



114,626



33,956



(2,389
)


188,644



43,834



111,242



28,642



(1,427
)


182,291Deferred income tax assets


29,735



49,207



254







79,196



30,828



52,597



250







83,675Income tax receivable


19,369



(579
)


(532
)






18,258



17,983



(1,865
)


(27
)






16,091Prepaid expenses and other current assets


14,608



33,809



1,486







49,903



14,972



44,384



1,504







60,860Total current assets


338,390



404,459



302,969



(2,389
)


1,043,429



419,045



411,850



300,375



(1,427
)


1,129,843Property, plant, and equipment, net


144,303



228,387



8,680







381,370



148,399



234,233



9,207







391,839Intangible assets, net






721,270



33,991







755,261







759,583



34,556







794,139Goodwill






467,613











467,613







467,613











467,613Deferred income tax assets


(30,929
)


287,155



602







256,828



(26,551
)


290,104



609







264,162Investments in debt securitiess


204,785















204,785



218,608















218,608Other assets


36,481



22,763



340







59,584



32,368



23,795



333







56,496Assets held for sale






5,890











5,890







5,890











5,890Investments in subsidiaries


3,026,310



908,086



(109
)


(3,934,287
)






3,027,491



938,020



(88
)


(3,965,423
)


Total assets

$
3,719,340


$
3,045,623


$
346,473


$
(3,936,676
)

$
3,174,760


$
3,819,360


$
3,131,088


$
344,992


$
(3,966,850
)

$
3,328,590LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
33,444


$
50,315


$
6,035


$



$
89,794


$
27,377


$
53,966


$
5,349


$



$
86,692Accrued expenses


18,631



216,702



9,520







244,853



31,541



279,662



9,789







320,992Short-term debt










3,369







3,369











3,662







3,662Current portion of long-term debt






















85,550















85,550Total current liabilities


52,075



267,017



18,924







338,016



144,468



333,628



18,800







496,896Long-term debt


336,978















336,978



339,016















339,016Other liabilities


66,601



47,499



14,138







128,238



59,884



48,579



14,908







123,371Intercompany payable (receivable)


892,158



(927,927
)


35,769











906,685



(932,193
)


25,508







Total liabilities


1,347,812



(613,411
)


68,831







803,232



1,450,053



(549,986
)


59,216







959,283Shareholders equity


2,371,528



3,659,034



277,642



(3,936,676
)


2,371,528



2,369,307



3,681,074



285,776



(3,966,850
)


2,369,307Total liabilities and shareholders equity

$
3,719,340


$
3,045,623


$
346,473


$
(3,936,676
)

$
3,174,760


$
3,819,360


$
3,131,088


$
344,992


$
(3,966,850
)

$
3,328,590  26




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##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENTS OF INCOME
    (In thousands)
    (Unaudited)
  Three Months Ended March 31, 2010


Three Months Ended March 31, 2009Non














NonGuarantor


Guarantor





King





Guarantor


Guarantor





KingKing


Subsidiaries


Subsidiaries


Eliminations


Consolidated


King


Subsidiaries


Subsidiaries


Eliminations


ConsolidatedRevenues:Net sales

$
92,938


$
356,794


$
37,442


$
(114,109
)

$
373,065


$
95,149


$
397,356


$
30,477


$
(108,683
)

$
414,299Royalty revenue






7,790











7,790







14,758











14,758Total revenues


92,938



364,584



37,442



(114,109
)


380,855



95,149



412,114



30,477



(108,683
)


429,057Operating costs and expenses:Cost of revenues


19,737



197,575



22,044



(112,302
)


127,054



26,930



209,395



23,101



(108,487
)


150,939Selling, general and administrative


49,764



82,838



7,873







140,475



59,419



76,219



6,685







142,323Research and development


2,184



24,714



1,426







28,324



1,609



24,327



1,320







27,256Depreciation and amortization


6,174



50,200



901







57,275



4,857



47,946



546







53,349Restructuring charges


2



260











262



13,504



34,546











48,050Total operating costs and expenses


77,861



355,587



32,244



(112,302
)


353,390



106,319



392,433



31,652



(108,487
)


421,917Operating income (loss)


15,077



8,997



5,198



(1,807
)


27,465



(11,170
)


19,681



(1,175
)


(196
)


7,140Other income (expense):Interest income


279



50



80







409



1,449



267



1,072







2,788Interest expense


(7,701
)


(988
)


(47
)






(8,736
)


(22,066
)


(961
)


(76
)






(23,103
)Loss on investments


(872
)














(872
)


(823
)














(823
)Other, net


93



137



(433
)






(203
)


(441
)


(99
)


(2,239
)






(2,779
)Equity in earnings (loss) of subsidiaries


4,461



2,760



(20
)


(7,201
)






12,618



7,810



(20
)


(20,408
)


Intercompany interest (expense) income


(2,093
)


7,557



(5,464
)










(1,391
)


3,748



(2,357
)






Total other (expense) income


(5,833
)


9,516



(5,884
)


(7,201
)


(9,402
)


(10,654
)


10,765



(3,620
)


(20,408
)


(23,917
)Income (loss) before income taxes


9,244



18,513



(686
)


(9,008
)


18,063



(21,824
)


30,446



(4,795
)


(20,604
)


(16,777
)Income tax expense (benefit)


4,775



7,871



948







13,594



(11,102
)


5,984



(937
)






(6,055
)Net income (loss)

$
4,469


$
10,642


$
(1,634
)

$
(9,008
)

$
4,469


$
(10,722
)

$
24,462


$
(3,858
)

$
(20,604
)

$
(10,722
)  27




---



##### Table of Contents



KING
    PHARMACEUTICALS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
    (In thousands) 
    (Unaudited)
  Three Months Ended March 31, 2010


Three Months Ended March 31, 2009Non











NonGuarantor


Guarantor


King





Guarantor


Guarantor


KingKing


Subsidiaries


Subsidiaries


Consolidated


King


Subsidiaries


Subsidiaries


ConsolidatedCash flows provided by (used in) operating activities

$
18,877


$
(12,301
)

$
(8,377
)

$
(1,801
)

$
(22,649
)

$
49,858


$
(15,875
)

$
11,334Cash flows from investing activities:Transfers to restricted cash


(3
)










(3
)


(38
)


(27
)






(65
)Proceeds from maturities and sales of investments in debt
    securities


16,810











16,810



8,000











8,000Purchases of property, plant and equipment


(4,344
)


(3,361
)


(88
)


(7,793
)


(4,681
)


(2,099
)


(112
)


(6,892
)Proceeds from the sale of
    Kadian®






20,000







20,000















Proceeds from sale of property and equipment






73







73















Acquisition of Alpharma


















(13,104
)


(56,602
)






(69,706
)Acquisition of
    Avinza®


















(1
)










(1
)Forward foreign exchange contracts


























5,406



5,406Purchases of intellectual property and product rights






(504
)






(504
)






(548
)






(548
)Net cash provided by (used in) investing activities


12,463



16,208



(88
)


28,583



(9,824
)


(59,276
)


5,294



(63,806
)Cash flows from financing activities:Proceeds from exercise of stock options


742











742



36











36Net (payments) proceeds related to stock-based award activity


(3,905
)










(3,905
)


(2,000
)










(2,000
)Payments on debt


(92,261
)






(293
)


(92,554
)


(48,022
)


(385,227
)






(433,249
)Debt issuance costs


















(1,220
)










(1,220
)Intercompany


(12,404
)


2,150



10,254







(119,091
)


116,338



2,753



Net cash (used in) provided by financing activities


(107,828
)


2,150



9,961



(95,717
)


(170,297
)


(268,889
)


2,753



(436,433
)Effect of exchange rate changes on cash










(4,614
)


(4,614
)










(14,514
)


(14,514
)(Decrease) increase in cash and cash equivalents


(76,488
)


6,057



(3,118
)


(73,549
)


(202,770
)


(278,307
)


(22,342
)


(503,419
)Cash and cash equivalents, beginning of period


277,603



30,779



236,930



545,312



401,657



289,996



248,559



940,212Cash and cash equivalents, end of period

$
201,115


$
36,836


$
233,812


$
471,763


$
198,887


$
11,689


$
226,217


$
436,793  28




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion contains certain forward-looking
    statements that reflect managements current views of
    future events and operations. This discussion should be read in
    conjunction with the following: (a) our audited
    consolidated financial statements and related notes which are
    included in our Annual Report on
    Form 10-K
    for the year ended December 31, 2009; and (b) our
    unaudited condensed consolidated financial statements and
    related notes which are included in this Quarterly Report on
    Form 10-Q.
    Please see the sections entitled Risk Factors in our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2009, and Risk
    Factors and A Warning About Forward-Looking
    Statements in this Quarterly Report on
    Form 10-Q
    for a discussion of the uncertainties, risks and assumptions
    associated with these statements.
  I.
    OVERVIEW  Our
    Business
    
    research and development
    manufacturing
    packaging
    quality control and assurance
    distribution
    sales and marketing
    business development
    regulatory management           29




---



##### Table of Contents



Recent
    Developments
  Acurox®

    Tablets
  ® ® ® ® ® ®
  ® ® ® ® ® ® ®
  Acurox®

    Tablets (without niacin)
  ® ® ®
  ® ® ® ®
  Department
    of Justice Investigation
  ® ®
   30




---



##### Table of Contents



Skelaxin®
  ® ® ® ®
  ®
  Patient
    Protection and Affordable Care Act
      II.
    RESULTS
    OF OPERATIONS  Three
    Months Ended March 31, 2010 and 2009
  Revenues
    For the Three Months


ChangeEnded March 31,


2010 vs. 20092010


2009


$


%(In thousands)Total RevenuesBranded prescription pharmaceuticals

$
241,541


$
277,704


$
(36,163
)


(13.0
)%Animal Health


81,314



79,835



1,479



1.9Meridian Auto-Injector


49,827



56,607



(6,780
)


(12.0
)Royalties and other


8,173



14,911



(6,738
)


(45.2
)Total revenues

$
380,855


$
429,057


$
(48,202
)


(11.2
)%  31




---



##### Table of Contents



For the Three MonthsEnded March 31,2010


2009(In thousands)Gross Revenues

$
470,145


$
507,044Commercial Rebates


15,929



15,459Medicare Part D Rebates


3,765



2,539Medicaid Rebates


10,940



11,623Chargebacks


28,222



28,176Returns


10,757



2,883Trade Discounts/Other


19,677



17,307Net Revenues

$
380,855


$
429,057     ® ® ® ® ® ®
    Accrual
    for Rebates, including Administrative Fees (in
    thousands):
  2010


2009Balance at January 1, net of prepaid amounts

$
44,439


$
58,129Current provision related to sales made in current period


30,431



28,512Current provision related to sales made in prior periods


203



1,109Alpharma acquisition


(124
)


1,772Rebates paid


(29,580
)


(34,482
)Balance at March 31, net of prepaid amounts

$
45,369


$
55,040     Accrual
    for Returns (in thousands):
  2010


2009Balance at January 1

$
30,345


$
33,471Current provision


10,757



2,883Actual returns


(9,729
)


(4,646
)Ending balance at March 31

$
31,373


$
31,708  32




---



##### Table of Contents



Accrual
    for Chargebacks (in thousands):
  2010


2009Balance at January 1

$
10,593


$
9,965Current provision


28,222



28,176Actual chargebacks


(28,589
)


(27,244
)Ending balance at March 31

$
10,226


$
10,897   Branded
    Prescription Pharmaceuticals
  For the Three Months


ChangeEnded March 31,


2010 vs. 20092010


2009


$


%(In thousands)Branded prescription pharmaceuticals revenue:Skelaxin®

$
90,917


$
100,599


$
(9,682
)


(9.6
)%Thrombin-JMI®


36,932



47,339



(10,407
)


(22.0
)Flector®Patch


33,532



16,776



16,756



99.9Avinza®


23,196



38,980



(15,784
)


(40.5
)Embeda®


9,075







9,075



Levoxyl®


15,355



19,572



(4,217
)


(21.5
)Other


32,534



54,438



(21,904
)


(40.2
)Total revenue

$
241,541


$
277,704


$
(36,163
)


(13.0
)%   Skelaxin®
  ® ® ® ® ®
  Thrombin-JMI®
  ® ®
  Flector®

    Patch
  ® ® ® ® ® ®
 33




---



##### Table of Contents



Avinza®
  ® ® ®
  ®
  Embeda®
  ® around-the-clock ® ®
  ® ® ®
  ®
  Levoxyl®
  ® ®
  Other
  ®
  ® ® ® ®
  ®
  Animal
    Health
   34




---



##### Table of Contents



Meridian
    Auto-Injector
    ® ® ®
  Royalties
    and other
  ®
  ® ® ® ®
  ®
  Operating
    Costs and Expenses
  For the Three Months


ChangeEnded March 31,


2010 vs. 20092010


2009


$


%(In thousands)Cost of revenues, exclusive of depreciation and amortization

$
127,054


$
150,939


$
(23,885
)


(15.8
)%Selling, general and administrative


140,475



142,323



(1,848
)


(1.3
)Research and development


28,324



27,256



1,068



3.9Depreciation and amortization


57,275



53,349



3,926



7.4Restructuring charges


262



48,050



(47,788
)


(99.5
)Total operating costs and expenses

$
353,390


$
421,917


$
(68,527
)


(16.2
)%   Cost
    of Revenues
  ® ®
 35




---



##### Table of Contents



®
    ®
  Selling,
    General and Administrative Expenses
  For the Three Months


ChangeEnded March 31,


2010 vs. 20092010


2009


$


%(In thousands)Selling, general and administrative

$
140,475


$
138,534


$
1,941



1.4
%Acquisition related costs






3,789



(3,789
)


(100.0
)Total selling, general and administrative

$
140,475


$
142,323


$
(1,848
)


(1.3
)%     ® ®
    ®
    Research
    and Development Expense
   36




---



##### Table of Contents



Depreciation
    and Amortization Expense
  ®
    ® ®
  Other
    Operating Expenses
  ®
  Non-Operating
    Items
  For the Three MonthsEnded March 31,2010


2009(In thousands)Interest income

$
409


$
2,788Interest expense


(8,736
)


(23,103
)Loss on investment


(872
)


(823
)Other, net


(203
)


(2,779
)Total other income


(9,402
)


(23,917
)Income tax expense (benefit)


13,594



(6,055
)   Interest
    Income
    Interest
    Expense
      
    The liability and equity components of the $400,000
    11/4% Convertible
    Senior Notes due April 1, 2026 (the Convertible
    Senior Notes) have been separately accounted for in a
    manner that reflects our nonconvertible debt borrowing rate at
    the date of issuance. The debt component is being amortized
    through March 31, 2013, 37




---



##### Table of Contents



which is reflected as an increase in interest expense. Interest
    expense in the first quarter of 2010 and 2009 reflects non-cash
    interest of $4.7 million and $4.4 million,
    respectively, due to the accretion of the debt component of the
    Convertible Senior Notes.  
    A loss of $0.9 million and $0.8 million in the first
    quarter of 2010 and 2009, respectively, related to our
    investments in debt securities.  Income
    Tax Expense
      Liquidity
    and Capital Resources
  General
      Investments
    in Debt Securities
       38




---



##### Table of Contents



available-for-sale
  other-than-temporary.
      Skelaxin®
  ® ® ® ®
   39




---



##### Table of Contents



Kadian®
  ® ® ® ®
  ®
  Maximum PurchasePrice PaymentFirst Quarter 2009

$30.0 millionSecond Quarter 2009

25.0 millionThird Quarter 2009

25.0 millionFourth Quarter 2009

20.0 millionFirst Quarter 2010

20.0 millionSecond Quarter 2010

7.5 million   ® ®
  Alpharma
       40




---



##### Table of Contents



Senior
    Secured Revolving Credit Facility
              CorePharma,
    LLC
  ®
  Acura
    Pharmaceuticals, Inc.
  ® ® ® ®
  ®
 41




---



##### Table of Contents



® ®
  Avinza®
  ® ®
  ® ®
  
    If calendar year net sales are less than $200.0 million,
    the royalty payment will be 5% of all net sales.
    If calendar year net sales are greater than $200.0 million,
    then the royalty payment will be 10% of all net sales up to
    $250.0 million, plus 15% of net sales greater than
    $250.0 million.  Patient
    Protection and Affordable Care Act
      Other
  ® ®
  ® ®
 42




---



##### Table of Contents



® ® ® ® ® ® ®
  Patent
    Challenges
  ® ® ® ® ® ® ®
  Cash
    Flows
  Operating
    Activities
  For the Three MonthsEnded March 31,2010

2009(In thousands)Net cash (used in) provided by operating activities

$
(1,801
)

$
11,334       ®
 43




---



##### Table of Contents



For the Three MonthsEnded March 31,2010


2009(In thousands)Accounts receivable, net of allowance

$
1,866


$
16,726Inventories


(7,663
)


(20,345
)Prepaid expenses and other current assets


(9,873
)


1,437Accounts payable


5,469



(45,471
)Accrued expenses and other liabilities


(70,725
)


(18,853
)Income taxes payable


(905
)


(9,552
)Deferred revenue


(1,170
)


(1,170
)Other assets


(4,614
)


988Deferred taxes


11,650



(5,135
)Total changes from operating assets and liabilities and deferred
    taxes

$
(75,965
)

$
(81,375
)   Investing
    Activities
  For the Three MonthsEnded March 31,2010

2009(In thousands)Net cash provided by (used in) investing activities

$
28,583


$
(63,806
)   ®
    Financing
    Activities
  For the Three MonthsEnded March 31,2010

2009(In thousands)Net cash used in financing activities

$
(95,717
)

$
(436,433
)     Certain
    Indebtedness and Other Matters
  Convertible
    Senior Notes
  1 4
 44




---



##### Table of Contents



Senior
    Secured Revolving Credit Facility
            
    a base rate generally defined as the sum of (i) the greater
    of (a) the prime rate of Credit Suisse and (b) the
    federal funds effective rate plus 0.5% and
    (ii) 4.0%; or
    an adjusted rate generally defined as the sum of (i) the
    product of (a) LIBOR (by reference to the British Banking
    Association Interest Settlement Rates) and (b) a fraction,
    the numerator of which is one and the denominator of which is
    the number one minus certain maximum statutory reserves for
    Eurocurrency liabilities and (ii) 5.0%.      
    maintenance of maximum funded debt to consolidated EBITDA ratios
    that range from 1.50:1 to 3.25:1 (depending on dates and the
    occurrence of certain events relating to certain
    patents); and
    maintenance of minimum consolidated EBITDA to interest expense
    ratios that range from 3.75:1 to 4.00:1 (depending on dates and
    the occurrence of certain events relating to certain patents).   45




---



##### Table of Contents



Impact
    of Inflation
    Recently
    Issued Accounting Standards
    Critical
    Accounting Policies and Estimates
              
    Intangible assets, goodwill, and other long-lived
    assets.  When we acquire product rights in
    conjunction with either business or asset acquisitions, we
    allocate an appropriate portion of the purchase price to
    intangible assets, goodwill and other long-lived assets. The
    purchase price is allocated to products, acquired 46




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##### Table of Contents



research and development, if any, and other intangibles using
    the assistance of valuation consultants. We estimate the useful
    lives of the assets by factoring in the characteristics of the
    products such as: patent protection, competition by products
    prescribed for similar indications, estimated future
    introductions of competing products, and other issues. The
    factors that drive the estimate of the life of the asset are
    inherently uncertain. We use a straight-line method of
    amortization for our intangible assets.        GrossCarrying


Accumulated


Net BookAmount


Amortization


Value(In thousands)Branded Prescription PharmaceuticalsAvinza®

$
290,133


$
82,372


$
207,761Skelaxin®


288,049



268,070



19,979Sonata®


61,961



61,961



Flector®

    Patch


130,000



14,773



115,227Neuroscience


770,143



427,176



342,967Synercid®


70,959



49,330



21,629Other hospital


8,442



6,808



1,634Hospital


79,401



56,138



23,263Bicillin®


92,350



35,897



56,453Other legacy products


324,035



281,966



42,069Legacy products


416,385



317,863



98,522Total Branded


1,265,929



801,177



464,752Animal Health


169,923



12,041



157,882Meridian Auto-Injector


184,206



51,789



132,417Royalties and other


3,731



3,521



210Total intangible assets

$
1,623,789


$
868,528


$
755,261  47




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Three Months Ended


Three Months EndedMarch 31, 2010


March 31, 2009Amortization





AmortizationImpairments


Expense


Impairments


Expense(In thousands)


(In thousands)Branded Prescription PharmaceuticalsAvinza®

$



$
6,775


$



$
6,638Skelaxin®






23,247







20,041Flector®

    Patch






2,955







2,955Neuroscience






32,977







29,634Synercid®






1,442







1,484Other hospital






76







76Hospital






1,518







1,560Bicillin®






925







925Other legacy products






1,430







1,430Legacy products






2,355







2,355Total Branded






36,850







33,549Animal Health






2,408







2,408Meridian Auto-Injector






2,168







2,035Royalties and other






11







186Total

$



$
41,437


$



$
38,178     Remaining Life at March 31, 2010Skelaxin®

3 monthsAvinza®

7 years 8 monthsSynercid®

3 years 9 monthsBicillin®

15 years 3 monthsFlector®

    Patch

9 years 9 months   
    Inventories.  Our inventories are valued at the
    lower of cost or market value. We evaluate our entire inventory
    for short-dated or slow-moving product and inventory commitments
    under supply agreements based on projections of future demand
    and market conditions. For those units in inventory that are so
    identified, we estimate their market value or net sales value
    based on current realization trends. If the projected net
    realizable value is less than cost, on a product basis, we make
    a provision to reflect the lower value of that inventory. This
    methodology recognizes projected inventory losses at the time
    such losses are evident rather than at the time goods are
    actually sold. We maintain supply agreements with some of our
    vendors which contain minimum purchase requirements. We estimate
    future inventory requirements based on current facts and trends.
    Should our minimum purchase requirements under supply
    agreements, or if our estimated future inventory requirements
    exceed actual inventory quantities that we will be able to sell
    to our customers, we record a charge in costs of revenues.
    Accruals for rebates, returns and
    chargebacks.  We establish accruals for returns,
    chargebacks, Medicaid, Medicare and commercial rebates in the
    same period we recognize the related sales. The accruals reduce
    revenues and are included in accrued expenses. At the time a
    rebate or chargeback payment is made or a product return is
    received, which occurs with a delay after the related sale, we
    record a reduction to accrued expenses and, at the end of each
    quarter, adjust accrued expenses for differences between
    estimated and actual payments. Due to estimates and assumptions
    inherent in determining the amount of returns, chargebacks and
    rebates, the actual amount of product returns and claims for
    chargebacks and rebates may be different from our estimates. 48




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##### Table of Contents




    Investments in debt securities.  Prior to the
    end of the first quarter of 2008, we undertook investments in
    debt securities. Tax-exempt auction rate securities are
    long-term variable rate bonds tied to short-term interest rates
    that are reset through an auction process generally every seven,
    28 or 35 days. On February 11, 2008, we began to
    experience auction failures with respect to our investments in
    auction rate securities. All of our investments in auction rate
    securities have experienced multiple failed auctions. We will
    not be able to liquidate these securities until a successful
    auction occurs, the issuer calls or restructures the underlying
    security, the underlying security matures or it is purchased by
    a buyer outside the auction process. Based on the frequency of
    auction failures and the lack of market activity, current market
    prices are not available for determining the fair value of these
    investments. As a result, we measure these investments using
    unobservable inputs.    
    Revenue recognition.  Revenue is recognized
    when title and risk of loss are transferred to customers,
    collection of sales is reasonably assured, and we have no
    further performance obligations. This is generally at the time
    products are received by the customer. Accruals for estimated
    returns, rebates and chargebacks, determined based on historical
    experience, reduce revenues at the time of sale and are included
    in accrued expenses. Medicaid and certain other governmental
    pricing programs involve particularly difficult interpretations
    of relevant statutes and regulatory guidance, which are complex
    and, in certain respects, ambiguous. Moreover, prevailing
    interpretations of these statutes and guidance can change over
    time. We launched
    Embeda®

    in late September 2009. We have recognized revenue on
    Embeda®

    in a manner consistent with our other products, as described
    above, which is generally at the time the product is received by
    the customer. We believe
    Embeda®

    has similar characteristics of certain of our other
    pharmaceutical products such that we can reliably estimate
    expected returns of the product. Royalty revenue is recognized
    based on a percentage of sales (namely, contractually
    agreed-upon
    royalty rates) reported by third parties. 49




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##### Table of Contents



A WARNING
    ABOUT FORWARD-LOOKING STATEMENTS
        
    expectations regarding the outcome of various pending legal
    proceedings including the
    Skelaxin®,

    Avinza®

    and
    EpiPen®

    patent challenges, litigation, and other legal proceedings
    described in this report;
    expectations regarding the enforceability and effectiveness of
    product-related patents, including, in particular, patents
    related to
    Skelaxin®,

    Avinza®,

    EpiPen®

    and
    Adenoscan®;
    the potential of, including anticipated net sales and
    prescription trends for, our branded prescription pharmaceutical
    products, particularly
    Skelaxin®,

    Avinza®,

    Thrombin-JMI®,

    Flector®

    Patch,
    Embeda®,

    Levoxyl®

    and
    Cytomel®;
    expected trends and projections with respect to particular
    products, reportable segment and income and expense line items;
    the adequacy of our liquidity and capital resources and our
    ability to enter into borrowing arrangements in the future;
    anticipated capital expenditures;
    the development, approval and successful commercialization of
    Remoxy®,

    Acurox®

    Tablets,
    CorVuetm

    and other products;
    the cost of and the successful execution of our growth and
    restructuring strategies;
    anticipated developments and expansions of our business;
    our plans for the manufacture of some of our products, including
    products manufactured by third parties;
    the potential costs, outcomes and timing of research, clinical
    trials and other development activities involving pharmaceutical
    products, including, but not limited to, the timing or outcomes
    of regulatory processes or the magnitude and timing of potential
    payments to third parties in connection with development
    activities;
    the development of product line extensions;
    the expected timing of the initial marketing of certain products;
    products developed, acquired or in-licensed that may be
    commercialized;
    our intent, beliefs or current expectations, primarily with
    respect to our future operating performance;
    expectations regarding sales growth, gross margins,
    manufacturing productivity, capital expenditures and effective
    tax rates;
    expectations regarding our financial condition and liquidity as
    well as future cash flows and earnings; and
    expectations regarding our ability to liquidate our holdings of
    auction rate securities and the temporary nature of unrealized
    losses recorded in connection with some of those securities. 50




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##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Form 10-K
  Item 4.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
   51




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##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
  Net
    sales of
    Skelaxin®

    will decline significantly as the result of competition from
    generic products.
  ® ® ®
  Item 6.
    Exhibits  ExhibitNumber

Description10
.1*(1)

Form of Option Certificate and Nonstatutory Stock Option
    Agreement10
.2*(1)

Form of Restricted Stock Certificate and Restricted Stock Grant
    Agreement10
.3*(1)

Form of Long-Term Performance Unit Award Agreement 
    One-Year Performance Cycle10
.4*(1)

Form of Long-Term Performance Unit Award Agreement 
    Three-Year Performance Cycle10
.5

Settlement Agreement, dated as of March 16, 2010, by and
    among the U.S. Department of Justice on behalf of the
    Office of Inspector General of the Department of Health and
    Human Services; the TRICARE Management Activity; the
    U.S. Office of Personnel Management; Alpharma Inc.;
    Alpharma Pharmaceuticals LLC; Debra Parks; and King
    Pharmaceuticals, Inc., as guarantor.31
.1

Certificate of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certificate of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certificate of Chief Executive Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certificate of Chief Financial Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     *
    
    Denotes management contract or compensatory plan or arrangement.(1)
    
    Incorporated by reference to Kings Current Report on
    Form 8-K,
    dated March 23, 2010. 52




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##### Table of Contents



SIGNATURES      By:
    /s/  Brian
    A. Markison   President and Chief Executive Officer
    By:
    /s/  Joseph
    Squicciarino   Chief Financial Officer
   53