##### 



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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2007ORo

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

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

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

37620(Address of principal executive
    offices)

(Zip Code)   (423)
    989-8000
 (Registrants telephone
    number, including area code)
  þ o
    Large
    accelerated filer þ
    Accelerated filer o
    Non-accelerated filer o
  Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  PagePart I  Financial
    InformationItem 1.

Financial Statements


3Condensed Consolidated Balance
    Sheets


3Condensed Consolidated Statements
    of Operations


4Condensed Consolidated Statements
    of Changes in Shareholders Equity and Other Comprehensive
    Income


5Condensed Consolidated Statements
    of Cash Flows


6Notes to Condensed Consolidated
    Financial Statements


7Item 2.

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


35Item 3.

Quantitative and Qualitative
    Disclosures about Market Risk


61Item 4

Controls and Procedures


61Part II  Other
    InformationItem 1.

Legal Proceedings


61Item 1A.

Risk Factors


61Item 4.

Submission of Matters to a Vote of
    Security Holders


62Item 6.

Exhibits


63Signatures


64  2




---



##### 



PART I
     FINANCIAL INFORMATION
  Item
    1.  Financial Statements
  KING
    PHARMACEUTICALS, INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 (Unaudited)
  June 30,


December 31,2007


2006ASSETSCurrent Assets:Cash and cash equivalents

$
54,705


$
113,777Investments in debt securities


867,998



890,185Accounts receivable, net of
    allowance for doubtful accounts of $5,457 and $5,437,
    respectively


261,057



263,939Inventories


185,382



202,577Deferred income tax assets


63,021



81,991Income taxes receivable


2,188



Prepaid expenses and other current
    assets


62,469



106,595Current assets held for sale


15,602



14,409Total current assets


1,512,422



1,673,473Property, plant and equipment, net


241,937



244,382Intangible assets, net


1,002,703



790,313Goodwill


129,046



121,152Marketable securities


11,237



11,578Deferred income tax assets


305,902



271,554Other assets (includes restricted
    cash of $16,199 and $15,968, respectively)


102,269



93,347Assets held for sale


72,829



123,732Total assets

$
3,378,345


$
3,329,531LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
70,188


$
77,158Accrued expenses


350,925



510,137Income taxes payable






30,501Total current liabilities


421,113



617,796Long-term debt


400,000



400,000Other liabilities


68,221



23,129Total liabilities


889,334



1,040,925Commitments and contingencies
    (Note 8)Shareholders equity


2,489,011



2,288,606Total liabilities and
    shareholders equity

$
3,378,345


$
3,329,531    3




---



##### 



KING
    PHARMACEUTICALS, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (In thousands, except per share data)
 (Unaudited)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Revenues:Net sales

$
522,330


$
478,560


$
1,018,036


$
943,159Royalty revenue


20,396



21,085



40,720



40,721Total revenues


542,726



499,645



1,058,756



983,880Operating costs and expenses:Cost of revenues, exclusive of
    depreciation amortization and impairments shown below


125,530



107,048



236,984



199,452Selling, general and
    administrative, exclusive of co-promotion fees


125,684



107,126



248,038



212,180Co-promotion fees


47,524



47,032



93,482



112,321Total selling, general and
    administrative expense


173,208



154,158



341,520



324,501Research and development


37,355



34,630



69,626



64,512Research and development-in process
    upon acquisition


3,100







3,100



85,000Total research and development


40,455



34,630



72,726



149,512Depreciation and amortization


40,412



38,547



76,090



72,912Asset impairments


74,810



279



74,810



279Restructuring charges (Note 12)






(8
)


460



(8
)Total operating costs and expenses


454,415



334,654



802,590



746,648Operating income


88,311



164,991



256,166



237,232Other income (expense):Interest income


8,517



8,393



17,783



14,353Interest expense


(1,853
)


(3,047
)


(3,878
)


(6,031
)(Loss) gain on early extinguishment
    of debt






(313
)






709Other, net


278



(204
)


(265
)


(714
)Total other income


6,942



4,829



13,640



8,317Income from continuing operations
    before income taxes


95,253



169,820



269,806



245,549Income tax expense


30,394



59,017



88,893



83,911Income from continuing operations


64,859



110,803



180,913



161,638Discontinued operations
    (Note 16):(Loss) income from discontinued
    operations


(115
)


157



(335
)


(90
)Income tax (benefit) expense


(41
)


57



(120
)


(32
)Total (loss) income from
    discontinued operations, net


(74
)


100



(215
)


(58
)Net income

$
64,785


$
110,903


$
180,698


$
161,580Income per common share:Basic:Income from continuing operations

$
0.27


$
0.46


$
0.74


$
0.67Total (loss) income from
    discontinued operations














Net income

$
0.27


$
0.46


$
0.74


$
0.67Diluted:Income from continuing operations

$
0.26


$
0.46


$
0.74


$
0.67Total (loss) income from
    discontinued operations














Net income

$
0.26


$
0.46


$
0.74


$
0.67    4




---



##### 



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


Unearned


Retained


ComprehensiveShares


Amount


Compensation


Earnings


Income (Loss)


TotalBalance at December 31, 2005


242,493,416


$
1,222,246


$
(8,764
)

$
754,953


$
4,987


$
1,973,422Adoption of Statement of Financial
    Accounting Standard 123(R)






(8,764
)


8,764











Comprehensive income:Net income














161,580







161,580Net unrealized loss on marketable
    securities, net of tax of $2,857


















(5,305
)


(5,305
)Foreign currency translation


















83



83Total comprehensive income






















156,358Stock-based compensation expense






9,714















9,714Exercise of stock options


409,023



7,073















7,073Issuance of share-based awards


188,745



















Balance at June 30, 2006


243,091,184


$
1,230,269


$



$
916,533


$
(235
)

$
2,146,567Balance at December 31, 2006


243,151,223


$
1,244,986


$



$
1,043,902


$
(282
)

$
2,288,606Comprehensive income:Net income














180,698







180,698Net unrealized loss on marketable
    securities, net of tax






















Foreign currency translation


















567



567Total comprehensive income






















181,265Adoption of Financial Accounting
    Standards Board Interpretation No. 48














(1,523
)






(1,523
)Stock-based compensation expense






10,959















10,959Exercise of stock options


590,282



9,704















9,704Issuance of share-based awards


422,501



















Balance at June 30, 2007


244,164,006


$
1,265,649


$



$
1,223,077


$
285


$
2,489,011    5




---



##### 



KING
    PHARMACEUTICALS, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
  Six Months Ended June 30,2007


2006Cash flows provided by operating
    activities

$
252,722


$
170,444Cash flows from investing
    activities:Transfers (to) from restricted cash


(231
)


128,874Purchases of investments in debt
    securities


(869,683
)


(766,117
)Proceeds from maturities and sales
    of investments in debt securities


891,870



482,152Purchases of property, plant and
    equipment


(18,094
)


(20,403
)Proceeds from sale of property and
    equipment


3



Acquisition of
    Avinza®


(296,492
)


Loan repayment from Ligand


37,750



Purchases of product rights and
    intellectual property


(15,058
)


(24,085
)Arrow International Limited
    collaboration agreement


(50,000
)


(35,000
)Net cash used in investing
    activities


(319,935
)


(234,579
)Cash flows from financing
    activities:Proceeds from exercise of stock
    options, net


9,156



6,698Excess tax benefits from
    stock-based compensation


608



397Proceeds from issuance of
    long-term debt






400,000Payments on long-term debt






(338,434
)Debt issuance costs


(1,623
)


(10,659
)Net cash provided by financing
    activities


8,141



58,002Decrease in cash and cash
    equivalents


(59,072
)


(6,133
)Cash and cash equivalents,
    beginning of period


113,777



30,014Cash and cash equivalents, end of
    period

$
54,705


$
23,881    6




---



##### 



KING
    PHARMACEUTICALS, INC.
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    June 30, 2007 and 2006
    (Unaudited)
    (In thousands, except share and per share data)
  1.
    General  Form 10-Q Rule 10-01 Regulation S-X Form 10-K
      2.
    Earnings
    Per Share    Three Months Ended June 30,


Six Months Ended June 30,2007


2006


2007


2006Basic income per common share:Weighted average common shares


242,745,937



242,208,955



242,568,089



242,115,699Diluted income per common share:Weighted average common shares


242,745,937



242,208,955



242,568,089



242,115,699Effect of stock options


813,989



298,864



648,956



330,135Effect of dilutive share awards


990,441



246,878



893,426



222,173Weighted average common shares


244,550,367



242,754,697



244,110,471



242,668,007   1 4
 7




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3 4 1 4
  3.
    Inventories    June 30,


December 31,2007


2006Raw materials

$
111,501


$
135,164Work-in-process


17,025



17,885Finished goods (including $7,390,
    and $6,813 of sample inventory, respectively)


65,625



62,395194,151



215,444Inventory valuation allowance


(8,769
)


(12,867
)Total inventories

$
185,382


$
202,577   4.
    Acquisitions,
    Dispositions, Co-Promotions and Alliances  ®
    ® ®
 8




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ®
  ®
  
    If calendar year net sales are less than $200,000 the royalty
    payment will be 5% of all net sales.
    If calendar year net sales are greater than $200,000 then the
    royalty payment will be 10% of all net sales up to $250,000,
    plus 15% of net sales greater than $250,000.  ® ® ®
    Intangible assets

$
285,700Goodwill


7,894Inventory


2,800$
296,394     TM ® TM ®
  ® ®
 9




---



##### 



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

$
23,985Inventory


618Fixed assets


3$
24,606     ®
      ®
 10




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Intangible
    Assets and Goodwill    June 30, 2007


December 31, 2006Gross





GrossCarrying


Accumulated


Carrying


AccumulatedAmount


Amortization


Amount


AmortizationTrademarks and product rights

$
1,035,112


$
370,132


$
1,056,991


$
337,046Patents


558,421



221,000



272,833



202,873Other intangibles


7,700



7,398



7,700



7,292Total intangible assets

$
1,601,233


$
598,530


$
1,337,524


$
547,211     ® ® ® ® ® ® ® ® ®
  ® and/or
    Branded


MeridianSegment


Segment


TotalGoodwill at June 30, 2007

$
20,636


$
108,410


$
129,046Goodwill at December 31, 2006

$
12,742


$
108,410


$
121,152   6.
    Assets
    Held for Sale   11




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    June 30,


December 31,2007


2006Accounts receivable, net

$
982


$
1,528Inventories


14,620



12,881Total current assets held for sale

$
15,602


$
14,409Property, plant and equipment

$
60,279


$
62,654Intangible assets


58,101



61,078Allowance to reduce noncurrent
    assets to estimated fair value less cost to sell


(45,551
)


Noncurrent assets held for sale

$
72,829


$
123,732   ®
  Hart-Scott-Rodino ®
  7.
    Long-Term
    Debt    June 30,


December 31,2007


2006Convertible senior notes

$
400,000


$
400,000Senior secured revolving credit
    facility(a)






Long-term portion

$
400,000


$
400,000     (a)
    
    On April 23, 2002, the Company established a $400,000
    five-year Senior Secured Revolving Credit Facility which was
    scheduled to mature in April 2007 (the 2002 Credit
    Facility). On April 19, 2007, this facility was
    terminated and replaced with a new $475,000 five-year Senior
    Secured Revolving Credit Facility which matures in April 2012
    (the 2007 Credit Facility).The 2007 Credit Facility is collateralized by a pledge of 100%
    of the equity of most of the Companys domestic
    subsidiaries and by a pledge of 65% of the equity of the
    Companys foreign subsidiaries. The Companys
    obligations under this facility are unconditionally guaranteed
    on a senior basis by four of the Companys subsidiaries,
    King Pharmaceuticals Research and Development, Inc., Monarch
    Pharmaceuticals, Inc., Meridian Medical Technologies, Inc., and
    Parkedale Pharmaceuticals, Inc.The 2007 Credit Facility accrues interest at either, at the
    Companys option, (a) the base rate, which is based on
    the greater of (1) the prime rate or (2) the federal
    funds rate plus one-half of 1%, plus an applicable spread
    ranging from 0.0% to 0.5% (based on a leverage ratio), or
    (b) the applicable LIBOR rate plus an applicable spread
    ranging from 0.875% to 1.50% (based on a leverage ratio). In
    addition, the lenders 12




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  under the 2007 Credit Facility are entitled to customary
    facility fees based on (a) unused commitments under the
    facility and (b) letters of credit outstanding. The
    facility provides availability for the issuance of up to $30,000
    in letters of credit. The Company incurred $1,623 of deferred
    financing costs in connection with the establishment of this
    facility, which the Company will amortize over five years, the
    life of the facility. This facility requires the Company to
    maintain a minimum net worth of no less than $1,500,000 plus 50%
    of the Companys consolidated net income for each fiscal
    quarter after April 19, 2007, excluding any fiscal quarter
    for which consolidated income is negative; an EBITDA (earnings
    before interest, taxes, depreciation and amortization) to
    interest expense ratio of no less than 3.00 to 1.00; and a
    funded debt to EBITDA ratio of no greater than 3.50 to 1.00.  8.
    Commitments
    and Contingencies  Fen/Phen
    Litigation
  In re Fen-Phen
    Litigation. and/or
  ®
  ®
   13




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Thimerosal
    / Childrens Vaccine Related Litigation
      Hormone
    Replacement Therapy
  In re: Prempro Products Liability Litigation
 14




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Average
    Wholesale Price Litigation
  In re: Pharmaceutical Industry
    Average Wholesale Pricing Litigation.
         15




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Settlement
    of Governmental Pricing Investigation
          SEC
    Investigation
     16




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Securities
    and Derivative Litigation
  and/or
            Other
    Legal Proceedings
  ® ® ® ®
 17




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ® ® Approved Drug Products With Therapeutic
    Equivalence Evaluations 30-month ®
    ® ®
 18




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ®
  ® ® ® ®
  30-month 30-month
  ®
 19




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ® ®
  ® ® ®
  ® ®
  ® ® ® ® ® ®
  ®
 20




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ®
    Other
    Contingencies
  ® ® ® and/or
  ® ®
  9.
    Accounting
    Developments  Fair Value Measurements
  Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
 21




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The Fair Value Option for
    Financial Assets and Financial Liabilities
  10.
    Income
    Taxes          non-U.S. income
  11.
    Segment
    Information   22




---



##### 



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


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Total revenues:Branded pharmaceuticals

$
466,931


$
419,118


$
916,018


$
836,738Meridian Medical Technologies


50,896



53,883



93,911



95,167Royalties


20,396



21,085



40,720



40,721Contract manufacturing


158,580



149,909



316,966



271,191Other


1,053







1,449



Eliminations


(155,130
)


(144,350
)


(310,308
)


(259,937
)Consolidated total net revenues

$
542,726


$
499,645


$
1,058,756


$
983,880Segment profit:Branded pharmaceuticals

$
371,172


$
343,415


$
733,385


$
695,644Meridian Medical Technologies


30,148



30,127



54,723



52,164Royalties


17,769



18,529



35,650



35,795Contract manufacturing


165



526



369



825Other


(2,058
)






(2,355
)


Other operating costs and expense


(328,885
)


(227,606
)


(565,606
)


(547,196
)Other income (expense)


6,942



4,829



13,640



8,317Income from continuing operations
    before tax

$
95,253


$
169,820


$
269,806


$
245,549   23




---



##### 



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


As ofJune 30,


December 31,2007


2006Total assets:Branded pharmaceuticals

$
2,991,880


$
2,994,580Meridian Medical Technologies


310,230



294,455Royalties


62,525



21,626Contract manufacturing


13,710



18,870Other






Consolidated total assets

$
3,378,345


$
3,329,531     Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Total revenues:Cardiovascular/metabolic

$
204,901


$
201,138


$
399,291


$
405,006Neuroscience


159,448



121,390



304,818



241,283Hospital/acute care


88,062



83,395



182,992



164,411Other


14,520



13,195



28,917



26,038Consolidated branded
    pharmaceutical revenues

$
466,931


$
419,118


$
916,018


$
836,738   12.
    Restructuring
    Activities  ®
    Accrued











AccruedBalance at


Income








Balance atDecember 31,


Statement


Cash


Non-Cash


June 30,2006


Impact


Payments


Costs


2007First quarter of 2007
    actionEmployee separation payments

$



$
460


$



$



$
460Third quarter of 2006
    actionEmployee separation payments


2,163















2,163Accelerated depreciation(1)






3,000







(3,000
)


Fourth quarter of 2005
    actionEmployee separation payments


521















521$
2,684


$
3,460


$



$
(3,000
)

$
3,144     (1)
    
    Included in depreciation and amortization on the Consolidated
    Statements of Operations.   24




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Marketable
    Securities    14.
    Stock-Based
    Compensation              15.
    Change in
    Estimate   25




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  16.
    Discontinued
    Operations  ® ®
  ® ® ® ®
    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Total revenues

$
(114
)

$
157


$
(336
)

$
(93
)Operating income (loss)


(115
)


157



(335
)


(90
)Net income (loss)

$
(74
)

$
100


$
(215
)

$
(58
)     17.
    Guarantor
    Financial Statements         26




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING BALANCE SHEETS
  June 30, 2007


December 31, 2006Non














NonGuarantor


Guarantor


Eliminating


King





Guarantor


Guarantor


Eliminating


KingKing


Subsidiaries


Subsidiaries


Entries


Consolidated


King


Subsidiaries


Subsidiaries


Entries


Consolidated(Unaudited)(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
43,093


$
6,391


$
5,221


$



$
54,705


$
101,210


$
8,749


$
3,818


$



$
113,777Investments in debt securities


867,998















867,998



890,185















890,185Accounts receivable, net


1,766



258,461



830







261,057



3,056



258,825



2,058







263,939Inventories


158,239



26,732



411







185,382



176,389



25,933



255







202,577Deferred income tax assets


13,007



50,014











63,021



30,051



51,940











81,991Income taxes receivable


1,250



947



(9
)






2,188



















Prepaid expenses and other current
    assets


50,927



14,605



(23
)


(3,040
)


62,469



99,678



6,891



26







106,595Current assets held for sale






15,602











15,602







14,409











14,409Total current assets


1,136,280



372,752



6,430



(3,040
)


1,512,422



1,300,569



366,747



6,157







1,673,473Property, plant and equipment, net


111,913



130,024











241,937



109,572



134,810











244,382Intangible assets, net






999,857



2,846







1,002,703







787,347



2,966







790,313Goodwill






129,046











129,046







121,152











121,152Marketable securities


11,237















11,237



11,578















11,578Deferred income tax assets


6,782



298,213



907







305,902



(2,111
)


272,868



797







271,554Other assets


43,598



58,671











102,269



40,142



53,205











93,347Assets held for sale






72,829











72,829







123,732











123,732Investments in subsidiaries


1,620,165











(1,620,165
)






2,615,029











(2,615,029
)


Total assets

$
2,929,975


$
2,061,392


$
10,183


$
(1,623,205
)

$
3,378,345


$
4,074,779


$
1,859,861


$
9,920


$
(2,615,029
)

$
3,329,531LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
44,309


$
28,575


$
344


$
(3,040
)

$
70,188


$
51,671


$
25,063


$
424


$



$
77,158Accrued expenses


36,086



314,835



4







350,925



134,089



376,051



(3
)






510,137Income taxes payable






















28,045



2,456











30,501Total current liabilities


80,395



343,410



348



(3,040
)


421,113



213,805



403,570



421







617,796Long-term debt


400,000















400,000



400,000















400,000Other long-term liabilities


60,256



7,965











68,221



16,243



6,886











23,129Intercompany payable (receivable)


(99,687
)


99,147



540











1,156,125



(1,168,516
)


12,391







Total liabilities


440,964



450,522



888



(3,040
)


889,334



1,786,173



(758,060
)


12,812







1,040,925Shareholders equity


2,489,011



1,610,870



9,295



(1,620,165
)


2,489,011



2,288,606



2,617,921



(2,892
)


(2,615,029
)


2,288,606Total liabilities and
    shareholders equity

$
2,929,975


$
2,061,392


$
10,183


$
(1,623,205
)

$
3,378,345


$
4,074,779


$
1,859,861


$
9,920


$
(2,615,029
)

$
3,329,531  27




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
  Three Months Ended June 30, 2007


Three Months Ended June 30, 2006Non














NonGuarantor


Guarantor


Eliminating


King





Guarantor


Guarantor


Eliminating


KingKing


Subsidiaries


Subsidiaries


Entries


Consolidated


King


Subsidiaries


Subsidiaries


Entries


Consolidated(Unaudited)(In thousands)Revenues:Net sales

$
130,933


$
520,847


$
78


$
(129,528
)

$
522,330


$
112,993


$
478,659


$
(146
)

$
(112,946
)

$
478,560Royalty revenue






20,396











20,396







21,085











21,085Total revenues


130,933



541,243



78



(129,528
)


542,726



112,993



499,744



(146
)


(112,946
)


499,645Operating costs and expenses:Cost of revenues


46,109



208,905



44



(129,528
)


125,530



46,088



173,820



86



(112,946
)


107,048Selling, general and administrative


68,203



104,781



224







173,208



53,789



100,730



(361
)






154,158Research and development


1,234



39,221











40,455



2,048



32,582











34,630Depreciation and amortization


4,883



35,469



60







40,412



6,759



31,728



60







38,547Asset impairments






74,810











74,810







279











279Restructuring charges


























(8
)










(8
)Total operating costs and expenses


120,429



463,186



328



(129,528
)


454,415



108,684



339,131



(215
)


(112,946
)


334,654Operating income


10,504



78,057



(250
)






88,311



4,309



160,613



69







164,991Other income (expense):Interest income


8,496



21











8,517



8,363



30











8,393Interest expense


(1,849
)


(4
)










(1,853
)


(2,907
)


(140
)










(3,047
)Loss on early extinguishment of debt






















(313
)














(313
)Other, net


175



38



65







278



(173
)


(245
)


214







(204
)Equity in earnings (loss) of
    subsidiaries


51,555











(51,555
)






114,690











(114,690
)


Intercompany interest (expense)
    income


(6,051
)


6,112



(61
)










(15,044
)


15,216



(172
)






Total other income (expense)


52,326



6,167



4



(51,555
)


6,942



104,616



14,861



42



(114,690
)


4,829Income (loss) from continuing
    operations before income taxes


62,830



84,224



(246
)


(51,555
)


95,253



108,925



175,474



111



(114,690
)


169,820Income tax (benefit) expense


(1,955
)


32,435



(86
)






30,394



(1,978
)


60,956



39







59,017Income (loss) from continuing
    operations


64,785



51,789



(160
)


(51,555
)


64,859



110,903



114,518



72



(114,690
)


110,803Discontinued operations:(Loss) income from discontinued
    operations






(115
)










(115
)






157











157Income tax (benefit) expense






(41
)










(41
)






57











57Total (loss) income from
    discontinued operations, net






(74
)










(74
)






100











100Net income (loss)

$
64,785


$
51,715


$
(160
)

$
(51,555
)

$
64,785


$
110,903


$
114,618


$
72


$
(114,690
)

$
110,903  28




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
  Six Months Ended June 30, 2007


Six Months Ended June 30, 2006Non














NonGuarantor


Guarantor





King





Guarantor


Guarantor





KingKing


Subsidiaries


Subsidiaries


Eliminations


Consolidated


King


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Unaudited)(In thousands)Revenues:Net sales

$
258,695


$
1,016,108


$
127


$
(256,894
)

$
1,018,036


$
210,825


$
941,327


$
1,411


$
(210,404
)

$
943,159Royalty revenue






40,720











40,720







40,721











40,721Total revenues


258,695



1,056,828



127



(256,894
)


1,058,756



210,825



982,048



1,411



(210,404
)


983,880Operating costs and expenses:Cost of revenues


93,295



400,347



236



(256,894
)


236,984



83,443



325,602



811



(210,404
)


199,452Selling, general and administrative


139,070



202,355



95







341,520



102,875



222,391



(765
)






324,501Research and development


2,022



70,704











72,726



2,921



146,591











149,512Depreciation and amortization


9,680



66,290



120







76,090



10,769



62,023



120







72,912Asset impairments






74,810











74,810







279











279Restructuring charges


460















460







(8
)










(8
)Total operating costs and expenses


244,527



814,506



451



(256,894
)


802,590



200,008



756,878



166



(210,404
)


746,648Operating income


14,168



242,322



(324
)






256,166



10,817



225,170



1,245







237,232Other income (expense):Interest income


17,719



60



4







17,783



14,216



137











14,353Interest expense


(3,852
)


(26
)










(3,878
)


(5,888
)


(143
)










(6,031
)Gain on early extinguishment of debt






















709















709Other, net


(384
)


(7
)


126







(265
)


(230
)


(779
)


295







(714
)Equity in earnings of subsidiaries


160,499











(160,499
)






165,908











(165,908
)


Intercompany dividend income


969,849











(969,849
)






















Intercompany interest (expense)
    income


(10,988
)


11,107



(119
)










(25,693
)


25,997



(304
)






Total other income (expenses)


1,132,843



11,134



11



(1,130,348
)


13,640



149,022



25,212



(9
)


(165,908
)


8,317Income (loss) from continuing
    operations before income taxes


1,147,011



253,456



(313
)


(1,130,348
)


269,806



159,839



250,382



1,236



(165,908
)


245,549Income tax (benefit) expense


(3,536
)


92,539



(110
)






88,893



(1,741
)


85,219



433







83,911Income (loss) from continuing
    operations


1,150,547



160,917



(203
)


(1,130,348
)


180,913



161,580



165,163



803



(165,908
)


161,638Discontinued operations:Loss from discontinued operations






(335
)










(335
)






(90
)










(90
)Income tax benefit






(120
)










(120
)






(32
)










(32
)Total loss from discontinued
    operations






(215
)










(215
)






(58
)










(58
)Net income (loss)

$
1,150,547


$
160,702


$
(203
)

$
(1,130,348
)

$
180,698


$
161,580


$
165,105


$
803


$
(165,908
)

$
161,580  29




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
  Six Months Ended June 30, 2007


Six Months Ended June 30, 2006Non











NonGuarantor


Guarantor


King





Guarantor


Guarantor


KingKing


Subsidiaries


Subsidiaries


Consolidated


King


Subsidiaries


Subsidiaries


Consolidated(Unaudited)(In thousands)Cash flows provided by operating
    activities

$
(18,093
)

$
269,952


$
863


$
252,722


$
(43,349
)

$
213,334


$
459


$
170,444Cash flows from investing
    activities:Transfers (to) from restricted cash


(231
)










(231
)


128,874











128,874Purchases of investments in debt
    securities


(869,683
)










(869,683
)


(766,117
)










(766,117
)Proceeds from maturities and sales
    of investments in debt securities


891,870











891,870



482,152











482,152Purchases of property, plant and
    equipment


(11,654
)


(6,440
)






(18,094
)


(11,022
)


(9,381
)






(20,403
)Proceeds from sale of property and
    equipment






3







3















Acquisition of
    Avinza®


(23
)


(296,469
)






(296,492
)














Loan repayment from Ligand


37,750











37,750















Purchases of product rights and
    intellectual property






(15,058
)






(15,058
)






(24,085
)






(24,085
)Arrow International Limited
    collaboration agreement






(50,000
)






(50,000
)






(35,000
)






(35,000
)Net cash provided by (used in)
    investing activities


48,029



(367,964
)






(319,935
)


(166,113
)


(68,466
)






(234,579
)Cash flows from financing
    activities:Proceeds from exercise of stock
    options, net


9,156











9,156



6,698











6,698Excess tax benefit from stock-based
    compensation


608











608



397











397Proceeds from issuance of long-term
    debt


















400,000











400,000Payments on long-term debt


















(338,434
)










(338,434
)Debt issuance costs


(1,623
)










(1,623
)


(10,659
)










(10,659
)Intercompany


(96,194
)


95,654



540







137,523



(138,338
)


815



Net cash (used in) provided by
    financing activities


(88,053
)


95,654



540



8,141



195,525



(138,338
)


815



58,002(Decrease) increase in cash and
    cash equivalents


(58,117
)


(2,358
)


1,403



(59,072
)


(13,937
)


6,530



1,274



(6,133
)Cash and cash equivalents,
    beginning of period


101,210



8,749



3,818



113,777



26,802



1,071



2,141



30,014Cash and cash equivalents, end of
    period

$
43,093


$
6,391


$
5,221


$
54,705


$
12,865


$
7,601


$
3,415


$
23,881    30




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING BALANCE SHEETS
  June 30, 2007


December 31, 2006Non














NonGuarantor


Guarantor


Eliminating


King





Guarantor


Guarantor


Eliminating


KingKing


Subsidiaries


Subsidiaries


Entries


Consolidated


King


Subsidiaries


Subsidiaries


Entries


Consolidated(Unaudited)(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
43,093


$
6,395


$
5,217


$



$
54,705


$
101,210


$
8,801


$
3,766


$



$
113,777Investment in Debt Securities


867,998















867,998



890,185















890,185Accounts receivable, net


1,766



258,459



832







261,057



3,056



258,825



2,058







263,939Inventories


158,239



17,845



9,298







185,382



176,389



16,942



9,246







202,577Deferred income tax assets


13,007



49,638



376







63,021



30,051



51,518



422







81,991Income taxes receivable


1,250



747



191







2,188



















Prepaid expenses and other current
    assets


50,927



14,310



272



(3,040
)


62,469



99,678



6,578



339







106,595Current assets held for sale






15,602











15,602







14,409











14,409Total current assets


1,136,280



362,996



16,186



(3,040
)


1,512,422



1,300,569



357,073



15,831







1,673,473Property, plant and equipment, net


111,913



84,498



45,526







241,937



109,572



86,595



48,215







244,382Intangible assets, net






999,556



3,147







1,002,703







787,029



3,284







790,313Goodwill






128,384



662







129,046







120,490



662







121,152Marketable securities


11,237















11,237



11,578















11,578Deferred income tax assets


6,782



299,938



(818
)






305,902



(2,111
)


274,992



(1,327
)






271,554Other assets


43,598



58,671











102,269



40,142



53,161



44







93,347Assets held for sale






72,829











72,829







123,732











123,732Investments in subsidiaries


1,620,165











(1,620,165
)






2,615,029











(2,615,029
)


Total assets

$
2,929,975


$
2,006,872


$
64,703


$
(1,623,205
)

$
3,378,345


$
4,074,779


$
1,803,072


$
66,709


$
(2,615,029
)

$
3,329,531LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
44,309


$
26,501


$
2,418


$
(3,040
)

$
70,188


$
51,671


$
22,836


$
2,651


$



$
77,158Accrued expenses


36,086



313,073



1,766







350,925



134,089



373,886



2,162







510,137Income taxes payable






















28,045



2,507



(51
)






30,501Total current liabilities


80,395



339,574



4,184



(3,040
)


421,113



213,805



399,229



4,762







617,796Long-term debt


400,000















400,000



400,000















400,000Other long-term liabilities


60,256



5,802



2,163







68,221



16,243



4,675



2,211







23,129Intercompany (receivable) payable


(99,687
)


104,640



(4,953
)










1,156,125



(725,304
)


(430,821
)






Total liabilities


440,964



450,016



1,394



(3,040
)


889,334



1,786,173



(321,400
)


(423,848
)






1,040,925Shareholders equity


2,489,011



1,556,856



63,309



(1,620,165
)


2,489,011



2,288,606



2,124,472



490,557



(2,615,029
)


2,288,606Total liabilities and
    shareholders equity

$
2,929,975


$
2,006,872


$
64,703


$
(1,623,205
)

$
3,378,345


$
4,074,779


$
1,803,072


$
66,709


$
(2,615,029
)

$
3,329,531  31




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
   Three Months Ended June 30, 2007


Three Months Ended June 30, 2006Non














NonGuarantor


Guarantor


Eliminating


King





Guarantor


Guarantor


Eliminating


KingKing


Subsidiaries


Subsidiaries


Entries


Consolidated


King


Subsidiaries


Subsidiaries


Entries


Consolidated(Unaudited)(In thousands)Revenues:Net sales

$
130,933


$
522,185


$
12,544


$
(143,332
)

$
522,330


$
112,993


$
480,651


$
13,068


$
(128,152
)

$
478,560Royalty revenue






20,396











20,396







21,085











21,085Total revenues


130,933



542,581



12,544



(143,332
)


542,726



112,993



501,736



13,068



(128,152
)


499,645Operating costs and expenses:Cost of revenues


46,109



211,495



11,258



(143,332
)


125,530



46,088



180,183



8,929



(128,152
)


107,048Selling, general and administrative


68,203



104,781



224







173,208



53,789



100,614



(245
)






154,158Research and development


1,234



39,117



104







40,455



2,048



32,582











34,630Depreciation and amortization


4,883



33,941



1,588







40,412



6,759



30,765



1,023







38,547Asset impairments






74,810











74,810







279











279Restructuring charges






























(8
)






(8
)Total operating costs and expenses


120,429



464,144



13,174



(143,332
)


454,415



108,684



344,423



9,699



(128,152
)


334,654Operating income


10,504



78,437



(630
)






88,311



4,309



157,313



3,369







164,991Other income (expense):Interest income


8,496



21











8,517



8,363



30











8,393Interest expense


(1,849
)


(4
)










(1,853
)


(2,907
)


(140
)










(3,047
)Loss on early extinguishment of debt






















(313
)














(313
)Other, net


175



43



60







278



(173
)


(225
)


194







(204
)Equity in earnings of subsidiaries


51,555











(51,555
)






114,690











(114,690
)


Intercompany interest income
    (expense)


(6,051
)


3,809



2,242











(15,044
)


8,862



6,182







Total other income (expenses)


52,326



3,869



2,302



(51,555
)


6,942



104,616



8,527



6,376



(114,690
)


4,829Income (loss) from continuing
    operations before income taxes


62,830



82,306



1,672



(51,555
)


95,253



108,925



165,840



9,745



(114,690
)


169,820Income tax expense (benefit)


(1,955
)


31,866



483







30,394



(1,978
)


60,956



39







59,017Income from continuing operations


64,785



50,440



1,189



(51,555
)


64,859



110,903



104,884



9,706



(114,690
)


110,803Discontinued operations:(Loss) income from discontinued
    operations






(115
)










(115
)






157











157Income tax (benefit) expense






(41
)










(41
)






57











57Total (loss) income from
    discontinued operations






(74
)










(74
)






100











100Net income (loss)

$
64,785


$
50,366


$
1,189


$
(51,555
)

$
64,785


$
110,903


$
104,984


$
9,706


$
(114,690
)

$
110,903  32




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
  Six Months Ended June 30, 2007


Six Months Ended June 30, 2006Non














NonGuarantor


Guarantor





King





Guarantor


Guarantor





KingKing


Subsidiaries


Subsidiaries


Eliminations


Consolidated


King


Subsidiaries


Subsidiaries


Eliminations


Consolidated(Unaudited)(In thousands)Revenues:Net sales

$
258,695


$
1,018,937


$
25,356


$
(284,952
)

$
1,018,036


$
210,825


$
943,556


$
23,367


$
(234,589
)

$
943,159Royalty revenue






40,720











40,720







40,721











40,721Total revenues


258,695



1,059,657



25,356



(284,952
)


1,058,756



210,825



984,277



23,367



(234,589
)


983,880Operating costs and expenses:Cost of revenues


93,295



407,646



20,995



(284,952
)


236,984



83,443



334,779



15,819



(234,589
)


199,452Selling, general and administrative


139,070



202,328



122







341,520



102,875



222,162



(536
)






324,501Research and development


2,022



70,595



109







72,726



2,921



146,591











149,512Depreciation and amortization


9,680



63,235



3,175







76,090



10,769



60,147



1,996







72,912Asset impairments






74,810











74,810







279











279Restructuring charges


460















460











(8
)






(8
)Total operating costs and expenses


244,527



818,614



24,401



(284,952
)


802,590



200,008



763,958



17,271



(234,589
)


746,648Operating income


14,168



241,043



955







256,166



10,817



220,319



6,096







237,232Other income (expense):Interest income


17,719



60



4







17,783



14,216



137











14,353Interest expense


(3,852
)


(26
)










(3,878
)


(5,888
)


(143
)










(6,031
)Loss on early extinguishment of debt






















709















709Other, net


(384
)


(2
)


121







(265
)


(230
)


(768
)


284







(714
)Equity in earnings of subsidiaries


258,003











(258,003
)






165,908











(165,908
)


Intercompany dividend income


969,849



97,504







(1,067,353
)






















Intercompany interest income
    (expense)


(10,988
)


6,533



4,455











(25,693
)


14,510



11,183







Total other income (expenses)


1,230,347



104,069



4,580



(1,325,356
)


13,640



149,022



13,736



11,467



(165,908
)


8,317Income (loss) from continuing
    operations before income taxes


1,244,515



345,112



5,535



(1,325,356
)


269,806



159,839



234,055



17,563



(165,908
)


245,549Income tax expense (benefit)


(3,536
)


90,466



1,963







88,893



(1,741
)


85,219



433







83,911Income (loss) from continuing
    operations


1,248,051



254,646



3,572



(1,325,356
)


180,913



161,580



148,836



17,130



(165,908
)


161,638Discontinued operations:(Loss) income from discontinued
    operations






(335
)










(335
)






(90
)










(90
)Income tax (benefit) expense






(120
)










(120
)






(32
)










(32
)Total (loss) income from
    discontinued operations






(215
)










(215
)






(58
)










(58
)Net income (loss)

$
1,248,051


$
254,431


$
3,572


$
(1,325,356
)

$
180,698


$
161,580


$
148,778


$
17,130


$
(165,908
)

$
161,580  33




---



##### 



KING PHARMACEUTICALS, INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  GUARANTOR
    SUBSIDIARIES
  CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
  Six Months Ended June 30, 2007


Six Months Ended June 30, 2006Non











NonGuarantor


Guarantor


King





Guarantor


Guarantor


KingKing


Subsidiaries


Subsidiaries


Consolidated


King


Subsidiaries


Subsidiaries


Consolidated(Unaudited)(In thousands)Cash flows provided by operating
    activities

$
(18,093
)

$
263,771


$
7,044


$
252,722


$
(43,349
)

$
199,740


$
14,053


$
170,444Cash flows from investing
    activities:Transfers from (to) restricted cash


(231
)










(231
)


128,874











128,874Purchases of investments in debt
    securities


(869,683
)










(869,683
)


(766,117
)










(766,117
)Proceeds from maturities and sales
    of investments in debt securities


891,870











891,870



482,152











482,152Purchases of property, plant and
    equipment


(11,654
)


(6,017
)


(423
)


(18,094
)


(11,022
)


(6,719
)


(2,662
)


(20,403
)Proceeds from sale of property and
    equipment






3







3















Acquisition of
    Avinza®


(23
)


(296,469
)






(296,492
)














Loan repayment from Ligand


37,750











37,750















Purchases of product rights and
    intellectual property






(15,058
)






(15,058
)






(24,085
)






(24,085
)Arrow International Limited
    collaboration agreement






(50,000
)






(50,000
)






(35,000
)






(35,000
)Net cash provided by (used in)
    investing activities


48,029



(367,541
)


(423
)


(319,935
)


(166,113
)


(65,804
)


(2,662
)


(234,579
)Cash flows from financing
    activities:


























Proceeds from exercise of stock
    options, net


9,156











9,156



6,698











6,698Excess tax benefit from stock-based
    compensation


608











608



397











397Proceeds from issuance of long-term
    debt


















400,000











400,000Payments on long-term debt


















(338,434
)










(338,434
)Debt issuance costs


(1,623
)










(1,623
)


(10,659
)










(10,659
)Intercompany


(96,194
)


101,364



(5,170
)






137,523



(127,501
)


(10,022
)


Net cash (used in) provided by
    financing activities


(88,053
)


101,364



(5,170
)


8,141



195,525



(127,501
)


(10,022
)


58,002(Decrease) increase in cash and
    cash equivalents


(58,117
)


(2,406
)


1,451



(59,072
)


(13,937
)


6,435



1,369



(6,133
)Cash and cash equivalents,
    beginning of period


101,210



8,801



3,766



113,777



26,802



1,172



2,040



30,014Cash and cash equivalents, end of
    period

$
43,093


$
6,395


$
5,217


$
54,705


$
12,865


$
7,607


$
3,409


$
23,881  34




---



##### 



Item
    2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion contains certain forward-looking
    statements that reflect managements current views of
    future events and operations. This discussion should be read in
    conjunction with the following: (a) Risk
    Factors set out below and in our Annual Report on
    Form 10-K
    for the year ended December 31, 2006, which are
    supplemented by the discussion which follows; (b) our
    audited consolidated financial statements and related notes
    which are included in our Annual Report on
    Form 10-K
    for the year ended December 31, 2006; and (c) our
    unaudited consolidated financial statements and related notes
    which are included in this report on
    Form 10-Q.
    Please see the sections entitled Risk Factors and
    A Warning About Forward-Looking Statements for a
    discussion of the uncertainties, risks and assumptions
    associated with these statements.
  OVERVIEW
  Our
    Business
        Recent
    Developments
  ® ® ® ® ® ®
  TM ® TM ® ®
 35




---



##### 



® ® ® ®
  ® ® ® ®
  tm tm
  ® Hart-Scott-Rodino
 36




---



##### 



RESULTS
    OF OPERATIONS
  Three
    and Six Months Ended June 30, 2007 and 2006
    For the Three


For the SixMonths Ended


Months EndedJune 30,


June 30,2007


2006


2007


2006(In thousands)


(In thousands)Total RevenuesBranded pharmaceuticals

$
466,931


$
419,118


$
916,018


$
836,738Meridian Medical Technologies


50,896



53,883



93,911



95,167Royalties


20,396



21,085



40,720



40,721Contract manufacturing


3,450



5,559



6,658



11,254Other


1,053







1,449



Total revenues

$
542,726


$
499,645


$
1,058,756


$
983,880Cost of Revenues, exclusive of
    depreciation, amortization and impairmentsBranded pharmaceuticals

$
95,759


$
75,703


$
182,633


$
141,094Meridian Medical Technologies


20,748



23,756



39,188



43,003Royalties


2,627



2,556



5,070



4,926Contract manufacturing


3,285



5,033



6,289



10,429Other


3,111







3,804



Total cost of revenues

$
125,530


$
107,048


$
236,984


$
199,452     For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006(In thousands)


(In thousands)Gross Sales

$
667,423


$
616,569


$
1,302,262


$
1,224,429Commercial Rebates


45,124



40,766



94,062



97,044Medicaid Rebates


12,179



9,600



20,897



18,312Medicare Part D Rebates


14,670



14,702



29,636



25,870Chargebacks


22,582



22,857



46,227



52,247Returns


6,490



8,244



5,236



7,542Trade Discounts/Other


23,766



20,598



47,784



39,627542,612



499,802



1,058,420



983,787Discontinued Operations


(114
)


157



(336
)


(93
)Net Sales

$
542,726


$
499,645


$
1,058,756


$
983,880   ®
   37




---



##### 



Accrual
    for Rebates, including Administrative Fees (in
    thousands):
  2007


2006Balance at January 1, net of
    prepaid amounts

$
53,765


$
126,240Current provision related to sales
    made in current period


72,088



79,690Current provision related to sales
    made in prior periods


534



(3,532
)Rebates paid


(67,255
)


(115,999
)Balance at March 31, net of
    prepaid amounts

$
59,132


$
86,399Current provision related to sales
    made in current period


72,822



69,912Current provision related to sales
    made in prior periods


(849
)


(4,844
)Rebates paid


(72,924
)


(82,158
)Balance at June 30, net of
    prepaid amounts

$
58,181


$
69,309        38




---



##### 



Accrual
    for Returns (in thousands):
  2007


2006Balance at January 1

$
42,001


$
50,902Current provision


(1,254
)


(702
)Actual returns


(6,295
)


(7,692
)Ending balance at March 31

$
34,452


$
42,508Current provision


6,490



8,244Actual returns


(4,767
)


(4,410
)Ending balance at June 30

$
36,175


$
46,342     Accrual for Chargebacks (in thousands):
  2007


2006Balance at January 1

$
13,939


$
13,153Current provision


23,645



29,390Actual chargebacks


(26,557
)


(25,972
)Ending balance at March 31

$
11,027


$
16,571Current provision


22,582



22,857Actual chargebacks


(22,962
)


(25,402
)Ending balance at June 30

$
10,647


$
14,026  39




---



##### 



Branded
    Pharmaceuticals Segment
  For the Three Months


Change


For the Six Months


ChangeEnded June 30,


2007 vs. 2006


Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Branded Pharmaceutical revenue:Altace®

$
163,296


$
153,842


$
9,454



6.1
%

$
319,916


$
312,690


$
7,226



2.3
%Skelaxin®


108,007



97,478



10,529



10.8



220,125



196,104



24,021



12.2Thrombin-JMI®


65,156



61,907



3,249



5.2



129,131



120,104



9,027



7.5Avinza®


34,850







34,850







44,249







44,249



Levoxyl®


25,584



29,127



(3,543
)


(12.2
)


47,641



60,082



(12,441
)


(20.7
)Sonata®


16,590



23,912



(7,322
)


(30.6
)


40,443



45,178



(4,735
)


(10.5
)Other


53,448



52,852



596



1.1



114,513



102,580



11,933



11.6Total revenue


466,931



419,118



47,813



11.4



916,018



836,738



79,280



9.5Cost of revenues, exclusive of
    depreciation, amortization and impairments


95,759



75,703



20,056



26.5



182,633



141,094



41,539



29.4   ® ® ® ® ® ® ®
  Sales
    of Key Products
  Altace®
  ® ®
  ®
  Skelaxin®
  ® ® ® ®
  ®
  Thrombin-JMI®
  ®
 40




---



##### 



®
  Avinza®
  ® ® ® ® ® ®
  Levoxyl®
  ® ®
  ®
  Sonata®
  ® ® ® ® ® ®
  ®
  ®
  Other
   41




---



##### 



® ®
  Cost
    of Revenues
  ® ®
      Meridian
    Medical Technologies
  For the Three Months


Change


For the Six


ChangeEnded June 30,


2007 vs. 2006


Months Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Meridian Medical Technologies
    revenue

$
50,896


$
53,883


$
(2,987
)


(5.5
)%

$
93,911


$
95,167


$
(1,256
)


(1.3
)%Cost of revenues, exclusive of
    depreciation, amortization and impairments


20,748



23,756



(3,008
)


(12.7
)


39,188



43,003



(3,815
)


(8.9
)   ® ® ® ®
   42




---



##### 



Royalties
  For the Three Months


Change


For the Six


ChangeEnded June 30,


2007 vs. 2006


Months Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Royalty revenue

$
20,396


$
21,085


$
(689
)


(3.3
)%

$
40,720


$
40,721


$
(1
)


(<1
)%Cost of revenues, exclusive of
    depreciation,
    amortization and impairments


2,627



2,556



71



2.8



5,070



4,926



144



2.9   ® ®
  Contract
    Manufacturing
  For the Three Months


Change


For the Six


ChangeEnded June 30,


2007 vs. 2006


Months Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Contract manufacturing revenue

$
3,450


$
5,559


$
(2,109
)


(37.9
)%

$
6,658


$
11,254


$
(4,596
)


(40.8
)%Cost of revenues, exclusive of
    depreciation, amortization and impairments


3,285



5,033



(1,748
)


(34.7
)


6,289



10,429



(4,140
)


(39.7
)     Operating
    Costs and Expenses
  For the Three Months


Change


For the Six Months


ChangeEnded June 30,


2007 vs. 2006


Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Cost of revenues, exclusive of
    depreciation, amortization and impairments as shown below

$
125,530


$
107,048


$
18,482



17.3
%

$
236,984


$
199,452


$
37,532



18.8
%Selling, general and administrative


173,208



154,158



19,050



12.4



341,520



324,501



17,019



5.2Research and development


40,455



34,630



5,825



16.8



72,726



149,512



(76,786
)


(51.4
)Depreciation and amortization


40,412



38,547



1,865



4.8



76,090



72,912



3,178



4.4Asset impairments


74,810



279



74,531



>100



74,810



279



74,531



>100Restructuring charges






(8
)


8



100.0



460



(8
)


468



58.5Total operating costs and expenses

$
454,415


$
334,654


$
119,761



35.8


$
802,590


$
746,648


$
55,942



7.5
%  43




---



##### 



Selling,
    General and Administrative Expenses
  For the Three Months


Change


For the Six


ChangeEnded June 30,


2007 vs. 2006


Months Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Selling, general and
    administrative, exclusive of co-promotion fees

$
125,684


$
107,126


$
18,558



17.3
%

$
248,038


$
212,180


$
35,858



16.9
%Co-promotion fees


47,524



47,032



492



1.0



93,482



112,321



(18,839
)


(16.8
)Total selling, general and
    administrative

$
173,208


$
154,158


$
19,050



12.4
%

$
341,520


$
324,501


$
17,019



5.2
%     ® ®
  ® ®
    Research
    and Development Expense
  For the Three Months


Change


For the Six


ChangeEnded June 30,


2007 vs. 2006


Months Ended June 30,


2007 vs. 20062007


2006


$


%


2007


2006


$


%(In thousands)








(In thousands)Research and development

$
37,355


$
34,630


$
2,725



7.9
%

$
69,626


$
64,512


$
5,114



7.9
%Research and
    development  in process upon acquisition


3,100







3,100







3,100



85,000



(81,900
)


(96.4
)Total research and development

$
40,455


$
34,630


$
5,825



16.8
%

$
72,726


$
149,512


$
(76,786
)


(51.4
%)    44




---



##### 



®
      Depreciation
    and Amortization Expense
  ® ® ®
  Other
    Operating Expenses
    
    Intangible asset impairment charge of $29.3 million in the
    second quarter of 2007 and $0.3 million in the second quarter of
    2006. The intangible asset impairment charge in the second
    quarter of 2007 was primarily related to our decision to no
    longer pursue the development of a new formulation of
    Intal®
    utilizing hydroflouroalkane (HFA) as a propellant. 45




---



##### 




    A charge of $45.6 million in the second quarter of 2007
    related to the write-down of our Rochester, Michigan sterile
    manufacturing facility and certain legacy branded pharmaceutical
    products which we have classified as held for sale. On
    July 14, 2007, we entered into an asset purchase agreement
    with JHP Pharmaceuticals, LLC (JHP), pursuant
    to which JHP will acquire the Companys Rochester, Michigan
    sterile manufacturing facility, some of the Companys
    legacy products that are manufactured there, and the related
    contract manufacturing business. For additional information,
    please see Note 6, Assets Held for Sale, in
    Part I, Financial Statements, and Recent
    Developments, in Part I, Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  ® and/or
  ® ® ® ®
  Non-Operating
    Items
  For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006(In thousands)


(In thousands)Interest income

$
8,517


$
8,393


$
17,783


$
14,353Interest expense


(1,853
)


(3,047
)


(3,878
)


(6,031
)(Loss) gain on early
    extinguishment of debt






(313
)






709Other, net


278



(204
)


(265
)


(714
)Total other income


6,942



4,829



13,640



8,317Income tax expense


30,394



59,017



88,893



83,911Discontinued operations


(74
)


100



(215
)


(58
)   Interest
    Income
    3 4
   Income
    Tax Expense
   46




---



##### 



Discontinued
    Operations
  ® ® ® ®
  Liquidity
    and Capital Resources
  General
      ® Hart-Scott-Rodino
    ® ® ® ®
 47




---



##### 



®
  
    If calendar year net sales are less than $200.0 million,
    the royalty payment will be 5% of all net sales.
    If calendar year net sales are greater than $200.0 million,
    then the royalty payment will be 10% of all net sales up to
    $250.0 million, plus 15% of net sales greater than
    $250.0 million.  ® ® ®
  TM ® TM ®
  ® ® ® ®
  
    For 2006, 15% of
    Altace®
    net sales up to $165.0 million, 42.5% of
    Altace®
    net sales in excess of $165.0 million and less than or
    equal to $465.0 million, and 52.5% of
    Altace®net
    sales that are in excess of $465.0 million and less than or
    equal to $585.0 million.
    For 2007, 30% of
    Altace®
    net sales, with the fee not to exceed $178.5 million.
    For 2008, 22.5% of
    Altace®
    net sales, with the fee not to exceed $134.0 million.
    For 2009, 14.2% of
    Altace®
    net sales, with the fee not to exceed $84.5 million.
    For 2010, 25% of
    Altace®
    net sales, with the fee not to exceed $5.0 million.  ® ®
  ®
  TM TM
 48




---



##### 



TM TM TM TM
  ® ®
  ® ®
    ®
  ®
  TM TM tm TM
 49




---



##### 



TM TM
    ® ® ® ®
  Settlement
    of Governmental Pricing Investigation
          Form 8-K
 50




---



##### 



SEC
    Investigation
      Securities
    and Derivative Litigation
            Patent
    Challenges
  ® ® ® ® ® ® ® ®
 51




---



##### 



Cash
    Flows
  Operating
    Activities
  For theSix Months EndedJune 30,2007


2006(In thousands)Net cash provided by operating
    activities

$
252,722


$
170,444       For theSix Months EndedJune 30,2007


2006(In thousands)Accounts receivable, net of
    allowance

$
2,972


$
(39,011
)Inventories


18,256



21,987Prepaid expenses and other current
    assets


(26,596
)


(29,202
)Accounts payable


(5,735
)


(14,837
)Accrued expenses and other
    liabilities


(69,671
)


(83,988
)Income taxes payable


11,535



33,962Deferred revenue


(2,340
)


(4,546
)Other assets


(8,264
)


(14,562
)Deferred taxes


(15,438
)


(30,169
)Total changes in operating assets
    and liabilities and deferred taxes

$
(95,281
)

$
(160,366
)   Investing
    Activities
  For theSix Months EndedJune 30,2007


2006(In thousands)Net cash used in investing
    activities

$
(319,935
)

$
(234,579
)   ®
   52




---



##### 



®
    Financing
    Activities
  For theSix Months EndedJune 30,2007


2006(In thousands)Net cash provided by financing
    activities

$
8,141


$
58,002   1 4 3 4
  Certain
    Indebtedness and Other Matters
  1 4 1 4
    3 4
   53




---



##### 



Form S-3 and/or
  Impact
    of Inflation
    Recently
    Issued Accounting Standards
  Fair Value Measurements
  Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
  The Fair Value Option for
    Financial Assets and Financial Liabilities
 54




---



##### 



Critical
    Accounting Policies and Estimates
              
    Intangible assets, goodwill, and other long-lived assets.When we acquire product rights in conjunction with either
    business or asset acquisitions, we allocate an appropriate
    portion of the purchase price to intangible assets, goodwill and
    other long-lived assets. The purchase price is allocated to
    product rights and trademarks, patents, acquired research and
    development, if any, and other intangibles using the assistance
    of valuation consultants. We estimate the useful lives of the
    assets by factoring in the characteristics of the products such
    as: patent protection, competition from products prescribed for
    similar indications, estimated future introductions of competing
    products, and other issues. The factors that drive the estimate
    of the life of the asset are inherently uncertain. However,
    patents have specific legal lives over which they are amortized.
    Conversely, trademarks and product rights have no specific legal
    lives. Trademarks and product rights will continue to be an
    asset to us after the expiration of the patent, as their
    economic value is not tied exclusively to the patent. We believe
    that by establishing separate lives for the patent versus the
    trademark and product rights, we are in essence using an
    accelerated method of amortization for the product as a whole.
    This results in greater amortization in earlier years when the
    product is under patent protection, as we are amortizing both
    the patent and the trademark and product rights, and less
    amortization when the product faces potential generic
    competition, as the amortization on the patent is eliminated.
    Because we have no discernible evidence to show a decline in
    cash flows for trademarks and product rights, or for patents, we
    use the straight-line method of amortization for both
    intangibles.
    We review our property, plant and equipment and intangible
    assets for possible impairment whenever 55




---



##### 



events or circumstances indicate that the carrying amount of an
    asset may not be recoverable. We review our goodwill for
    possible impairment annually, or whenever events or
    circumstances indicate that the carrying amount may not be
    recoverable. In any event, we evaluate the remaining useful
    lives of our intangible assets each reporting period to
    determine whether events and circumstances warrant a revision to
    the remaining period of amortization. This evaluation is
    performed through our quarterly evaluation of intangibles for
    impairment. Further, on an annual basis, we review the life of
    each intangible asset and make adjustments as deemed
    appropriate. In evaluating goodwill for impairment, we estimate
    the fair value of our individual business reporting units on a
    discounted cash flow basis. Assumptions and estimates used in
    the evaluation of impairment may affect the carrying value of
    long-lived assets, which could result in impairment charges in
    future periods. Such assumptions include projections of future
    cash flows and, in some cases, the current fair value of the
    asset. In addition, our depreciation and amortization policies
    reflect judgments on the estimated useful lives of assets.
    We may incur impairment charges in the future if prescriptions
    for, or sales of, our products are less than current
    expectations and result in a reduction of our estimated
    undiscounted future cash flows. This may be caused by many
    factors, including competition from generic substitutes,
    significant delays in the manufacture or supply of materials,
    the publication of negative results of studies or clinical
    trials, new legislation or regulatory proposals.    Accumulated


Net BookCost


Amortization


Value(In thousands)BrandedAltace®

$
281,150


$
93,285


$
187,865Other Cardiovascular/metabolic


80,569



48,936



31,633Cardiovascular/metabolic


361,719



142,221



219,498Intal®


34,033



25,278



8,755Other Hospital/acute care


170,242



53,868



116,374Hospital/acute care


204,275



79,146



125,129Skelaxin®


203,015



55,953



147,062Sonata®


23,146



23,146



Neuroscience


226,161



79,099



147,062Other


66,643



39,086



27,557Total Branded


858,798



339,552



519,246Meridian Medical
    Technologies


173,844



28,434



145,410Royalties


2,470



2,146



324Contract
    manufacturing










All other










Total trademarks and product rights

$
1,035,112


$
370,132


$
664,980  56




---



##### 



Three Months Ended





Three Months EndedJune 30, 2007





June 30, 2006Amortization


Life





AmortizationImpairments


Expense


(Years)


Impairments


Expense(In thousands)





(In thousands)BrandedAltace®

$




4,084



20


$



$
3,677Other Cardiovascular/metabolic






1,799











1,821Cardiovascular/metabolic






5,883











5,498Intal®


27,693



1,402



6







1,902Other Hospital/acute care


1,566



2,833







279



3,181Hospital/acute care


29,259



4,235







279



5,083Skelaxin®






3,887



13.5







3,887Other






605











795Total Branded


29,259



14,610







279



15,263Meridian Medical
    Technologies






1,984











1,903Royalties






11











11Contract
    manufacturing


















All other


















Total trademarks and product rights

$
29,259


$
16,605






$
279


$
17,177  57




---



##### 



Six Months Ended





Six Months EndedJune 30, 2007





June 30, 2006Amortization


Life





AmortizationImpairments


Expense


(Years)


Impairments


Expense(In thousands)





(In thousands)BrandedAltace®

$




8,062



20


$



$
7,355Other Cardiovascular/metabolic






3,598











3,641Cardiovascular/metabolic






11,660











10,996Intal®


27,693



2,804



6







3,805Other Hospital/acute care


1,566



5,666







279



6,361Hospital/acute care


29,259



8,470







279



10,166Skelaxin®






7,774



13.5







7,774Other






1,211











1,590Total Branded


29,259



29,115







279



30,526Meridian Medical
    Technologies






3,950











3,397Royalties






21











21Contract
    manufacturing


















All other


















Total trademark and product rights

$
29,259


$
33,086






$
279


$
33,944     Remaining Life at June 30, 2007Trademark &Patent


Product RightsAltace®


1 year 10 months



11 years 6 monthsSkelaxin®






9 years 6 monthsAvinza®


10 years 5 months



Intal®






1 year 6 months   
    Inventories.  Our inventories are valued at the
    lower of cost or market value. We evaluate our entire inventory
    for short dated or slow moving product and inventory commitments
    under supply agreements based on projections of future demand
    and market conditions. For those units in inventory that are so
    identified, we estimate their market value or net sales value
    based on current realization trends. If the projected net
    realizable value is less than cost, on a product basis, we make
    a provision to reflect the lower value of that inventory. This
    methodology recognizes projected inventory losses at the time
    such losses are evident rather than at the time goods are
    actually sold. We maintain supply agreements with some of our
    vendors which contain minimum purchase requirements. We estimate
    future inventory requirements based on current facts and trends.
    Should our minimum purchase requirements under supply agreements
    or our estimated future inventory requirements exceed actual
    inventory quantities that we will be able to sell to our
    customers, we record a charge in costs of revenues.
    Accruals for rebates, returns, and
    chargebacks.  We establish accruals for returns,
    chargebacks and Medicaid, Medicare, and commercial rebates in
    the same period we recognize the related sales. The accruals
    reduce revenues and are included in accrued expenses. At the
    time a rebate or chargeback payment is made or a product return
    is received, which occurs with a delay after the related sale,
    we record a reduction to accrued expenses and, at the end of
    each quarter, adjust accrued expenses for differences between
    estimated and actual payments. Due to estimates and assumptions
    inherent in 58




---



##### 



determining the amount of returns, chargebacks and rebates, the
    actual amount of product returns and claims for chargebacks and
    rebates may be different from our estimates.      
    Revenue recognition.  Revenue is recognized
    when title and risk of loss are transferred to customers,
    collection of sales is reasonably assured, and we have no
    further performance obligations. This is generally at the time
    products are received by the customer. Accruals for estimated
    returns, rebates and chargebacks, determined based on historical
    experience, reduce revenues at the time of sale and are included
    in accrued expenses. Medicaid and certain other governmental
    pricing programs involve particularly difficult interpretations
    of relevant statutes and regulatory guidance, which are complex
    and, in certain respects, ambiguous. Moreover, prevailing
    interpretations of these statutes and guidance can change over
    time. Royalty revenue is recognized based on a percentage of
    sales (namely, contractually
    agreed-upon
    royalty rates) reported by third parties. 59




---



##### 



A WARNING
    ABOUT FORWARD-LOOKING STATEMENTS
        
    the potential of, including anticipated net sales and
    prescription trends for, our branded pharmaceutical products,
    particularly
    Altace®,
    Skelaxin®,
    Avinza®,
    Thrombin-JMI®,
    Levoxyl®
    and
    Sonata®;
    expectations regarding the enforceability and effectiveness of
    product-related patents, including in particular patents related
    to
    Altace®,
    Skelaxin®,
    Sonata®
    and
    Adenoscan®;
    expected trends and projections with respect to particular
    products, reportable segment and income and expense line items;
    the adequacy of our liquidity and capital resources;
    anticipated capital expenditures;
    the development, approval and successful commercialization of
    Remoxytm,
    an investigational drug for the treatment of moderate-to-severe
    chronic pain; bremelanotide, an investigational new drug for the
    treatment of erectile dysfunction and female sexual dysfunction;
    an
    Altace®
    diuretic combination product for patients who require an
    antihypertensive as well as a diuretic; and product life-cycle
    development projects;
    the successful execution of our growth strategies;
    anticipated developments and expansions of our business;
    our plans for the manufacture of some of our products, including
    products manufactured by third parties;
    the potential costs, outcomes and timing of research, clinical
    trials and other development activities involving pharmaceutical
    products, including, but not limited to, the magnitude and
    timing of potential payments to third parties in connection with
    development activities;
    the development of product line extensions;
    the expected timing of the initial marketing of a ramipril
    tablet formulation and other products;
    products developed, acquired or in-licensed that may be
    commercialized;
    our intent, beliefs or current expectations, primarily with
    respect to our future operating performance;
    expectations regarding sales growth, gross margins,
    manufacturing productivity, capital expenditures and effective
    tax rates;
    expectations regarding the outcome of various pending legal
    proceedings including the
    Altace®
    and
    Skelaxin®
    patent challenges, the SEC investigation, other possible
    governmental investigations, securities litigation, and other
    legal proceedings described in this report; and 60




---



##### 




    the completion of the pending sale of our Rochester, Michigan
    sterile manufacturing facility, and substantially all of our
    contract manufacturing business;
    expectations regarding our financial condition and liquidity as
    well as future cash flows and earnings.  Form 10-K,
  Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk          Item 4.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
  Rules 13a-15(f) 15d-15(f)
  PART II 
    OTHER INFORMATION
  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
 61




---



##### 



Any
    significant delays or difficulties in the manufacture of, or
    supply of materials for, our products may reduce our profit
    margins and revenues, limit the sales of our products, or harm
    our products reputations.
  ® ® ® ® ® ® ® ®
    ® ® ® ®
  Item 4.
    Submission
    of Matters to a Vote of Security Holders    Election of Directors.
  WithholdFor


AuthorityPhilip A. Incarnati


211,492,619



5,704,294Gregory D. Jordan


142,066,281



75,130,631Brian A. Markison


208,884,777



8,312,136     Class I(terms to expire in
    2008)

R. Charles MoyerD. Greg RookerTed G. WoodClass II(terms to expire in
    2009)

Earnest W. Deavenport, Jr.Elizabeth M. Greetham   Approval of Third Amended and Restated
    Charter.
  62




---



##### 



For

Against


Abstain215,178,882


550,060



1,467,970   Ratification of Independent Registered Public
    Accounting Firm.
  For

Against


Abstain215,021,866


932,609



1,242,437   Item
    6. Exhibits
  Number



Exhibit Title3
.1



Third Amended and Restated Charter
    of King Pharmaceuticals, Inc.10
.1(1)



Form Of Retention Grant
    Agreement.10
.2(1)



Form Of Long-Term Performance
    Unit Award Agreement.10
.3(1)



Form Of Long-Term Performance
    Unit Award Agreement.10
.4(1)



Form Of Restricted Stock Unit
    Agreement.10
.5(1)



Director Compensation Policy.10
.6



Credit Agreement dated as of
    April 19, 2007 among King Pharmaceuticals, Inc.; the
    Lenders (as defined therein); Credit Suisse, Cayman Islands
    Branch, as Administrative Agent, Collateral Agent and Swingline
    Lender; Bank of America, N.A. and UBS Securities LLC, as
    Cosyndication Agents; Citigroup Global Markets Inc., Wachovia
    Bank, National Association and The Royal Bank of Scotland plc,
    as Codocumentation Agents; U.S. Bank National Association as
    Managing Agent; and the Issuing Banks (as defined therein).31
.1



Certification by Chief Executive
    Officer Pursuant to Rule 13A-14(a) or 15D-14(a) of the
    Securities Exchange Act of 1934, as adopted pursuant to Section
    302 of the Sarbanes-Oxley Act of 2002.31
.2



Certification by Chief Financial
    Officer Pursuant to Rule 13A-14(a) or 15D-14(a) of the
    Securities Exchange Act of 1934, as adopted pursuant to Section
    302 of the Sarbanes-Oxley Act of 2002.32
.1



Certification by Chief Executive
    Officer Pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32
.2



Certification by Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    Incorporated by reference to Kings Current Report on
    Form 8-K
    filed May 21, 2007. 63




---



##### 



SIGNATURES
      By:
    /s/  BRIAN
    A. MARKISON   President and Chief Executive Officer
    By:
    /s/  JOSEPH
    SQUICCIARINO   Chief Financial Officer
   64