<PAGE>   1

--------------------------------------------------------------------------------
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ---------------------

                                   FORM 10-Q

<TABLE>
<C>               <S>
   (MARK ONE)
      [X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
                                               OR
      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>

                          COMMISSION FILE NO. 0-24425

                           KING PHARMACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                    <C>
              TENNESSEE                             54-1684963
   (State or other jurisdiction of               (I.R.S. Employer
   Incorporation or organization)               Identification No.)
</TABLE>

<TABLE>
<S>                                    <C>
          501 FIFTH STREET
             BRISTOL, TN                               37620
   (Address of principal executive                  (Zip Code)
              offices)
</TABLE>

      Registrant's telephone number, including area code:  (423) 989-8000

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

<TABLE>
<CAPTION>
              CLASS                OUTSTANDING SHARES AT AUGUST 10, 2000
              -----                -------------------------------------
<S>                                <C>
             Common                            92,150,970
</TABLE>

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<PAGE>   2

ITEM 1: FINANCIAL STATEMENTS

                           KING PHARMACEUTICALS, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                               JUNE 30,     DECEMBER 31,
                                                                 2000           1999
                                                              -----------   ------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................   $ 73,554       $ 20,720
  Investments held to maturity..............................         --         17,001
  Accounts receivable, net..................................     89,535         75,906
  Inventory.................................................     60,101         33,410
  Deferred income taxes.....................................     14,522         14,643
  Prepaid expenses and other assets.........................      8,455          9,443
                                                               --------       --------
          Total current assets..............................    246,167        171,123
                                                               --------       --------
Investments held to maturity................................         --         33,583
Property, plant and equipment, net..........................     98,794         97,759
Intangible assets, net......................................    545,939        558,555
Other assets................................................     11,319         20,321
                                                               --------       --------
          Total assets......................................   $902,219       $881,341
                                                               ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt:
     Term loans.............................................   $  1,411       $ 12,962
     Other..................................................      1,501          1,540
  Accounts payable..........................................     36,564         25,447
  Accrued expenses..........................................     54,420         53,735
  Income taxes payable......................................      1,228          4,756
                                                               --------       --------
          Total current liabilities.........................     95,124         98,440
                                                               --------       --------
Long-term debt:
  Revolving Credit Facility.................................         --         45,000
  Term loans................................................    137,540        354,194
  Senior Subordinated Notes.................................    150,000        150,000
  Other.....................................................      3,932          4,161
Other long-term liabilities.................................     26,500          1,500
Deferred income taxes.......................................     12,516         12,638
                                                               --------       --------
          Total liabilities.................................    425,612        665,933
                                                               --------       --------
Shareholders' equity........................................    476,607        215,408
                                                               --------       --------
          Total liabilities and shareholders' equity........   $902,219       $881,341
                                                               ========       ========
</TABLE>

                            See accompanying notes.

                                        2
<PAGE>   3

                           KING PHARMACEUTICALS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                     FOR THE THREE MONTHS     FOR THE SIX MONTHS
                                                         ENDED JUNE 30          ENDED JUNE 30
                                                     ---------------------   --------------------
                                                       2000        1999        2000       1999
                                                     ---------   ---------   --------   ---------
                                                          (UNAUDITED)            (UNAUDITED)
<S>                                                  <C>         <C>         <C>        <C>
REVENUES:
          Total net revenues.......................  $ 103,144   $  84,939   $194,585   $ 152,508
                                                     ---------   ---------   --------   ---------
OPERATING COSTS AND EXPENSES:
     Cost of revenue...............................     30,253      24,712     52,838      41,851
     Selling, general and administrative...........     23,668      16,402     49,379      30,322
     Research and development......................      5,599       4,312      9,033       7,219
     Merger and restructuring costs................         --          --     20,789          --
     Depreciation and amortization.................      7,915       6,529     15,773      12,971
                                                     ---------   ---------   --------   ---------
          Total operating costs and expenses.......     67,435      51,955    147,812      92,363
                                                     ---------   ---------   --------   ---------
OPERATING INCOME...................................     35,709      32,984     46,773      60,145
                                                     ---------   ---------   --------   ---------
OTHER (EXPENSES) INCOME:
     Interest expense..............................    (10,124)    (13,343)   (24,156)    (26,062)
     Interest income...............................        446         764      1,268       1,535
     Other (expenses) income.......................          2          53       (179)        (35)
                                                     ---------   ---------   --------   ---------
          Total other expenses.....................     (9,676)    (12,526)   (23,067)    (24,562)
                                                     ---------   ---------   --------   ---------
Income before income taxes and extraordinary
  item.............................................     26,033      20,458     23,706      35,583
     Income tax expense............................     (9,500)     (7,275)   (15,706)    (12,892)
                                                     ---------   ---------   --------   ---------
Income before extraordinary item...................     16,533      13,183      8,000      22,691
     Extraordinary item net of income taxes........     (4,685)         --     (4,685)       (705)
                                                     ---------   ---------   --------   ---------
NET INCOME.........................................  $  11,848   $  13,183   $  3,315   $  21,986
                                                     =========   =========   ========   =========
Basic income per common share:
     Income before extraordinary item..............  $    0.19   $    0.16   $   0.09   $    0.28
     Extraordinary item............................      (0.06)         --      (0.05)      (0.01)
                                                     ---------   ---------   --------   ---------
     Net income....................................  $    0.13   $    0.16   $   0.04   $    0.27
                                                     =========   =========   ========   =========
Diluted income per common share:
     Income before extraordinary item..............  $    0.19   $    0.16   $   0.09   $    0.27
     Extraordinary item............................      (0.06)         --      (0.05)      (0.01)
                                                     ---------   ---------   --------   ---------
     Net income....................................  $    0.13   $    0.16   $   0.04   $    0.26
                                                     =========   =========   ========   =========
</TABLE>

                            See accompanying notes.

                                        3
<PAGE>   4

                           KING PHARMACEUTICALS, INC.

      CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                           COMMON                          TOTAL
                                                    ---------------------   RETAINED   SHAREHOLDERS'
                                                      SHARES      AMOUNT    EARNINGS      EQUITY
                                                    ----------   --------   --------   -------------
<S>                                                 <C>          <C>        <C>        <C>
Balance, December 31, 1999 as previously
  reported........................................  72,308,391   $ 68,027   $ 80,409     $148,436
  Medco pooling of interests......................  10,827,726     45,866     21,106       66,972
                                                    ----------   --------   --------     --------
Balance, December 31, 1999, as adjusted...........  83,136,117    113,893    101,515      215,408
  Stock options exercised (unaudited).............     124,482      2,954         --        2,954
  Net loss (unaudited)............................          --         --     (8,533)      (8,533)
                                                    ----------   --------   --------     --------
Balance, March 31, 2000 (unaudited)...............  83,260,599    116,847     92,982      209,829
  Options Exercised (unaudited)...................     853,465     14,580         --       14,580
  April 19, 2000, issuance of common shares, net
     of $170 expenses (unaudited).................   6,000,000    165,350         --      165,350
  June 22, 2000, issuance of common shares,
     (unaudited)..................................   1,928,021     75,000                  75,000
  Net income......................................          --         --     11,848       11,848
                                                    ----------   --------   --------     --------
Balance, June 30, 2000 (unaudited)................  92,042,085   $371,777   $104,830     $476,607
                                                    ==========   ========   ========     ========
</TABLE>

                            See accompanying notes.

                                        4
<PAGE>   5

                           KING PHARMACEUTICALS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                              FOR THE SIX MONTHS
                                                                ENDED JUNE 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                  (UNAUDITED)
<S>                                                           <C>        <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES...................  $ 22,238   $ 14,484
                                                              --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sale of short-term investments...........    17,001         --
     Purchase of long-term investments......................        --    (16,000)
     Proceeds from sale of long-term investments............    33,583     13,000
     Proceeds from sale of property and equipment...........       398         19
     Purchases of property and equipment....................    (4,768)    (3,664)
                                                              --------   --------
          Net cash provided by (used in) investing
           activities.......................................    46,214     (6,645)
                                                              --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from exercise of employee stock options.......    17,534        821
     Proceeds from senior subordinated seller notes.........        --    150,000
     Repayment of senior subordinated seller notes..........        --    (75,000)
     Proceeds from long-term debt and capital lease
      obligations...........................................        --         81
     Proceeds from common stock offerings, net..............   240,350         --
     Debt issuance costs....................................        --     (6,746)
     Repayment of revolver..................................   (59,000)   (22,174)
     Borrowings on revolver.................................    14,000      7,000
     Proceeds from exercise of warrants.....................        --        540
     Purchase of stock held in treasury.....................        --     (4,456)
     Repayments of long-term debt and capital lease
      obligations...........................................  (228,502)   (55,918)
                                                              --------   --------
          Net cash used in financing activities.............   (15,618)    (5,852)
                                                              --------   --------
Increase in cash and cash equivalents.......................    52,834      1,987
Cash and cash equivalents, beginning of the period..........    20,720      5,901
                                                              --------   --------
Cash and cash equivalents, end of the period................  $ 73,554   $  7,888
                                                              ========   ========
</TABLE>

                            See accompanying notes.

                                        5
<PAGE>   6

                           KING PHARMACEUTICALS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

1. GENERAL

     The accompanying unaudited interim condensed consolidated financial
statements of King Pharmaceuticals, Inc. (the "Company") have been prepared by
the Company in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X, and accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of items of a normal recurring nature) considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 2000, are not necessarily indicative of the results that may be expected for
the year ended December 31, 2000. The interim statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 8-K filed with the Securities and Exchange Commission on June 23,
2000. The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles.

STOCK SPLIT

     On June 2, 2000 the Company's board of directors declared a three for two
stock split for shareholders of record as of June 12, 2000, distributed June 21,
2000. The stock split has been reflected in all share data contained in these
consolidated financial statements.

Authorized Common Stock

     On June 23, 2000, the shareholders approved at their annual meeting an
amendment to the Charter to increase the number of authorized shares of common
stock to 300 million.

2. NEW ACCOUNTING PRONOUNCEMENTS

     In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is the type
of hedge transaction. The Financial Accounting Standards Board delayed the
effective date of SFAS No. 133 for one year, to fiscal years beginning after
June 15, 2000. The delay, published as SFAS No. 137, applies to quarterly and
annual financial statements. Management is evaluating the provisions of SFAS No.
137, but management does not anticipate its adoption to have a material impact
on the Company's financial position or results of operations.

3. INCOME (LOSS) PER SHARE

     The following table sets forth a reconciliation of the numerators and
denominators in computing income per common share:

<TABLE>
<CAPTION>
                                                 THREE MONTHS        SIX MONTHS ENDED
                                                ENDED JUNE 30,           JUNE 30,
                                              ------------------    ------------------
                                               2000       1999       2000       1999
                                              -------    -------    -------    -------
<S>                                           <C>        <C>        <C>        <C>
Net income..................................  $11,848    $13,183    $ 3,315    $21,986
                                              =======    =======    =======    =======
Weighted average basic shares outstanding...   88,201     82,710     85,707     82,724
Effect of dilutive stock options............    1,039        728      1,042        710
                                              -------    -------    -------    -------
Dilutive shares outstanding.................   89,240     83,438     86,748     83,434
                                              =======    =======    =======    =======
Basic income per common share:
  Income before extraordinary item..........  $  0.19    $  0.16    $  0.09    $  0.28
  Extraordinary item........................    (0.06)        --      (0.05)     (0.01)
                                              -------    -------    -------    -------
     Net income.............................  $  0.13    $  0.16    $  0.04    $  0.27
                                              =======    =======    =======    =======
</TABLE>

                                        6
<PAGE>   7
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                 THREE MONTHS        SIX MONTHS ENDED
                                                ENDED JUNE 30,           JUNE 30,
                                              ------------------    ------------------
                                               2000       1999       2000       1999
                                              -------    -------    -------    -------
<S>                                           <C>        <C>        <C>        <C>
Diluted income per common share:
  Income before extraordinary item..........  $  0.19    $  0.16    $  0.09    $  0.27
  Extraordinary item........................    (0.06)        --      (0.05)     (0.01)
                                              -------    -------    -------    -------
     Net income.............................  $  0.13    $  0.16    $  0.04    $  0.26
                                              =======    =======    =======    =======
</TABLE>

4. INVENTORY

     Inventory consists of the following:

<TABLE>
<CAPTION>
                                                                   JUNE 30,     DECEMBER 31,
                                                                     2000           1999
                                                                  -----------   ------------
                                                                  (UNAUDITED)
    <S>                                                           <C>           <C>
    Finished goods..............................................    $29,783       $18,085
    Work-in-process.............................................     20,613         6,120
    Raw materials...............................................      9,705         9,205
                                                                    -------       -------
                                                                    $60,101       $33,410
                                                                    =======       =======
</TABLE>

5. CONTINGENCIES

     In the normal course of business, the Company is subject to various
regulatory proceedings, lawsuits, claims and other matters. Such matters are
subject to many uncertainties and outcomes are not predictable with assurance.

State of Wisconsin Investment Board.

     On November 30, 1999, the Company entered into an agreement of merger with
Medco pursuant to which the Company acquired Medco in an all stock, tax-free
pooling of interests transaction, which was subject to approval by the Medco
shareholders. On January 5, 2000, Medco issued to its stockholders a proxy
statement with respect to the proposed transaction and noticed a meeting to
approve the transaction for February 10, 2000.

     On January 11, 2000, the State of Wisconsin Investment Board, ("SWIB"), a
Medco shareholder which held approximately 11.6% of the outstanding stock of
Medco, filed suit on behalf of a proposed class of Medco shareholders in the
Court of Chancery for the State of Delaware, New Castle County, against Medco
and members of Medco's board of directors to enjoin the shareholder vote on the
merger and the consummation of the merger. State of Wisconsin Investment Board
v. Bartlett, et al., C.A. No. 17727. SWIB alleged, among other things, that the
proxy materials filed by Medco failed to disclose all material information and
included misleading statements regarding the transaction, its negotiation, and
its approval by the Medco board of directors; that the Medco directors were not
adequately informed and did not adequately inform themselves of all reasonably
available information before recommending the transaction to Medco shareholders;
and that the Medco directors were disloyal and committed waste in allegedly
enabling one of the Medco directors to negotiate the transaction purportedly for
his own benefit and in agreeing to terms that precluded what the complaint
alleged were more beneficial alternative transactions. SWIB also moved for a
preliminary injunction to enjoin the shareholder vote and the merger based on
the claims asserted in its complaint. Medco and the other defendants denied all
allegations and continue to deny them.

     After Medco distributed a supplemental proxy statement on January 31, 2000
and the court postponed the February 10, 2000 vote on the merger agreement for
15 days to allow shareholders sufficient time to consider the supplemental
disclosures, the court rejected SWIB's claims in a February 24 Memorandum

                                        7
<PAGE>   8
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Opinion and denied preliminary injunctive relief because SWIB had not shown a
reasonable likelihood of success following trial on the merits. The court made a
number of preliminary findings, including that the Medco board of directors
properly delegated to one of its directors the responsibility to negotiate the
merger; that the payment of the negotiating fee was a proper exercise of
business judgment and did not constitute waste; that the other merger provisions
were also valid; that the Medco directors were adequately informed of all
material information reasonably available to them prior to approving the merger
agreement; that the Medco directors acted independently and in good faith to
benefit the economic interests of the Medco shareholders; that the alleged
omissions in the proxy statements were not material; and that the Medco board of
directors fully met its duty of complete disclosure with respect to the
transaction.

     SWIB has filed an Application for a Scheduling Order stating its intention
to dismiss the case, before a class has been certified, without prejudice. In
the meantime, the action is still pending. While SWIB has indicated that it does
not intend to prosecute the merits of the case further, another shareholder
could intervene and continue the action. Even though SWIB lost its motion for
preliminary injunction, and is going to dismiss the case, SWIB has claimed that
its attorneys are entitled to an award of attorneys' fees and costs. SWIB has
petitioned the court for approximately $7.26 million in attorneys' fees and
approximately $270,000 in costs.

     A hearing on SWIB's petition to dismiss and for attorneys' fees and costs
was held on June 26, 2000 in the Court of Chancery for the State of Delaware. As
of August 11, 2000, no ruling has been issued.

     The Company believes that SWIB's case, including SWIB's claim for
significant attorneys' fees which includes fees based on a formula related to an
alleged benefit conferred on Medco shareholders, is meritless, and the Company
is vigorously contesting it. The Company believes SWIB's actions did not confer
a benefit on the Medco shareholders. The Company also believes it is unlikely
that another shareholder will intervene to continue the action, but if that
results then the Company will vigorously contest it.

Fluogen(R).

     On April 13, 2000, the Company resumed production of the Company's product
Fluogen(R) upon written certification to the U.S. Food and Drug Administration
("FDA") of its conformance with and completion of all actions required by the
FDA to resume manufacturing, processing, packing and labeling of the product.
The Company must still receive written notification from the FDA permitting
distribution. The FDA will issue to the Company written notification permitting
distribution, upon the FDA's determination that the Company is in substantial
compliance. If the FDA does not allow the Company to distribute Fluogen(R) for
the 2000-2001 flu vaccine season, the Company would suffer an adverse financial
impact.

     Even if the FDA permits the Company to resume distribution of Fluogen(R),
the FDA could also prevent distribution of some or all of the Company's
influenza vaccine inventory.

     The three influenza virus strains that comprise each year's vaccine are
selected annually by governmental authorities based on epidemiologic data
collected worldwide. The growth characteristics of each of the three strains are
unpredictable, resulting in potentially significant variations of vaccine
component yields. Since the final vaccine is comprised of equal proportions of
each strain, a low yield of any one strain will reduce the total number of
vaccine doses available for distribution.

     A write off of in-process or finished inventory of Fluogen(R) or an
unexpectedly low yield of any one strain of the vaccine components could have a
material adverse effect on the Company's business, financial condition and
results of operations.

                                        8
<PAGE>   9
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Other.

     Many distributors, marketers and manufacturers of anorexigenic drugs have
been subject to claims relating to the use of these drugs. The Company is a
defendant in 94 lawsuits, which claim damages for personal injury arising from
the Company's production of the anorexigenic drug phentermine under contract for
SmithKline Beecham Corporation. Generally, the lawsuits allege that the
defendants (1) misled users of the products with respect to the dangers
associated with them, (2) failed to adequately test the products, and (3) knew
or should have known about the negative effects of the drugs, and should have
informed the public about the risks of such negative effects. The actions
generally have been brought by individuals in their own right and have been
filed in various state and federal jurisdictions throughout the United States.
They seek, among other things, compensatory and punitive damages and/or
court-supervised medical monitoring of persons who have ingested the product.
The Company expects to be named in additional lawsuits related to the Company's
production of the anorexigenic drug under contract for SmithKline.

     While the Company cannot predict the outcome of these suits, the Company
believes that the claims against it are without merit and intends to vigorously
pursue all defenses available to it. The Company is being indemnified in all of
these suits by SmithKline for which it manufactured the anorexigenic product,
provided that neither the lawsuits nor the associated liabilities are based upon
the independent negligence or intentional acts of the Company, and intends to
submit a claim for all unreimbursed costs to its product liability insurance
carrier. However, in the event that SmithKline is unable to satisfy or fulfill
its obligations under the indemnity, the Company would have to defend the
lawsuit and be responsible for damages, if any, which are awarded against it or
for amounts in excess of the Company's product liability coverage.

6. LONG-TERM DEBT

     On April 19, 2000, the Company completed an offering of 6,000,000 shares of
common stock, at a price of $41.38 per share. The Company received net proceeds
from the underwriter of $165,350 on April 25, 2000. On April 28, 2000, after
giving the required notice to the Administrative Agent, the Company prepaid
$143,760 of its Senior Credit Facility. On June 22, 2000, the Company issued
1,928,021 shares of common stock to a third party in connection with the
Altace(R) co-promotion agreement. Of the net proceeds of $75 million, $37.5
million was used to make a mandatory prepayment to the outstanding term loans as
required by the Senior Credit Facility.

     As a result of these prepayments, during the three months ended June 30,
2000, an extraordinary charge of $4,685, net of related tax benefits of $2,847,
associated with the write-off of certain unamortized deferred financing costs
was recorded.

     As of June 30, 2000 the Company has $100,000 of availability under the
Senior Credit Facility.

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                   JUNE 30,      DECEMBER 31,
                                                                     2000            1999
                                                                  -----------    ------------
                                                                  (UNAUDITED)
    <S>                                                           <C>            <C>
    Revolving credit facility...................................    $     --       $ 45,000
    Tranche A...................................................          --         97,235
    Tranche B...................................................     137,540        269,921
    Senior subordinated notes...................................     150,000        150,000
    Other.......................................................       3,932          5,701
                                                                    --------       --------
                                                                    $291,472       $567,857
                                                                    ========       ========
</TABLE>

                                        9
<PAGE>   10
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SEGMENT REPORTING

     The Company primarily evaluates its segments based on gross profit.
Reportable segments were separately identified based on revenues, gross profit
and total assets.

     The following represents selected information for the Company's reporting
segments for the periods indicated:

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS      FOR THE SIX MONTHS
                                                      ENDED JUNE 30,           ENDED JUNE 30,
                                                   ---------------------    --------------------
                                                     2000         1999        2000        1999
                                                   ---------    --------    --------    --------
                                                        (UNAUDITED)             (UNAUDITED)
    <S>                                            <C>          <C>         <C>         <C>
    TOTAL REVENUE:
    Branded pharmaceuticals......................  $ 77,953     $61,191     $148,821    $112,130
    Licensed products............................    10,129       8,936       22,871      16,503
    Contract manufacturing.......................    15,333      11,959       28,232      25,624
    All other....................................     4,915       5,479        5,255       6,479
    Eliminations.................................    (5,186)     (2,626)     (10,594)     (8,228)
                                                   --------     -------     --------    --------
      Consolidated total revenues................  $103,144      84,939     $194,585    $152,508
                                                   ========     =======     ========    ========
    GROSS PROFIT:
    Branded pharmaceuticals......................  $ 62,516     $50,996     $119,010    $ 93,738
    Licensed products............................     8,518       7,357       19,365      13,595
    Contract manufacturing.......................      (640)     (1,747)         799        (953)
    All other....................................     2,497       3,621        2,573       4,277
                                                   --------     -------     --------    --------
      Consolidated gross profit..................  $ 72,891     $60,227     $141,747    $110,657
                                                   ========     =======     ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                  AS OF JUNE 30,   AS OF DECEMBER 31,
                                                                       2000               1999
                                                                  --------------   ------------------
                                                                              (UNAUDITED)
    <S>                                                           <C>              <C>
    TOTAL ASSETS:
    Branded pharmaceuticals.....................................     $645,847           $637,225
    Licensed products...........................................       17,203             77,162
    Contract manufacturing......................................      235,958            168,484
    All other...................................................        4,720              1,070
    Eliminations................................................       (1,509)            (2,600)
                                                                     --------           --------
      Consolidated total assets.................................     $902,219           $881,341
                                                                     ========           ========
</TABLE>

     Capital expenditures were $4,768 and $3,664 for the six months ended June
30, 2000 and 1999, respectively. Capital expenditures are substantially utilized
for contract manufacturing.

9. GUARANTOR FINANCIAL STATEMENTS

     The Company's wholly-owned subsidiaries Monarch Pharmaceuticals, Inc.,
Parkedale Pharmaceuticals, Inc., King Pharmaceuticals of Nevada, Inc. and Medco
Research, Inc. (the "Guarantor Subsidiaries") have guaranteed the Company's
performance under the $150,000 of 10 3/4% Senior Subordinated Notes due 2009 on
a joint and several basis. There are no restrictions under the Company's
financing arrangements on the ability of the Guarantor Subsidiaries to
distribute funds to the Company in the form of cash dividends, loans or
advances. The following combined financial data provides information regarding
the financial position, results of operations and cash flows of the Guarantor
Subsidiaries (condensed consolidated/combined financial data). Separate
financial statements and other disclosures concerning the Guarantor Subsidiaries
are not presented because management has determined that such information would
not be material to the holders of the Notes.

                                       10
<PAGE>   11
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                             GUARANTOR SUBSIDIARIES
                       CONDENSED COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               JUNE 30,     DECEMBER 31,
                                                                 2000           1999
                                                              -----------   ------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
ASSETS
Current assets:
  Cash......................................................   $  2,806       $ 12,269
  Investments held to maturity..............................         --         17,001
  Accounts receivable.......................................     77,563         70,073
  Inventory.................................................     55,531         27,433
  Prepaid expenses and other assets.........................      2,046          6,382
  Deferred tax asset........................................        607            607
                                                               --------       --------
          Total current assets..............................    138,553        133,765
                                                               --------       --------
  Investments held to maturity..............................         --         33,583
  Other assets..............................................        625          2,506
  Deferred income taxes.....................................      1,632             --
  Intercompany receivable...................................     49,320             --
  Property, plant, and equipment, net.......................     76,671         75,267
  Intangible assets, net....................................    117,000        120,316
                                                               --------       --------
          Total assets......................................   $383,801       $365,437
                                                               ========       ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
  Accounts payable..........................................   $ 34,704       $ 22,275
  Current portion of long-term debt.........................         27             27
  Accrued expenses..........................................     46,173         44,694
  Income taxes payable......................................     14,038          4,755
                                                               --------       --------
          Total current liabilities.........................     94,942         71,751
                                                               --------       --------
  Other long-term liabilities...............................      1,500          1,500
  Long-term debt............................................         29             42
  Intercompany payable......................................         --         57,290
                                                               --------       --------
          Total liabilities.................................     96,471        130,583
                                                               --------       --------
  Shareholder's equity......................................    287,330        234,854
                                                               --------       --------
          Total liabilities and shareholder's equity........   $383,801       $365,437
                                                               ========       ========
</TABLE>

                                       11
<PAGE>   12
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                             GUARANTOR SUBSIDIARIES
                  CONDENSED COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS      FOR THE SIX MONTHS
                                                      ENDED JUNE 30,           ENDED JUNE 30,
                                                   ---------------------    --------------------
                                                     2000         1999        2000        1999
                                                   ---------    --------    --------    --------
    <S>                                            <C>          <C>         <C>         <C>
    REVENUES:
         Total net revenues......................  $100,010     $79,501     $193,323    $148,974
                                                   --------     -------     --------    --------
    OPERATING COSTS AND EXPENSES:
    Cost of revenues.............................    30,792      22,246       56,541      42,264
    Selling, general and administrative..........    19,946      15,131       42,487      26,673
    Merger and restructuring costs...............        --          --       14,564          --
    Research and development.....................     5,326       2,162        8,500       3,996
    Depreciation and amortization................     2,673       3,681        5,297       9,755
                                                   --------     -------     --------    --------
         Total operating costs and expenses......    58,737      43,220      127,389      82,688
                                                   --------     -------     --------    --------
    OPERATING INCOME.............................    41,274      38,444       65,935      66,286
    Interest expense.............................         1           1            2           1
    Gain on disposition of assets................         4          --           94          69
    Interest income..............................        56         746          673       1,471
    Other income.................................         1          --            1           1
                                                   --------     -------     --------    --------
    Income before income taxes...................    41,324      39,188       66,511      67,686
                                                   --------     -------     --------    --------
    Income tax expense...........................    (9,500)    (14,074)     (23,825)    (25,720)
                                                   --------     -------     --------    --------
         NET INCOME..............................  $ 31,824     $25,114     $ 42,686    $ 41,966
                                                   ========     =======     ========    ========
</TABLE>

                                       12
<PAGE>   13
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                             GUARANTOR SUBSIDIARIES
                  CONDENSED COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                               FOR THE SIX MONTHS
                                                                 ENDED JUNE 30,
                                                              ---------------------
                                                                2000         1999
                                                              ---------    --------
<S>                                                           <C>          <C>
Net cash provided by operating activities...................  $  50,010    $ 27,668
                                                              ---------    --------
Cash flow from investing activities:
  Purchase of investments held to maturity..................         --     (16,000)
  Proceeds from sale of investments.........................     50,584          --
  Maturity of investments held to maturity..................         --      13,000
  Purchases of intangibles..................................         --      (4,889)
  Purchases of property and equipment.......................     (3,477)     (2,563)
                                                              ---------    --------
          Net cash provided by investing activities.........     47,107     (10,452)
                                                              ---------    --------
Cash flows from financing activities:
  Net proceeds from exercise of stock options...............         43         785
  Purchase of stock held in treasury........................         --      (4,456)
  Proceeds from exercise of warrants........................         --         540
  Decrease in intercompany payable..........................   (106,610)    (15,792)
  Increase (decrease) in long-term debt.....................        (13)         81
                                                              ---------    --------
          Net cash provided by financing activities.........   (106,580)    (18,842)
Change in cash and cash equivalents.........................     (9,463)     (1,626)
Cash and cash equivalents, beginning of the period..........     12,269       3,331
                                                              ---------    --------
Cash and cash equivalents, end of the period................  $   2,806    $  1,705
                                                              =========    ========
</TABLE>

10.  MERGER AND RESTRUCTURING COSTS

     On February 25, 2000, the Company completed a merger with Medco by
exchanging 7,221,126 shares of its common stock for all of the common stock of
Medco. Each share of Medco was exchanged for 0.6757 of one share of King common
stock. In addition, outstanding Medco stock options were converted at the same
exchange ratio into options to purchase approximately 700,000 shares of King
common stock. Medco, the common stock of which was previously publicly traded,
is a pharmaceutical company engaged in the global commercialization of
cardiovascular medicines and adenosine-based products. The merger has been
accounted for as a pooling of interests and accordingly, the consolidated
financial statements for the periods presented have been restated to include the
accounts of Medco.

                                       13
<PAGE>   14
                           KING PHARMACEUTICALS, INC.

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The unaudited revenues and net income (loss) of the separate companies for
the periods indicated below were as follows:

<TABLE>
<CAPTION>
                                                         THREE MONTHS          SIX MONTHS
                                                        ENDED JUNE 30,       ENDED JUNE 30,
                                                      ------------------   -------------------
                                                        2000      1999       2000       1999
                                                      --------   -------   --------   --------
<S>                                                   <C>        <C>       <C>        <C>
Revenues:
  King..............................................  $ 93,015   $76,003   $171,714   $136,005
  Medco.............................................    10,129     8,936     22,871     16,502
                                                      --------   -------   --------   --------
                                                      $103,144   $84,939   $194,585   $152,507
                                                      ========   =======   ========   ========
Net income (loss):
  King..............................................  $  8,480   $ 9,890   $  8,950   $ 15,883
  Medco.............................................     3,368     3,293     (5,635)     6,103
                                                      --------   -------   --------   --------
                                                      $ 11,848   $13,183   $  3,315   $ 21,986
                                                      ========   =======   ========   ========
</TABLE>

     In connection with the merger with Medco, in the first quarter of 2000, the
Company incurred merger and restructuring related costs of $20.8 million. The
types of costs incurred, the actual cash payments made and the remaining accrued
balances at June 30, 2000 are summarized below:

<TABLE>
<CAPTION>
                                                  INCOME        ACCRUED         ACTIVITY         ACCRUED
                                                 STATEMENT     BALANCE AT        THROUGH       BALANCE AT
                                                  IMPACT     MARCH 31, 2000   JUNE 30, 2000   JUNE 30, 2000
                                                 ---------   --------------   -------------   -------------
<S>                                              <C>         <C>              <C>             <C>
Transaction costs..............................   $14,389        $5,019          $4,087          $  932
Employee costs and other.......................     6,400         1,715             876             839
                                                  -------        ------          ------          ------
     Total.....................................   $20,789        $6,734          $4,963          $1,771
                                                  =======        ======          ======          ======
</TABLE>

11.  ACQUISITIONS

     On June 22, 2000, the Company entered into a co-promotion agreement with
the Wyeth-Ayerst division of American Home Products Corporation related to the
marketing of Altace(R). In addition, the agreement transferred sales rights of
Nordette(R), Wycillin(R) and Bicillin(R) to King. Subsequently, on July 7, 2000,
the Company completed the acquisition of marketing rights in the United States
and Puerto Rico to the Nordette(R), Bicillin(R), and Wycillin(R) product lines
from American Home Products for $200.0 million as contemplated by the
co-promotion agreement.

     This acquisition was financed with a draw of $10.0 million on a $50.0
million bridge loan, $25.0 million in the form of a note issued to American Home
Products, $37.5 million of the proceeds from the sale of stock to American Home
Products, $25.0 million received in connection with the co-promotion agreement
with American Home Products, $90.0 million from the Revolving Credit Facility
and $12.5 million in excess cash from operations.

     On July 13, 2000, the Company signed an Agreement and Plan of Merger with
Jones Pharma Incorporated. An exchange ratio was set at 1.125 shares of the
Company common stock for each share of Jones common stock. The Company
anticipates merger and restructuring costs to be approximately $18.2 million.

12. SUBSEQUENT EVENT

     On August 4, 2000 the Company terminated a $100.0 million interest rate
swap as a result of the paydown of its variable rate debt. A gain of
approximately $1.4 million will be recognized.

                                       14
<PAGE>   15

                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You should read the following discussion together with the consolidated
financial statements and related notes included in our Current Report on Form
8-K dated June 23, 2000, which is on file with the Securities and Exchange
Commission. The results discussed below are not necessarily indicative of the
results to be expected in any future periods. To the extent that the information
presented in this discussion addresses financial projections, information or
expectations about our products, strategies or markets or otherwise makes
statements about future events, such statements are forward-looking and are
subject to a number of special risks and uncertainties that could cause actual
results to differ materially from the statements made.

OVERVIEW

     We are a vertically integrated pharmaceutical company that manufactures,
markets and sells primarily branded prescription pharmaceutical products.
Through a national sales force of almost 300 representatives and co-promotion
arrangements, we market our branded pharmaceutical products to general/family
practitioners, internal medicine physicians, cardiologists and hospitals across
the country.

     Our primary business strategy is to acquire established branded
pharmaceutical products and to increase their sales through focused marketing
and promotion, life cycle management as well as by securing new indications,
developing product line extensions and devising new formulations or dosages. In
pursuing product acquisitions, we seek to capitalize on opportunities in the
pharmaceutical industry created by cost containment initiatives and
consolidation among large, global pharmaceutical companies. We also seek
attractive company acquisitions that add products or product pipelines,
technologies or sales and marketing capabilities to our key therapeutic areas.
These activities are attractive for us because they may expand the market for
our branded pharmaceutical products, provide market exclusivity or sales levels
that do not attract significant competition. In addition to branded
pharmaceuticals, we also provide contract manufacturing for a number of the
world's leading pharmaceutical and biotechnology companies, including Amgen,
Inc., Warner-Lambert Company, Centocor, Inc., Mallinckrodt Chemical, Inc.,
Genetics Institute, Inc. and Hoffmann-La Roche Inc.

     Our branded pharmaceutical products can be divided primarily into four
therapeutic areas: (i) cardiovascular (including Altace(R), Thalitone(R) and
Procanbid(R)), (ii) anti-infectives (including Lorabid(R), Cortisporin(R),
Neosporin(R) and Coly-Mycin(R) M), (iii) vaccines and biologicals (including
Fluogen(R) and Aplisol(R)) and (iv) women's health (including Menest(R) and
Pitocin(R)). All of these products are marketed to general/family practitioners,
cardiologists, internal medicine physicians and hospitals. Unlike many of our
competitors, we have a broad therapeutic focus which provides us with
opportunities to purchase a wide variety of products, as evidenced by our
acquisition of 34 products over the last 36 months, including Altace(R) and
Lorabid(R). In addition, we have well known products in all of our therapeutic
categories that generate high prescription volumes. Our portfolio of
well-recognized prescription brand names includes, among others, Altace(R),
Lorabid(R), Nordette(R), Neosporin(R), Cortisporin(R), Menest(R), Pitocin(R),
Bicillin(R), Anusol-HC(R) and Fluogen(R).

     We acquired from Glaxo Wellcome the Cortisporin(R) product line in March
1997, the Viroptic(R) product line in May 1997 and six additional branded
products, including Septra(R), and exclusive licenses, free of royalty
obligations, for the prescription formulations of Neosporin(R) and Polysporin(R)
in November 1997.

     In February 1998, we acquired from Warner-Lambert 15 branded pharmaceutical
products, the Parkedale Facility located in Rochester, Michigan and certain
manufacturing contracts for third parties for $127.9 million, including $2.9
million of assumed liabilities.

     In June 1998, launched our new Cortisporin(R)-TC Otic line.
Cortisporin(R)-TC Otic is a product line extension for our Cortisporin(R) Otic
Suspension product.

     In December 1998, we acquired from Hoechst Marion Roussel, Inc.,
predecessor to Aventis Pharma AG, for $362.5 million the United States rights to
Altace(R), an Angiotensin Converting Enzyme inhibitor, HMR's worldwide rights to
Silvadene(R), and HMR's worldwide rights to AVC(TM). Aventis currently
manufactures Altace(R) for us. We anticipate moving the manufacturing of
Altace(R) to the Bristol facility prior to
                                       15
<PAGE>   16

December 31, 2001. Aventis will continue to supply raw materials for the process
and we anticipate that Aventis will continue to be a secondary manufacturer for
this product.

     In August 1999, we acquired the antibiotic Lorabid(R) from Eli Lilly and
Company for $91.8 million including acquisition costs plus sales performance
milestones that could bring the total value of the deal to $158.0 million. The
final contingent payment will be made if we achieve $140.0 million in annual net
sales of Lorabid(R). As part of the agreement, we acquired or licensed all of
Lilly's rights in the United States and Puerto Rico to Lorabid(R) including
Lorabid(R)'s new drug applications, investigational new drug applications, and
certain patents and associated United States copyright and trademark material.
Lilly will manufacture Lorabid(R) for us. Lorabid(R) has United States patent
protection through December 31, 2005.

     On February 25, 2000, we completed the merger with Medco by exchanging
approximately 7.2 million shares of King common stock for all of the outstanding
shares of Medco in an all-stock transaction accounted for as a pooling of
interests. Medco is a research and development company engaged in the
development and global commercialization of cardiovascular medicines and
adenosine-based products.

     On March 19, 2000 our Supplemental New Drug Application to request approval
for new and unique indications for Altace(R) was accepted for review by the FDA.
If approved, we believe these indications will help the company in the future
marketing of Altace(R). Additionally, on June 22, 2000, we entered into a co-
promotion agreement with the Wyeth-Ayerst division of American Home Products
Corporation related to the marketing of Altace(R). In addition, the agreement
transferred sales rights of Nordette(R), Wycillin(R) and Bicillin(R) to King.
Subsequently, on July 7, 2000, we completed the acquisition of marketing rights
in the United States and Puerto Rico to the Nordette(R), Bicillin(R), and
Wycillin(R) product lines from American Home Products for $200.0 million as
contemplated by the co-promotion agreement.

     On July 13, 2000, we entered into a definitive agreement to merge a wholly
owned subsidiary of ours into Jones Pharma Incorporated in an all-stock
transaction accounted for as a pooling of interests. Jones manufactures, markets
and sells branded prescription and critical care pharmaceutical products. During
1999, Jones derived revenues primarily from the sale of Thrombin-JMI(R),
Levoxyl(R), Cytomel(R)/Triostat(R) and Tapazole(R). Jones shareholders will
receive 1.125 shares of our common stock for each share of Jones common stock
they hold. The transaction is subject to the approval of both the shareholders
of Jones and King at special meetings scheduled for August 31, 2000.

     Our strategy is to continue to acquire branded pharmaceutical products and
to create value by leveraging our marketing, manufacturing and product
development capabilities. The success of our marketing strategy will be aided by
gaining approval of the new indications for Altace(R) requested under the
Supplemental New Drug Application, which is now before the FDA, and capitalizing
on that approval by increasing our marketing efforts related to Altace(R),
including the potential execution of co-promotion agreements, and our ability to
continue to develop product line extensions.

     As soon as practicable after regulatory requirements are satisfied and when
advantageous, we expect that manufacturing some of these acquired pharmaceutical
products ourselves will increase our margins because the cost of producing
pharmaceutical products on our own should be lower than the cost of having these
products manufactured by third parties. As discussed above, we anticipate
beginning the manufacturing of Altace(R) in our Bristol, Tennessee facility
prior to December 31, 2001.

     We manufacture pharmaceutical products for a variety of pharmaceutical and
biotechnology companies under contracts expiring at various times within the
next five years. We intend to enter into additional manufacturing contracts in
cases where we identify contracts that offer significant volumes and attractive
revenues. We have not accepted or renewed manufacturing contracts for third
parties where we perceived insignificant volumes or revenues. In accordance with
our focus on branded pharmaceutical products, we expect that, over time, our
contract manufacturing will become a smaller percentage of revenues.

                                       16
<PAGE>   17

     The following summarizes approximate net revenues by operating segment (in
thousands).

<TABLE>
<CAPTION>
                                                      THREE MONTHS             SIX MONTHS
                                                     ENDED JUNE 30,          ENDED JUNE 30,
                                                  --------------------    --------------------
                                                    2000        1999        2000        1999
                                                  --------    --------    --------    --------
                                                                  (UNAUDITED)
    <S>                                           <C>         <C>         <C>         <C>
    Branded pharmaceuticals.....................  $ 77,995    $ 61,173    $148,920    $112,112
    Licensed products...........................    10,129       8,936      22,782      16,502
    Contract manufacturing......................    10,060       9,333      17,487      17,396
    Other.......................................     4,960       5,497       5,306       6,498
                                                  --------    --------    --------    --------
              Total.............................  $103,144    $ 84,939    $194,585    $152,508
                                                  ========    ========    ========    ========
</TABLE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 AND 1999

Revenues

     Net revenues increased $18.2 million, or 21.4%, to $103.1 million in 2000
from $84.9 million in 1999, due primarily to the acquisition and growth of
branded pharmaceutical products. The increase in revenues is primarily from
Altace(R), the acquisition of Lorabid(R), and revenue growth of royalties and
certain branded pharmaceutical products.

     Net sales from branded pharmaceutical products increased $16.8 million, or
27.4%, to $78.0 million in 2000 from $61.2 million in 1999. The acquisition of
Lorabid(R) and revenue gains by Altace(R) accounted for most of the sales
increases. In addition, we also received revenue from sales of Nordette(R),
Wycillin(R) and Bicillin(R) as a result of an agreement with American Home
Products on June 22, 2000 before our acquisition of the marketing rights in the
United States and Puerto Rico of the products on July 7, 2000.

     Fluogen(R) production will be lower in 2000 than in previous years
primarily because of difficulties encountered in producing one component of the
vaccine. On March 10, 2000, the FDA notified us that the methods, facilities and
controls used by Fluogen(R), our influenza virus vaccine, were not in compliance
with current Good Manufacturing Practices, which we refer to as "cGMP"
requirements. The FDA therefore informed Parkedale that it must suspend
production and distribution of Fluogen(R) until the Parkedale facility meets the
applicable cGMP standards for the manufacture and distribution of Fluogen(R).

     On April 13, 2000, the we resumed production of our product Fluogen(R) upon
written certification to the FDA of our conformance with and completion of all
actions required by the FDA to resume manufacturing, processing, packing and
labeling of the product. We must still receive written notification from the FDA
permitting distribution. The FDA will issue us written notification permitting
distribution, upon the FDA's determination that we are in substantial
compliance. If the FDA does not allow us to distribute Fluogen(R) for the
2000-2001 flu vaccine season, we would suffer an adverse financial impact.

     Even if the FDA permits us to resume distribution of Fluogen(R), the FDA
could also prevent distribution of some or all of our influenza vaccine
inventory.

     The three influenza virus strains that comprise each year's vaccine are
selected annually by governmental authorities based on epidemiologic data
collected worldwide. The growth characteristics of each of the three strains are
unpredictable, resulting in potentially significant variations of vaccine
component yields. Since the final vaccine is comprised of equal proportions of
each strain, a low yield of any one strain will reduce the total number of
vaccine doses available for distribution.

     A write off of in-process or finished inventory of Fluogen(R) or an
unexpectedly low yield of any one strain of the vaccine components could have a
material adverse effect on our business, financial condition and results of
operations.

     Revenues from contract manufacturing increased $0.8 million, or 8.6%, to
$10.1 million in 2000 from $9.3 million in 1999. This increase is due to
increased orders from certain of our contract manufacturing

                                       17
<PAGE>   18

customers. While contract manufacturing is an important part of our business, we
do not consider contract manufacturing as a key part of our growth strategy.

     Revenues from licensed products increased $1.2 million, or 13.5%, to $10.1
million in 2000 from $8.9 million in 1999 due to continued increases in unit
sales of Adenoscan(R) by Fujisawa, our North American licensee.

     Net sales from generic and other sources decreased $537,000, or 10.8%, to
$5.0 million in 2000 from $5.5 million in 1999. The decrease in revenues is
primarily attributable to discontinued generic product lines.

Gross Profit

     Total gross profit increased $12.7 million, or 21.1%, to $72.9 million in
2000 from $60.2 million in 1999. The increase was primarily due to increased
gross profit from branded pharmaceutical products.

     The gross profit from branded pharmaceutical products increased $2.5
million, or 4.2%, to $62.5 million in 2000 from $60.0 million in 1999. This
increase was primarily due to increases in gross profit from the sales of
Altace(R), sales of the Lorabid(R) product acquired in August 1999 and our
distribution of Nordette(R), Wycillin(R) and Bicillin(R) which began on June 22,
2000 before the consummation of our acquisition of the marketing rights to these
products on July 7, 2000.

     Gross profit from contract manufacturing decreased $1.1 million, or 63.4%,
to a loss of $1.7 million in 2000 from a loss of $640,000 in 1999.

     Gross profit from licensed products increased $1.1 million, or 14.9%, to
$8.5 million in 2000 from $7.4 million in 1999. This increase is due to the
continuing shift in the product sales mix to Adenoscan(R) from which we receive
a higher net royalty than from Adenocard(R) sales. Royalty expense from
adenosine sales increased $0.1 million, or 6.6%, to $1.6 million in 2000 from
$1.5 million in 1999 due to increased net sales of Adenoscan(R), a product for
which we pay a royalty of 3% of net sales to a third party.

     Gross profit from generic and other sources decreased $1.1 million, or
30.6%, to $2.5 million in 2000 from $3.6 million in 1999.

Operating Costs and Expenses

     Total operating costs and expenses increased $15.4 million, or 29.6%, to
$67.4 million in 2000 from $52.0 million in 1999. The increase was due to
increases in the costs associated with our growth, particularly increases in our
sales force due primarily to the acquisitions of Altace(R), Lorabid(R) and
Medco.

     Cost of revenues increased $5.6 million, or 22.7%, to $30.3 million in 2000
from $24.7 million in 1999. The increase was due primarily to the costs
associated with the acquisition of Lorabid(R) and our distribution of
Nordette(R), Wycillin(R) and Bicillin(R) which began on June 22, 2000 before the
consummation of our acquisition of the marketing rights to these products on
July 7, 2000. As a percentage of total revenues, cost of revenues increased to
29.3% in 2000 from 29.1% in 1999.

     Selling, general and administrative expenses increased $7.3 million, or
44.5%, to $23.7 million in 2000 from $16.4 million in 1999. The increase was
primarily attributable to the hiring of additional sales representatives during
the second half of 1999 and first part of 2000, as well as other personnel
costs, marketing and sampling costs associated with the new branded product
lines. As a percentage of total revenues, selling, general and administrative
expenses increased to 23.0% in 2000 from 19.3% in 1999.

     Expenditures of $5.0 million resulted in a reduction of the accrued balance
from $6.7 million as of March 31, 2000 to $1.7 million at June 30, 2000, for
merger and restructuring costs related to our merger with Medco on February 25,
2000.

     Research and development costs increased $1.3 million, or 30.2%, to $5.6
million in 2000 from $4.3 million in 1999 due to increased research and
development activities.

                                       18
<PAGE>   19

     Depreciation and amortization expense increased $1.4 million, or 21.5%, to
$7.9 million in 2000 from $6.5 million in 1999. This increase was primarily
attributable to the amortization of the fixed assets and intangible asset
acquired in the acquisition of Lorabid(R).

Operating Income

     Operating income increased $2.7 million, or 8.2%, to $35.7 million in 2000
from $33.0 million in 1999. This increase was primarily due to increased
revenues from the acquisition of branded products and revenue growth of certain
branded pharmaceutical products offset by increased expenses described above. As
a percentage of total revenues, operating income decreased to 34.6% in 2000 from
38.9% in 1999.

Interest Expense

     Interest expense decreased $3.2 million, or 24.1%, to $10.1 million in 2000
from $13.3 million in 1999, as a result of paying down the term loans.

Income Tax Expense

     The effective tax rate in 2000 of 36.5% and 1999 of 35.6% was higher than
the federal statutory rate of 35% primarily due to state income taxes.

Extraordinary Item

     During the second quarter of 2000, we repaid outstanding debt under our
senior credit facility prior to maturity. The early repayment caused us to
recognize an extraordinary loss of $4.7 million, net of related tax benefits of
$2.8 million, from the write-off of certain deferred financing costs.

Net Income

     Due to the factors set forth above, net income decreased $1.4 million, or
10.6%, to $11.8 million in 2000 from $13.2 million in 1999.

SIX MONTHS ENDED JUNE 30, 2000 AND 1999

Revenues

     Net revenues increased $42.1 million, or 27.6%, to $194.6 million in 2000
from $152.5 million in 1999, due primarily to the acquisition and growth of
branded pharmaceutical products. The increase in revenues is primarily from
Altace(R), the acquisitions of Lorabid(R) and Nordette(R), and revenue growth of
royalties and certain branded pharmaceutical products.

     Net sales from branded pharmaceutical products increased $36.8 million, or
32.8%, to $148.9 million in 2000 from $112.1 million in 1999. The acquisition of
Lorabid(R) and revenue gains by Altace(R) accounted for most of the sales
increases. In addition, we also received revenue from sales of Nordette(R),
Wycillin(R) and Bicillin(R) as a result of an agreement with American Home
Products on June 22, 2000 before our acquisition of the products on July 7,
2000.

     Fluogen(R) production will be lower in 2000 than in previous years. On
March 10, 2000, the FDA notified us that the methods, facilities and controls
used by Fluogen(R), our influenza virus vaccine, were not in compliance with
cGMP standards. The FDA therefore informed Parkedale that it must suspend
production and distribution of Fluogen(R) until the Parkedale facility meets the
applicable cGMP standards for the manufacture and distribution of Fluogen(R).

     On April 13, 2000, we resumed production of our product Fluogen(R) upon
written certification to the FDA of our conformance with and completion of all
actions required by the FDA to resume manufacturing, processing, packing and
labeling of the product. We must still receive written notification from the FDA
permitting distribution. The FDA will issue us written notification permitting
distribution, upon the FDA's

                                       19
<PAGE>   20

determination that we are in substantial compliance. If the FDA does not allow
us to distribute Fluogen(R) for the 2000-2001 flu vaccine season, we would
suffer an adverse financial impact.

     Even if the FDA permits us to resume distribution of Fluogen(R), the FDA
could also prevent distribution of some or all of our influenza vaccine
inventory.

     The three influenza virus strains that comprise each year's vaccine are
selected annually by governmental authorities based on epidemiologic data
collected worldwide. The growth characteristics of each of the three strains are
unpredictable, resulting in potentially significant variations of vaccine
component yields. Since the final vaccine is comprised of equal proportions of
each strain, a low yield of any one strain will reduce the total number of
vaccine doses available for distribution.

     A write off of in-process or finished inventory of Fluogen(R) or an
unexpectedly low yield of any one strain of the vaccine components could have a
material adverse effect on our business, financial condition and results of
operations.

     Revenues from contract manufacturing increased $0.1 million, or 0.6%, to
$17.5 million in 2000 from $17.4 million in 1999. While contract manufacturing
is an important part of our business, we do not consider contract manufacturing
as a key part of our growth strategy.

     Revenues from licensed products increased $6.3 million, or 38.2%, to $22.8
million in 2000 from $16.5 million in 1999 due to continued increases in unit
sales of Adenoscan(R) by Fujisawa, our North American licensee.

     Net sales from generic and other sources decreased $1.2 million, or 18.5%,
to $5.3 million in 2000 from $6.5 million in 1999. The decrease in revenues is
primarily attributable to discontinued generic product lines.

Gross Profit

     Total gross profit increased $31.2 million, or 28.2%, to $141.8 million in
2000 from $110.6 million in 1999. The increase was primarily due to increased
gross profit from branded pharmaceutical products.

     The gross profit from branded pharmaceutical products increased $25.3
million, or 27.0%, to $119.0 million in 2000 from $93.7 million in 1999. This
increase was primarily due to increases in gross profit from the sales of
Altace(R) and Lorabid(R) and our distribution of Nordette(R), Wycillin(R) and
Bicillin(R) which began on June 22, 2000 before the consummation of our
acquisition of the marketing rights to these products on July 7, 2000.

     Gross profit from contract manufacturing increased $1.8 million, or 183.8%,
to $799,000 in 2000 from a loss of $953,000 in 1999.

     Gross profit from licensed products increased $5.8 million, or 42.6%, to
$19.4 million in 2000 from $13.6 million in 1999, due to the continuing shift in
the product sales mix to Adenoscan from which we receive a higher net royalty
than from Adenocard(R) sales. Royalty expense from adenosine sales increased
$0.6 million, or 20.7%, to $3.5 million in 2000 from $2.9 million in 1999, due
to increased net sales of Adenoscan(R), a product for which we pay a royalty of
3% of net sales to a third party.

     Gross profit from generic and other sources decreased $1.7 million, or
39.5%, to $2.6 million in 2000 from $4.3 million in 1999.

Operating Costs and Expenses

     Total operating costs and expenses increased $55.4 million, or 60.0%, to
$147.8 million in 2000 from $92.4 million in 1999. The increase was due to
increases in the costs associated with our growth, particularly increases in our
sales force due primarily to the acquisitions of Altace(R), Lorabid(R) and
Medco.

     Cost of revenues increased $10.9 million, or 26.0%, to $52.8 million in
2000 from $41.9 million in 1999. The increase was due primarily to the costs
associated with the acquisition of Lorabid(R) and our distribution of
Nordette(R), Wycillin(R) and Bicillin(R) which began on June 22, 2000 before the
consummation of our acquisition

                                       20
<PAGE>   21

of the marketing rights to those products on July 7, 2000. As a percentage of
total revenues, cost of revenues decreased from 27.1% in 2000 to 27.5% in 1999.

     Selling, general and administrative expenses increased $19.1 million, or
63.0%, to $49.4 million in 2000 from $30.3 million in 1999. The increase was
primarily attributable to the hiring of additional sales representatives during
the second half of 1999 and first part of 2000, as well as other personnel
costs, marketing and sampling costs associated with the new branded product
lines. As a percentage of total revenues, selling, general and administrative
expenses increased to 25.4% in 2000 from 19.9% in 1999.

     Research and development costs increased $1.8 million, or 25%, to $9.0
million in 2000 from $7.2 million in 1999 due to increased research and
development activities.

     Merger and restructuring costs of $20.8 million in 2000 were one-time
charges incurred in connection with the acquisition of Medco.

     Depreciation and amortization expense increased $2.8 million, or 21.5%, to
$15.8 million in 2000 from $13.0 million in 1999. This increase was primarily
attributable to the amortization of the fixed assets and the intangible asset
acquired in the acquisition of Lorabid(R).

Operating Income

     Operating income decreased $13.3 million, or 22.1%, to $46.8 million in
2000 from $60.1 million in 1999. This decrease was primarily due to increased
revenues from the acquisition of branded products and revenue growth of certain
branded pharmaceutical products offset by merger and restructuring one-time
charges and other increased expenses described above. As a percentage of total
revenues, operating income decreased to 24.0% in 2000 from 39.4% in 1999.

Interest Expense

     Interest expense decreased $1.9 million, or 7.3%, to $24.2 million in 2000
from $26.1 million in 1999, as a result of paying down the term loans used to
finance, in part, the acquisitions of Altace(R) and Lorabid(R).

Income Tax Expense

     The effective tax rate in 2000 of 66.3% and 1999 of 36.2% was higher than
the federal statutory rate of 35%. The effective tax rate for 2000 is primarily
due to non-deductible merger and restructuring costs related to our merger with
Medco.

Extraordinary Item

     During the second quarter of 2000, we repaid outstanding debt under our
senior credit facility prior to maturity. The early repayment caused us to
recognize an extraordinary loss of $4.7 million, net of related tax benefits of
$2.8 million, from the write-off of certain deferred financing costs. During the
first quarter of 1999, we repaid $75.0 million of Senior Subordinated Notes
prior to maturity. The early repayment of the notes caused us to recognize an
extraordinary loss of $705,000, net of related tax benefits of $445,000, from
the write-off of certain deferred financing costs.

Net Income

     Due to the factors set forth above, net income decreased $18.7 million, or
85.0%, to $3.3 million in 1999 from $22.0 million in 1998.

LIQUIDITY AND CAPITAL RESOURCES

General

     Our liquidity requirements arise from debt service, working capital
requirements and funding of acquisitions of branded pharmaceutical products.

                                       21
<PAGE>   22

Six months ended June 30, 2000

     We generated net cash from operations of $22.7 million for the six months
ended June 30, 2000. Our net cash provided from operations was primarily the
result of $3.3 million in net income, adjusted for non-cash depreciation and
amortization of $15.8 million and amortization of deferred financing costs of
$1.0 million, a non-cash extraordinary loss of $4.7 million, an increase in
accrued expenses of $685,000, and an increase in accounts payable and other
long-term liabilities of $11.1 million and $25.0 million, respectively.
Additionally, we decreased other assets and prepaid assets by $3.5 million and
$1.2 million, respectively. An increase in accounts receivable of $13.6 million,
an increase in inventory of $26.7 million and a decrease in income taxes payable
of $3.5 million offset the items previously discussed.

     Investing activities provided cash flows of $46.2 million resulting from
proceeds from sales of investment securities of $50.6 million and sales of
property and equipment of $398,000, offset by purchases of property and
equipment of $4.8 million.

     Cash flows used in financing activities was $16.1 million comprised
principally of repayments of $59.0 million on the revolving credit facility and
$228.5 million relating to term loans. These amounts were offset by $14.0
million in proceeds from the revolving credit facility, $17.8 million in
proceeds from the exercise of employee stock options and $240.1 million in
proceeds from the issuance of common stock.

Certain Indebtedness and Other Matters

     As of June 30, 2000, we had $294.4 million of long-term debt (including
current portion) and we have available up to $100.0 million under our revolving
credit facility. Of this amount, approximately $139.0 million was at variable
rates based on LIBOR and the remainder at fixed rates. We have entered into
$285.0 million of interest rate hedging transactions with a group of commercial
banks to exchange our variable LIBOR for a fixed rate of interest. We have also
entered into a $150.0 million interest rate hedging agreement to exchange our
fixed interest rate for a variable LIBOR-based interest rate, with the LIBOR
rate fixed for three years. Certain financing arrangements require us to
maintain certain minimum net worth, debt to equity, cash flow and current ratio
requirements. As of June 30, 2000, we were in compliance with these covenants.

     In April 2000, we completed an offering of 4.0 million shares of common
stock at a price of $41.38 per share. We received $165.4 million in net proceeds
from the offering on April 25, 2000. On June 22, 2000 we sold American Home
Products 1.9 million shares for $75.0 million. During the quarter we utilized
$201.3 million of these proceeds as prepayments on our senior credit facility.
After application of all prepayments and normal amortization, we have repaid the
balance of the tranche A term loan and $139.4 million remains outstanding under
the tranch B term loan. As a result of these prepayments, we have recorded an
extraordinary charge related to the write-off of certain deferred financing
costs.

     On July 7, 2000, we completed the acquisition of marketing rights in the
United States and Puerto Rico to the Nordette(R), Bicillin(R), and Wycillin(R)
product lines from American Home Products as contemplated by the co-promotion
agreement for $200 million, financed with a draw of $10.0 million on a $50.0
million bridge loan, $25.0 million in the form of a note issued to American Home
Products, $37.5 million of the proceeds from the sale of stock to American Home
Products, $25.0 million received in connection with the co-promotion agreement
with American Home Products, $90.0 million from the Revolving Credit Facility
and $12.5 million in cash from operations.

     We believe that existing credit facilities and cash expected to be
generated from operations are sufficient to finance our current operations and
working capital requirements. However, in the event we make significant future
acquisitions or change our capital structure, we may be required to raise funds
through additional borrowings or the issuance of additional debt or equity
securities.

     On July 13, 2000, we entered into a definitive agreement to merge with
Jones Pharma Incorporated in a stock-for-stock transaction. Under the terms of
the agreement, which has been approved by the boards of directors of both
companies, holders of Jones common stock will be entitled to receive 1.125
shares of King common stock in exchange for each share of Jones common stock.
Following the completion of the merger, G. Andrew Franz, Chief Operating Officer
of Jones, will be joining King's board of directors, and will become
                                       22
<PAGE>   23

President and Chief Executive Officer of Jones, as a wholly owned subsidiary of
King. The transaction is expected to be accounted for as a tax-free pooling of
interests transaction. Closing of the transaction is subject to approval by the
holders of a majority of the outstanding common stock of King and Jones at
special shareholders meetings set for August 31, 2000.

     At present, we are actively pursuing acquisitions that may require the use
of substantial capital resources. Except as described above, there are no
present agreements or commitments with respect to any such acquisitions.

Capital Expenditures

     Capital expenditures, including capital lease obligations, were $4.8
million and $3.4 million for the six months ended June 30, 2000 and 1999,
respectively. The principal capital expenditures included property and equipment
purchases and building improvements. We expect that we may need to incur
additional capital expenditures in connection with the maintenance and operation
of our Parkedale facility. In addition, we expect to increase our capital
expenditures over the next few years as a part of our acquisition and growth
strategy, and growth of our primary product Altace(R).

QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     We use derivative instruments to manage our long-term interest rate
exposure, rather than for trading purposes.

     As of June 30, 2000, there were no significant changes in our qualitative
or quantitative market risk since the prior reporting period. Subsequent to June
30, 2000, we terminated a $100.0 million interest rate swap as a result of the
paydown of our variable rate debt. A gain of approximately $1.4 million will be
recognized.

                                       23
<PAGE>   24

                          PART II -- OTHER INFORMATION

                           ITEM 1. LEGAL PROCEEDINGS

     In the normal course of business, we are subject to various regulatory
proceedings, lawsuits, claims and other matters. Such matters are subject to
many uncertainties and outcomes are not predictable with assurance.

     State of Wisconsin Investment Board.  On November 30, 1999, we entered into
an agreement of merger with Medco pursuant to which we acquired Medco in an all
stock, tax-free pooling of interests transaction, which was subject to approval
by the Medco shareholders. On January 5, 2000, Medco issued to its stockholders
a proxy statement with respect to the proposed transaction and noticed a meeting
to approve the transaction for February 10, 2000.

     On January 11, 2000, the State of Wisconsin Investment Board, whom we call
SWIB, a Medco shareholder which held approximately 11.6% of the outstanding
stock of Medco filed suit on behalf of a proposed class of Medco shareholders in
the Court of Chancery for the State of Delaware, New Castle County, against
Medco and members of Medco's board of directors to enjoin the shareholder vote
on the merger and the consummation of the merger. State of Wisconsin Investment
Board v. Bartlett, et al., C.A. No. 17727. SWIB alleged, among other things,
that the proxy materials filed by Medco failed to disclose all material
information and included misleading statements regarding the transaction, its
negotiation, and its approval by the Medco board of directors; that the Medco
directors were not adequately informed and did not adequately inform themselves
of all reasonably available information before recommending the transaction to
Medco shareholders; and that the Medco directors were disloyal and committed
waste in allegedly enabling one of the Medco directors to negotiate the
transaction purportedly for his own benefit and in agreeing to terms that
precluded what the complaint alleged were more beneficial alternative
transactions. SWIB also moved for a preliminary injunction to enjoin the
shareholder vote and the merger based on the claims asserted in its complaint.
Medco and the other defendants denied all allegations and continue to deny them.

     After Medco distributed a supplemental proxy statement on January 31, 2000
and the court postponed the February 10, 2000 vote on the merger agreement for
15 days to allow shareholders sufficient time to consider the supplemental
disclosures, the court rejected SWIB's claims in a February 24 Memorandum
Opinion and denied preliminary injunctive relief because SWIB had not shown a
reasonable likelihood of success following trial on the merits. The court made a
number of preliminary findings, including that the Medco board of directors
properly delegated to one of its directors the responsibility to negotiate the
merger; that the payment of the negotiating fee was a proper exercise of
business judgment and did not constitute waste; that the other merger provisions
were also valid; that the Medco directors were adequately informed of all
material information reasonably available to them prior to approving the merger
agreement; that the Medco directors acted independently and in good faith to
benefit the economic interests of the Medco shareholders; that the alleged
omissions in the proxy statements were not material; and that the Medco board of
directors fully met its duty of complete disclosure with respect to the
transaction.

     SWIB has filed an Application for a Scheduling Order stating its intention
to dismiss the case, before a class has been certified, without prejudice. In
the meantime, the action is still pending. While SWIB has indicated that it does
not intend to prosecute the merits of the case further, another shareholder
could intervene and continue the action. Even though SWIB lost its motion for
preliminary injunction, and is going to dismiss the case, SWIB has claimed that
its attorneys are entitled to an award of attorneys' fees and costs. SWIB has
petitioned the court for approximately $7.26 million in attorneys' fees and
approximately $270,000 in costs.

     A hearing on SWIB's petition to dismiss and for attorneys' fees and costs
was held on June 26, 2000 in the Court of Chancery for the State of Delaware. As
of August 11, 2000, no ruling has been issued.

     We believe that SWIB's case, including SWIB's claim for significant
attorneys' fees which includes fees based on a formula related to an alleged
benefit conferred on Medco shareholders, is meritless, and we are vigorously
contesting it. We believe SWIB's actions did not confer a benefit on the Medco
shareholders. We

                                       24
<PAGE>   25

also believe it is unlikely that another shareholder will intervene to continue
the action, but if that results then we will vigorously contest it.

     Other.  Many distributors, marketers and manufacturers of anorexigenic
drugs have been subject to claims relating to the use of these drugs. We are a
defendant in 94 lawsuits which claim damages for personal injury arising from
our production of the anorexigenic drug phentermine under contract for
SmithKline. Generally, the lawsuits allege that the defendants (1) misled users
of the products with respect to the dangers associated with them, (2) failed to
adequately test the products, and (3) knew or should have known about the
negative effects of the drugs, and should have informed the public about the
risks of such negative effects. The actions generally have been brought by
individuals in their own right and have been filed in various state and federal
jurisdictions throughout the United States. They seek, among other things,
compensatory and punitive damages and/or court-supervised medical monitoring of
persons who have ingested the product. We expect to be named in additional
lawsuits related to our production of the anorexigenic drug under contract for
SmithKline.

     While we cannot predict the outcome of these suits, we believe that the
claims against us are without merit and intend to vigorously pursue all defenses
available to us. We are being indemnified in all of these suits by SmithKline
for which we manufactured the anorexigenic product, provided that neither the
lawsuits nor the associated liabilities are based upon our independent
negligence or intentional acts, and intend to submit a claim for all
unreimbursed costs to our product liability insurance carrier. However, in the
event that SmithKline is unable to satisfy or fulfill its obligations under the
indemnity, we would have to defend the lawsuit and be responsible for damages,
if any, which are awarded against us or for amounts in excess of our product
liability coverage.

          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the annual meeting of shareholders on June 23, 2000, the shareholders
voted on the following proposals with the results as indicated:

     1. Approved an amendment to the Charter to increase the number of
        authorized shares of common stock to 300,000,000.

<TABLE>
     <S>                                                          <C>
     For:.......................................................  78,549,384
     Against:...................................................   5,363,649
     Abstention:................................................     117,763
</TABLE>

     2. Elected three of its current directors to continue in office for a
        three-year terms as follows:

<TABLE>
<CAPTION>
                                                                      WITHHOLD
                                                          FOR         AUTHORITY
                                                       ----------     ---------
     <S>                                               <C>            <C>
     Joseph R. Gregory...............................  83,757,672      273,124
     Frank W. De Friece..............................  83,815,267      215,529
     Earnest W. Deavenport, Jr.......................  83,790,885      239,911
</TABLE>

           Directors continuing in service include:  John M. Gregory, Jefferson
           J. Gregory, Ernest C. Bourne, D. Greg Rooker, Richard C. Williams,

     3. Ratified the appointment of PricewaterhouseCoopers LLP as the
        independent accountants and auditors for 2000 as follows:

<TABLE>
     <S>                                                          <C>
     For:.......................................................  83,983,021
     Against:...................................................      24,576
     Abstention:................................................      23,199
</TABLE>

                                       25
<PAGE>   26

                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (A) EXHIBITS

     Exhibit No. Description

      (3.1) Amendment to Second Amended and Restated Charter of King
            Pharmaceuticals, Inc. effective June 27, 2000.

     (27.1) Financial Data Schedule (For SEC Use Only)

     (B) REPORTS ON FORM 8-K

     We filed the following Current Reports on Form 8-K during the quarter ended
June 30, 2000:

          (1) Current Report on Form 8-K filed April 20,2000 included under Item
     5 the consent of PricewaterhouseCoopers LLP related to the incorporation by
     reference of its report dated February 25, 2000, except for the information
     in Note 20 for which the date is March 17, 2000, relating to the
     Supplementary Consolidated Financial Statements which appeared in the
     Prospectus Supplement dated April 19, 2000.

          (2) Current Report on Form 8-K filed April 21, 1000 included under
     Item 5 Supplementary Consolidated Financial Statements and accompanying
     Management's Discussion and Analysis of Financial Condition and Results of
     Operations. The supplementary consolidated financial statements included
     were:

             (a) Report of Independent Accountants on Supplemenaty Consolidated
        Financial Statements

             (b) Supplementary Consolidated Balance Sheets as of December 31,
        1998 and 1999

             (c) Supplementary Consolidated Statements of Operations for the
        years ended December 31, 1997, 1998 and 1999

             (d) Supplementary Consolidated Statements of Changes in
        Shareholders' Equity for the years ended December 31, 1997, 1998 and
        1999

             (e) Supplementary Consolidated Statements of Cash Flows for the
        years ended December 31, 1997, 1998 and 1999

             (f) Notes to Supplementary Consolidated Financial Statements.

          (3) Current Report on Form 8-K filed June 23, 2000 included under Item
     5 restated consolidated financial statements for the years ended December
     31, 1997, 1998 and 1999 which appeared in its Form 10-K for the fiscal year
     ended December 31, 1999 to reflect a three for two stock split effective
     June 21, 2000. The restated consolidated financial statements included
     were:

             (a) Report of Independent Accountants.

             (b) Consolidated Balance Sheets as of December 31, 1998 and 1999

             (c) Consolidated Statements of Operations for the years ended
        December 31, 1997, 1998 and 1999

             (d) Consolidated Statements of Changes in Shareholders' Equity for
        the years ended December 31, 1997, 1998 and 1999

             (e) Consolidated Statements of Cash Flows for the years ended
        December 31, 1997, 1998 and 1999

             (f) Notes to Consolidated Financial Statements.

          (4) Current Report on form 8-K filed June 30, 2000 included under Item
     5 a report of the execution of a Co-Promotion Agreement, an Asset Purchase
     Agreement and a Stock and Note Purchase Agreement with American Home
     Products Corporation.

                                       26
<PAGE>   27

                                   SIGNATURES

     Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                          KING PHARMACEUTICALS, INC.

<TABLE>
<S>                                                       <C>
Date: August 11, 2000                                     By: /s/ JOHN M. GREGORY
                                                          ----------------------------------------------------
                                                                              John M. Gregory
                                                                    Chairman and Chief Executive Officer

Date: August 11, 2000                                     By: /s/ BRIAN G. SHRADER
                                                          ----------------------------------------------------
                                                                              Brian G. Shrader
                                                                          Chief Financial Officer
</TABLE>

                                       27