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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark one):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)
For the fiscal year ended December 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
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Commission file number 0-24425
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
King Pharmaceuticals, Inc. 401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
King Pharmaceuticals, Inc., 501 Fifth Street, Bristol, Tennessee 37620
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
PAGE
Report of Independent Accountants 2
Financial Statements
Statements of Net Assets Available for Plan Benefits
as of December 31, 2000 and 1999 3
Statements of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 2000 4
Notes to Financial Statements 5-8
Supplemental Schedule
Schedule H, Line 4(i) - Schedule of Assets Held for Investment Purposes
as of December 31, 2000 9
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
King Pharmaceuticals, Inc. 401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the King Pharmaceuticals, Inc. 401(k) Retirement Savings Plan (the "Plan") at
December 31, 2000 and 1999, and the changes in net assets available for benefits
for the year ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Supplemental Schedule of Assets Held
for Investment Purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PricewaterhouseCoopers LLP
May 11, 2001
Atlanta, Georgia
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2000 AND 1999
2000 1999
ASSETS
Investments, at fair value $28,420,194 $19,429,513
Receivables:
Contributions receivable
Participant 129,417 650,673
Employer 51,314 6,517
Accrued Income 13,888 8,293
Cash 121 112,608
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Net assets available for plan benefits $28,614,934 $20,207,604
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The accompanying notes are an integral part of these financial statements.
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
2000
Additions to net assets attributed to:
Participant contributions $ 5,439,156
Employer contributions 1,560,706
Interest and dividend income 113,759
Net appreciation in fair value
of investments 2,632,337
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Total additions 9,745,958
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Deductions from net assets attributed to:
Benefits paid 1,338,628
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Net increase 8,407,330
Net assets available for benefits
Beginning of year 20,207,604
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End of year $28,614,934
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The accompanying notes are an integral part of these financial statements.
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the King Pharmaceuticals, Inc. 401(k)
Retirement Savings Plan (the "Plan") provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan, established by King
Pharmaceuticals, Inc. (the "Company") as of January 1, 1994, under
Section 401(k) of the Internal Revenue Code ("IRC") covering
substantially all employees who have completed a minimum of one
hour of service and are at least 21 years of age. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
CONTRIBUTIONS
Participation in the plan is voluntary. Active participants can
contribute up to 17% of earnings or $10,500, whichever is lower, to the
Plan in accordance with Internal Revenue Code Section 402(g). The Company
contributes a discretionary matching percentage of the participant's
eligible contributions for the Plan year. Participant rollovers are
reported as participant contributions.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching contribution portion
of their accounts plus actual earnings thereon is based on years of
continuous service. A participant is 100% vested after 3 years of
credited service.
INVESTMENT OPTIONS
The Plan provides participants twelve investment options:
King Pharmaceuticals, Inc. Common Stock
Fidelity Advisor Intermediate Bond Fund
Fidelity Institutional Cash U.S. Government Money Market
Fidelity Puritan Fund
Vanguard Institutional Index Fund
Janus Worldwide Fund
Vanguard Intermediate-Term Bond Fund
Fidelity Institutional Domestic Money Market
Vanguard Equity Income Fund
Vanguard Growth Index Fund
FAM Value Fund
Lazard International Equity Portfolio Fund
PARTICIPANT ACCOUNTS
Participant accounts are credited with units by investment fund for
participant contributions, employer contributions, fund transfers or loan
repayments. Unit values are calculated daily to reflect the gains or
losses of the underlying fund investments and expenses. The benefit to
which a participant is entitled is the benefit that can be provided from
the units in the participant's fund multiplied by the appropriate unit
values on the valuation date limited to the amount which can be provided
from the participant's vested account.
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (Continued)
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 and
a maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance. The loan repayment term is for a period not to exceed 5
years or up to 10 years if the purpose of the loan is to acquire a
primary residence. The loans are secured by the balance in the
participant's accounts and bear interest at a rate of Prime plus 1%.
Interest rates on outstanding loans range from 8.75% to 10.50% as of
December 31, 2000. Interest earned on principal loans receivable is
allocated directly to a participant directed fund. Principal and interest
are paid through payroll deductions.
BENEFIT PAYMENTS
Vested benefits of retired, disabled, or terminated employees are
distributed as a single lump-sum payment or as installment payments over
a fixed period of time and are recorded when paid.
FORFEITURES
The cumulative forfeitures balance of $184,205 as of December 31, 2000 is
available to reduce future employer contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual
basis and in accordance with generally accepted accounting principles.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan invests in mutual funds and common stocks. Each fund is valued
at quoted market prices to determine a current fund value. Investments in
securities for which exchange quotations are readily available are valued
at the last sale price or, if not for sale, at the closing bid price.
Purchases and sales of securities are recorded on a trade date basis.
Dividends are recorded on the ex-dividend basis. The Plan presents in the
Statement of Changes in Net Assets Available for Plan Benefits the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains and losses and the unrealized appreciation
(depreciation) on those investments.
Realized gains and losses are recognized, as reported by the trustee,
when units of the funds are sold. The average cost method is used in
determining the costs of the units sold.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of increases and decreases
in net assets during the reporting periods. Actual results could differ
from those estimates.
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (Continued)
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue contributions and terminate the Plan.
Upon a complete or partial termination of the Plan, the account of each
affected participant will fully vest. The form and timing of payment will
be as determined under the Plan at the time of Plan termination.
ADMINISTRATIVE COSTS
Certain fees for professional services of the Plan in 2000 have been paid
by the Company. Additionally, personnel and facilities of the Plan
sponsor have been used by the Plan for its administrative activities
at no cost to the Plan.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in mutual funds and
other investment securities. Investment securities are exposed to various
risks, such as interest rate, market and credit. Due to the level of risk
associated with certain investment securities and the level of
uncertainty related to changes in the value of the investment securities,
it is at least reasonably possible that changes in risks in the near term
would materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits and the
statement of changes in net assets available for benefits.
3. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated November 12, 1996 that the Plan is qualified and that the
trust established under the Plan is tax exempt under the appropriate
sections of the Internal Revenue Code. The Plan has been amended
subsequent to the determination letter. However, the Plan administrator
and the Plan's tax counsel believe that the Plan is currently designed
and being operated in compliance with the applicable requirements of the
Internal Revenue Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
4. INVESTMENTS
The following is a summary of investments that represent 5% or more of
the Plan's net assets at December 31, 2000 and 1999:
Fair Value Fair Value
at December 31, at December 31,
2000 1999
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Fidelity Institutional Cash U.S. Government Money Market $ 2,061,707 $1,408,447
Fidelity Puritan Fund 2,611,393 2,073,192
Vanguard Institutional Index Fund 4,518,518 4,291,701
Janus Worldwide Fund 3,427,698 3,383,119
King Pharmaceuticals, Inc. Common Stock 10,868,436 4,889,591
Vanguard Equity Income Fund 3,344,484 2,592,962
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5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
2000 1999
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Net assets available for benefits per the
financial statements $26,614,934 $20,707,604
Difference in benefits payable -- (1,093)
Difference in accrued income and expenses -- (2,898)
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Net assets available for benefits per the
Form 5500 $28,614,934 $20,703,613
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The following is a reconciliation of benefits paid per the financial
statements to the Form 5500:
2000
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Benefits paid per the financial
statements $1,338,628
Difference in current year 4,109
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Benefits paid per the Form 5500 $1,342,737
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The following is a reconciliation of net appreciation in fair value of
assets per the financial statements to the Form 5500:
2000
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Net appreciation in fair value of assets
per financial statements $2,632,337
Difference in current year 8,100
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Net appreciation in fair value of assets
per the Form 5500 $2,640,437
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KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
SCHEDULE H, LINE 4(I) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2000
UNITS FAIR VALUE
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Fidelity Advisory Intermediate Bond Fund 40,748 $ 429,077
Vanguard Intermediate-Term Bond Fund 14,090 141,183
Fidelity Institutional Cash U.S. Government Money Market 2,061,707 2,061,707
Fidelity Institutional Domestic Money Market 33 33
Fidelity Puritan Fund 138,683 2,611,393
Vanguard Institutional Index Fund 37,430 4,518,518
Janus Worldwide Fund 60,283 3,427,698
King Pharmaceuticals, Inc. Common Stock * 210,270 10,868,436
Vanguard Equity Income Fund 136,845 3,344,484
Vanguard Growth Index Fund 21,937 670,616
FAM Value Fund 4,029 131,739
Lazard International Equity Portfolio Fund 3,297 44,383
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28,249,267
Participant Loans (with interest rates
from 8.75% to 10.50%) N/A 170,927
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$ 28,420,194
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* Represents allowable party-in-interest.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
KING PHARMACEUTICALS, INC. 401(K) RETIREMENT SAVINGS PLAN
Date June 29, 2001
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/s/ James R. Lattanzi
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James R. Lattanzi
Chief Financial Officer