King Pharmaceuticals 8-K King Pharmaceuticals Reports Second-quarter 2007 Financial Results

EXHIBIT 99.1

PRESS RELEASE

Contacts:
James E. Green, Executive Vice President, Corporate Affairs
423-989-8125
David E. Robinson, Senior Director, Corporate Affairs
423-989-7045

FOR IMMEDIATE RELEASE

KING PHARMACEUTICALS REPORTS
SECOND-QUARTER 2007 FINANCIAL RESULTS

BRISTOL, TENNESSEE, August 7, 2007 — King Pharmaceuticals, Inc. (NYSE:KG) announced today that total revenues increased 9% to a record high $543 million during the second quarter ended June 30, 2007, compared to $500 million in the second quarter of 2006. Reported net income equaled $65 million and diluted income per share equaled $0.26 during the second quarter of 2007, compared to net earnings of $111 million and diluted earnings per share of $0.46 in the second quarter of the prior year. Excluding special items, net earnings equaled $117 million and diluted earnings per share equaled $0.48 during the second quarter ended June 30, 2007, compared to net earnings of $112 million and diluted earnings per share of $0.46 in the second quarter of 2006.

Brian A. Markison, Chairman, President and Chief Executive Officer of King, stated, “During the second quarter of 2007, we continued to deliver solid financial results and advance several promising product opportunities in our development pipeline. Importantly, we, together with our partner Pain Therapeutics, Inc. (NASDAQ: PTIE), recently announced the completion of patient enrollment in the pivotal Phase III clinical trial for REMOXY™ (long acting oral oxycodone), our lead investigational product for moderate to severe pain. REMOXY™’s sustained release formulation has the potential to reduce the improper and often intentional accelerated release of oxycodone through crushing, heating, or dissolution in alcohol that is reported with respect to other long acting opioids.”

Mr. Markison continued, “We also recently announced positive results from our Phase III clinical trial evaluating our ALTACE^® (ramipril) diuretic combination product, and expect to file a New Drug Application for this product in the second half of this year. Another important R&D accomplishment is the recent initiation of our Phase II clinical trial program evaluating the safety and efficacy of T-62, a potential major advance in the treatment of neuropathic pain.”

Mr. Markison concluded, “In addition to the significant advancements we are making with our new product pipeline, we are also continuing to evaluate many business development opportunities and remain committed to executing our strategy to provide long-term growth for our shareholders.”

As of June 30, 2007, the Company’s cash and cash equivalents and investments in debt securities totaled approximately $923 million. King generated strong cash flow from operations of $145 million during the second quarter of 2007.

Net revenue from branded pharmaceuticals totaled $467 million for the second quarter of 2007, an 11% increase from $419 million during the second quarter of 2006.

ALTACE^® net sales totaled $163 million during the second quarter of 2007, compared to $154 million during the second quarter of 2006.

Net sales of SKELAXIN^â (metaxalone) totaled $108 million during the second quarter of 2007, an increase of 11% compared to $97 million during the same period of the prior year.

THROMBIN-JMI^Ò (thrombin, topical, bovine, USP) net sales totaled $65 million during the second quarter of 2007, compared to $62 million during the second quarter of 2006.

Net sales of AVINZA^â (morphine sulfate extended release) totaled $35 million during the second quarter of 2007. The Company acquired AVINZA^â in February 2007.

Net sales of SONATA^â (zaleplon) totaled $17 million during the second quarter of 2007, compared to $24 million during the second quarter of the prior year.

LEVOXYL^Ò (levothyroxine sodium tablets, USP) net sales decreased to $26 million during the second quarter ended June 30, 2007 from $29 million during the second quarter of 2006.

King’s Meridian Medical Technologies business contributed revenue totaling $51 million during the second quarter of 2007, compared to $54 million during the same period of the prior year.

Royalty revenues, derived primarily from ADENOSCAN^Ò (adenosine), totaled $20 million during the second quarter ended June 30, 2007. For the second quarter ended June 30, 2007, net revenue from contract manufacturing equaled $3 million.

Webcast Information
King will conduct a webcast today which may include discussion of the Company’s marketed products, pipeline, strategy for growth, financial results and expectations, and other matters relating to its business. Interested persons may listen to the webcast on Tuesday, August 7, 2007, at 11:00 a.m., E.D.T., by clicking the following link to register and then joining the live event with the same URL:

http://www.kingpharm.com/web_casts.asp

If you are unable to participate during the live event, the webcast will be archived on King’s web site at the same link for not less than 14 days after the webcast.

About Special Items
Under Generally Accepted Accounting Principles (“GAAP”), reported “net earnings” and “diluted earnings per share” include special items. In addition to the reported results determined in accordance with GAAP, King provides its net earnings and diluted earnings per share results for the second quarters and six months ended June 30, 2007 and 2006, excluding special items.

These non-GAAP financial measures exclude special items which are those particular material income or expense items that King considers to be unrelated to the Company’s ongoing, underlying business, non-recurring, or not generally predictable. Such items include, but are not limited to, merger and restructuring expenses; non-capitalized expenses associated with acquisitions, such as in-process research and development charges and one-time inventory valuation adjustment charges; charges resulting from the early extinguishment of debt; asset impairment charges; expenses of drug recalls; and gains and losses resulting from the divestiture of assets. King believes the identification of special items enhances the analysis of the Company’s ongoing, underlying business and the analysis of the Company’s financial results when comparing those results to that of a previous or subsequent like period. However, it should be noted that the determination of whether to classify an item as a special item involves judgments by King’s management. A reconciliation of non-GAAP financial measures referenced herein and King’s reported financial results determined in accordance with GAAP is provided below.

About King Pharmaceuticals
King, headquartered in Bristol, Tennessee, is a vertically integrated branded pharmaceutical company. King, an S&P 500 Index company, seeks to capitalize on opportunities in the pharmaceutical industry through the development, including through in-licensing arrangements and acquisitions, of novel branded prescription pharmaceutical products in attractive markets and the strategic acquisition of branded products that can benefit from focused promotion and marketing and product life-cycle management.

Forward-looking Statements
This release contains forward-looking statements which reflect management’s current views of future events and operations, including, but not limited to, statements pertaining to the Company’s plan to file a New Drug Application this year with respect to the ALTACE^® combination product; statements pertaining to the Company’s plan to continue evaluating business development opportunities and commitment to executing its long-term growth strategy; and statements pertaining to the Company’s planned webcast to discuss its second-quarter 2007 results. These forward-looking statements involve certain significant risks and uncertainties, and actual results may differ materially from the forward-looking statements. Some important factors which may cause actual results to differ materially from the forward-looking statements include dependence on King’s ability to file the New Drug Application as planned; dependence on King’s ability to continue to acquire branded products, including products in development; dependence on King’s ability to continue to successfully execute the Company’s strategy and to continue to capitalize on strategic opportunities in the future for sustained long-term growth; dependence on King’s ability to successfully integrate its acquisitions; dependence on the Company’s ability to continue to advance the development of its pipeline products as planned; dependence on the high cost and uncertainty of research, clinical trials, and other development activities involving pharmaceutical products in which King has an interest; dependence on the unpredictability of the duration and results of the U.S. Food and Drug Administration’s (“FDA”) review of Investigational New Drug applications (“IND”), New Drug Applications (“NDA”),

and Abbreviated New Drug Applications (“ANDA”) and/or the review of other regulatory agencies worldwide that relate to those projects; dependence on the availability and cost of raw materials; dependence on no material interruptions in supply by contract manufacturers of King’s products; dependence on the potential effect on sales of the Company’s existing branded pharmaceutical products as a result of the potential development and approval of a generic substitute for any such product or other new competitive products; dependence on the potential effect of future acquisitions and other transactions pursuant to the Company’s growth strategy; dependence on King’s compliance with FDA and other government regulations that relate to the Company’s business; dependence on King’s ability to conduct its webcast as currently planned on August 7, 2007; dependence on changes in general economic and business conditions; changes in current pricing levels; changes in federal and state laws and regulations; changes in competition; unexpected changes in technologies and technological advances; and manufacturing capacity constraints. Other important factors that may cause actual results to differ materially from the forward-looking statements are discussed in the “Risk Factors” section and other sections of King’s Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended March 31, 2007, which are on file with the U.S. Securities and Exchange Commission. King does not undertake to publicly update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.

KING PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

	June 30,		December 31,
	2007		2006
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	54,705	$	113,777
Investments in debt securities		867,998		890,185
Accounts receivable, net		261,057		263,939
Inventories		185,382		202,577
Deferred income tax assets		63,021		81,991
Income tax receivable		2,188		—
Prepaid expenses and other current assets		62,469		106,595
Current assets held for sale		15,602		14,409
Total current assets		1,512,422		1,673,473
Property, plant and equipment, net		241,937		244,382
Intangible assets, net		1,002,703		790,313
Goodwill		129,046		121,152
Deferred income tax assets		305,902		271,554
Marketable securities		11,237		11,578
Other assets		102,269		93,347
Assets held for sale		72,829		123,732
Total assets	$	3,378,345	$	3,329,531
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	70,188	$	77,158
Accrued expenses		350,925		510,137
Income taxes payable		—		30,501
Total current liabilities		421,113		617,796
Long-term debt		400,000		400,000
Other liabilities		68,221		23,129
Total liabilities		889,334		1,040,925
Commitments and contingencies
Shareholders’ equity:
Common shares no par value, 600,000,000 shares authorized, 244,164,006 and 243,151,223 shares issued and outstanding, respectively		1,265,649		1,244,986
Retained earnings		1,223,077		1,043,902
Accumulated other comprehensive income		285		(282	)
Total shareholders’ equity		2,489,011		2,288,606
Total liabilities and shareholders’ equity	$	3,378,345	$	3,329,531

KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
REVENUES:
Total revenues	$	542,726		$	499,645		$	1,058,756		$	983,880
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of depreciation, amortization and impairments shown below		121,685			107,048			233,139			199,452
Contract termination		3,845			—			3,845			—
Total cost of revenues		125,530			107,048			236,984			199,452
Selling, general and administrative, exclusive of co-promotion fees		127,316			105,640			248,526			207,715
Special legal and professional fees		(1,632	)		1,486			(488	)		4,465
Co-promotion fees		47,524			47,032			93,482			112,321
Total selling, general, and administrative expense		173,208			154,158			341,520			324,501
Depreciation and amortization		38,912			38,547			73,090			72,912
Accelerated depreciation		1,500			—			3,000			—
Research and development		37,355			34,630			69,626			64,512
Research and development-in-process upon acquisition		3,100			—			3,100			85,000
Asset impairments		74,810			279			74,810			279
Restructuring charges		—			(8	)		460			(8	)
Total operating costs and expenses		454,415			334,654			802,590			746,648
OPERATING INCOME		88,311			164,991			256,166			237,232
OTHER INCOME (EXPENSE):
Interest expense		(1,853	)		(3,047	)		(3,878	)		(6,031	)
Interest income		8,517			8,393			17,783			14,353
(Loss) gain on early extinguishment of debt		—			(313	)		—			709
Other, net		278			(204	)		(265	)		(714	)
Total other income		6,942			4,829			13,640			8,317
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		95,253			169,820			269,806			245,549
Income tax expense		30,394			59,017			88,893			83,911
INCOME FROM CONTINUING OPERATIONS		64,859			110,803			180,913			161,638
DISCONTINUED OPERATIONS
(Loss)/income from discontinued operations		(115	)		157			(335	)		(90	)
Income tax (benefit) expense		(41	)		57			(120	)		(32	)
Total (loss) income from discontinued operations		(74	)		100			(215	)		(58	)
NET INCOME	$	64,785		$	110,903		$	180,698		$	161,580
Basic net income per common share	$	0.27		$	0.46		$	0.74		$	0.67
Diluted net income per common share	$	0.26		$	0.46		$	0.74		$	0.67
Shares used in basic net income per share		242,746			242,209			242,568			242,116
Shares used in diluted net income per share		244,550			242,755			244,110			242,668

KING PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING SPECIAL ITEMS — NON GAAP
(in thousands, except per share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
REVENUES:
Total revenues	$	542,726		$	499,645		$	1,058,756		$	983,880
OPERATING COSTS AND EXPENSES:
Cost of revenues , exclusive of depreciation and amortization		121,685			107,048			233,139			199,452
Selling, general and administrative, exclusive of co-promotion fees		127,316			105,640			248,526			207,715
Co-promotion fees		47,524			47,032			93,482			112,321
Total selling, general, and administrative expense		174,840			152,672			342,008			320,036
Depreciation and amortization		38,912			38,547			73,090			72,912
Research and development		37,355			34,630			69,626			64,512
Total operating costs and expenses		372,792			332,897			717,863			656,912
OPERATING INCOME		169,934			166,748			340,893			326,968
OTHER INCOME (EXPENSE):
Interest expense		(1,853	)		(3,047	)		(3,878	)		(6,031	)
Interest income		8,517			8,393			17,783			14,353
Other, net		278			(204	)		(265	)		(714	)
Total other income		6,942			5,142			13,640			7,608
INCOME BEFORE INCOME TAXES		176,876			171,890			354,533			334,576
Income tax expense		59,390			59,803			119,049			116,260
NET INCOME	$	117,486		$	112,087		$	235,484		$	218,316
Basic net income per common share	$	0.48		$	0.46		$	0.97		$	0.90
Diluted net income per common share	$	0.48		$	0.46		$	0.96		$	0.90
Shares used in basic net income per share		242,746			242,209			242,568			242,116
Shares used in diluted net income per share		244,550			242,755			244,110			242,668

KING PHARMACEUTICALS, INC.
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except per share data)

The following tables reconcile Non-GAAP measures to amounts reported under GAAP:

	Three Months Ended June 30, 2007						Six Months Ended June 30, 2007
	(Unaudited)			EPS						EPS
Net income, excluding special items	$	117,486					$	235,484
Diluted income per common share, excluding special items				$	0.48					$	0.96
SPECIAL ITEMS:
Contract termination (cost of revenues)		(3,845	)		(0.02	)		(3,845	)		(0.02	)
Special legal and professional fees (selling, general, and administrative)		1,632			0.01			488			0.00
Accelerated depreciation (other operating costs and expenses)		(1,500	)		(0.01	)		(3,000	)		(0.01	)
Research and development-in-process upon acquisition (other operating costs and expenses)		(3,100	)		(0.01	)		(3,100	)		(0.01	)
Asset impairments (other operating costs and expenses)		(74,810	)		(0.31	)		(74,810	)		(0.31	)
Restructuring charges (other operating costs and expenses)		—			—			(460	)		(0.00	)
Loss from discontinued operations		(115	)		(0.00	)		(335	)		(0.00	)
Total special items before income taxes		(81,738	)		(0.34	)		(85,062	)		(0.35	)
Income tax benefit from special items		29,037			0.12			30,276			0.13
Net income	$	64,785					$	180,698
Diluted income per common share, as reported under GAAP				$	0.26					$	0.74

	Three Months Ended June 30, 2006						Six Months Ended June 30, 2006
	(Unaudited)			EPS						EPS
Net income, excluding special items	$	112,087					$	218,316
Diluted income per common share, excluding special items				$	0.46					$	0.90
SPECIAL ITEMS:
Special legal and professional fees (selling, general, and administrative)		(1,486	)		0.00			(4,465	)		(0.02	)
Research and development-in-process upon acquisition (other operating costs and expenses)		—			—			(85,000	)		(0.35	)
Intangible asset impairment (other operating costs and expenses)		(279	)		(0.00	)		(279	)		(0.00	)
Restructuring charges (other operating costs and expenses)		8			0.00			8			0.00
(Loss) gain on early extinguishment of debt (other income (expense))		(313	)		(0.00	)		709			0.00
Income (loss) from discontinued operations		157			0.00			(90	)		(0.00	)
Total special items before income taxes		(1,913	)		0.00			(89,117	)		(0.37	)
Income tax benefit from special items		729			0.00			32,381			0.14
Net income	$	110,903					$	161,580
Diluted income per common share, as reported under GAAP				$	0.46					$	0.67

KING PHARMACEUTICALS, INC.

SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE SECOND QUARTERS ENDED JUNE 30, 2007 AND 2006

King recorded special items during the second quarter ended June 30, 2007 resulting in a net charge of $82 million, or $53 million net of tax, primarily due to (i) an impairment charge totaling $46 million related to the Company’s classification of its Rochester, Michigan sterile manufacturing facility and certain legacy branded products as held for sale and (ii) an impairment charge totaling $29 million related to Intal^® and Tilade^®as a result of the Company’s decision to no longer pursue the development of a new formulation of Intal^® utilizing hyrdroflouroalkane (HFA) as a propellant.

During the second quarter ended June 30, 2006, King recorded special items resulting in a net charge of $2 million, or $1 million net of tax, primarily due to legal fees related to private plaintiff securities litigation.

KING PHARMACEUTICALS, INC.
SUMMARY RECONCILIATION OF SPECIAL ITEMS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

King recorded special items during the six months ended June 30, 2007 resulting in a net charge of $85 million, or $55 million net of tax, primarily due to (i) an impairment charge totaling $46 million related to the Company’s classification of its Rochester, Michigan sterile manufacturing facility and certain legacy branded products as held for sale and (ii) an impairment charge totaling $29 million related to Intal^® and Tilade^®as a result of the Company’s decision to no longer pursue the development of a new formulation of Intal^® utilizing HFA as a propellant.

King recorded special items during the six months ended June 30, 2006 resulting in a net charge of $89 million, or $57 million net of tax, primarily due to an $85 million charge related to acquired in-process research and development associated with King’s entry into a strategic collaboration with Arrow and certain of its affiliates to commercialize novel formulations of Altace^®.

EXECUTIVE OFFICES

KING PHARMACEUTICALS, INC.
501 FIFTH STREET, BRISTOL, TENNESSEE 37620