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SCHEDULE 13D
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
KING PHARMACEUTICALS, INC.
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(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
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(Title of Class of Securities)
49558210-8
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(CUSIP Number)
CHARLES E. H. LUEDDE, ESQ.
10 SOUTH BROADWAY, SUITE 2000, ST. LOUIS, MISSOURI 63102 (314) 241-9090
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
AUGUST 31, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 49558210-8 13D PAGE 2 OF 6 PAGES
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
DENNIS M. JONES; JUDITH A. JONES
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
00
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER
NUMBER OF
8,865,111
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
8,865,111
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,865,111
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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CUSIP No. 49558210-8 13D Page 3 of 6 Pages
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ITEM 1. Security and Issuer.
Common Stock, without par value (including certain rights relating
thereto)
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
ITEM 2. Identity and Background.
(a) Dennis M. Jones and Judith A. Jones, husband and wife
(b) c/o Jones Pharma Incorporated
1945 Craig Road
St. Louis, Missouri 63146
(c) Dennis M. Jones was the founder and is the former Chairman of the Board
and Chief Executive Officer of Jones Pharma Incorporated. Judith A.
Jones is the former Executive Vice President of Corporate Affairs,
Secretary and Treasurer of Jones Pharma Incorporated. Both Mr. and Mrs.
Jones served continuously as Directors of Jones Pharma Incorporated
from 1981 through August 31, 2000. Effective as of the close of
business on August 31, 2000, Jones Pharma Incorporated merged with a
subsidiary of King Pharmaceuticals, Inc. (the "Issuer") and became a
wholly-owned subsidiary of the Issuer. Mr. Jones currently serves as a
consultant to the Issuer.
(d) Not applicable.
(e) Not applicable.
(f) Both Mr. and Mrs. Jones are citizens of the United States of America.
ITEM 3. Source and Amount of Funds and Other Consideration.
Mr. and Mrs. Jones acquired an aggregate of 7,156,517 shares of the
Common Stock of the Issuer as of the effectiveness of the merger of Jones Pharma
Incorporated with a wholly-owned subsidiary of the Issuer (the "Jones/King
Merger") in exchange for their prior holdings of shares of the common stock of
Jones Pharma Incorporated. Of the shares so acquired, 4,572,272 are held by the
Dennis M. Jones Revocable Trust and 2,584,245 are held by the Judith A. Jones
Revocable Trust.
Under non-statutory options granted to Mr. and Mrs. Jones on January 2,
1996, each of Mr. and Mrs. Jones held options to acquire additional shares of
the Common Stock of Jones Pharma Incorporated. Upon the effectiveness of the
Jones/King Merger, such options were converted into and exchanged for options to
acquire an aggregate of 1,708,594 shares of the Common Stock of the Issuer. Mr.
Jones holds options to acquire 1,366,875 of such shares and Mrs. Jones holds
options to acquire 341,719 of such shares. Under the terms of the option
agreements relating to such shares, such options will expire unless exercised on
or before August 31, 2001. These options are exercisable at an adjusted option
price per share of $4.22. At the time of the exercise of such options, the
optionee will be required to recognize as ordinary income an amount per share
equal to the difference between the exercise price and the fair market value on
the date of exercise and the Issuer will be entitled to a tax deduction for a
like amount. In lieu of making payment of the exercise price in cash, the terms
of the applicable option plans permit the exercise price to be paid by means of
surrender of outstanding shares having a market value equal to such exercise
price, however such means of payment does not eliminate the income tax treatment
relating to the premium of the market value over the exercise price as of the
date of exercise.
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CUSIP No. 49558210-8 13D Page 4 of 6 Pages
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ITEM 4. Purpose of the Transaction.
As set forth in Item 2, the transaction is the result of the Jones/King
Merger which became effective on August 31, 2000. In connection with the
Jones/King Merger, each previously outstanding share of the common stock of
Jones Pharma Incorporated was converted into and exchanged for 1.125 shares of
the Common Stock of the Issuer.
Mr. and Mrs. Jones' holdings of shares of the Common Stock of the
Issuer represent a continuing investment position in the operations formerly
conducted by Jones Pharma Incorporated as an independent entity. Neither Mr. nor
Mrs. Jones contemplates the acquisition of additional shares of the Common Stock
of the Issuer except in connection with the exercise of the non-statutory
options described in Item 2 above. Mr. and Mrs. Jones may from time to time
engage in sales or other dispositions of shares of the Common Stock of the
Issuer in order to provide increased liquidity and diversity to their respective
portfolios and/or to provide funding for anticipated income tax liabilities
associated with the exercise of the non-statutory options described in Item 2
above. In addition to sales on the New York Stock Exchange or in privately
negotiated transactions, such sales may involve the writing of call options
and/or hedging techniques. Mr. and Mrs. Jones may also make charitable or other
gifts of shares from time to time.
In order to comply with "pooling of interests" accounting treatment to
be accorded to the Jones/King Merger and Accounting Series Release 135 adopted
by the Securities and Exchange Commission, Mr. and Mrs. Jones have agreed not to
effect any disposition of shares prior to the announcement by the Issuer of
financial results including combined operations of Jones Pharma Incorporated and
the Issuer for a period of at least thirty days following the effective date of
the Jones/King Merger.
Since each of Mr. and Mrs. Jones was an "affiliate" of Jones Pharma
Incorporated prior to its acquisition by King, resales of the shares of Common
Stock of the Issuer received by them as a result of the Jones/King merger is
subject to the safe harbor restrictions arising set forth in Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"). The offer and sale by
the Issuer of shares of its Common Stock issuable upon exercise of options
originally issued by Jones Pharma Incorporated will be the subject of a
Registration Statement on form S-8 under the Securities Act. Shares acquired as
a result of such exercises may be resold by persons who are not affiliates of
the Issuer without limitation under either Rule 144 or Rule 145 under the
Securities Act. For such purposes, neither Mr. nor Mrs. Jones is deemed to be an
"affiliate" of the Issuer.
Except insofar as the acquisition of Jones Pharma Incorporated by the
Issuer (which gave rise to Mr. and Mrs. Jones' holdings of shares of the Common
Stock of the Issuer) itself represents an extraordinary corporate transaction
for the Issuer, the transaction does not have as its purpose:
(i) the bringing about of any future extraordinary transactions;
(ii) the sale or transfer of a material amount of the assets
of the Issuer or any of its subsidiaries;
(iii) any change in the present board of directors or management of
the Issuer (although it should be noted that pursuant to the
terms of the Jones/King Merger, Mr. G. Andrew Franz, the
former President and Chief Operating Officer of Jones Pharma
Incorporated and the son-in-law of Mr. and Mrs. Jones, has
been elected to the board of directors of the Issuer);
(iv) any material change in the capitalization or dividend policy
of the Issuer;
(v) other material changes in the Issuer's business or corporate
structure;
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CUSIP No. 49558210-8 13D Page 5 of 6 Pages
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(vi) changes in the Issuer's charter or by-laws; or
(vii) causing the Common Stock of the Issuer to be delisted from the
NYSE or to become eligible for termination of registration
under Section 12(g)(4) of the Securities Exchange Act of 1934.
Although not related to the purpose of the transaction, it should be noted that
as a consultant to the Issuer, Mr. Jones may from time to time be asked to
provide his views on one or more of the types of transactions or actions
described in this paragraph.
ITEM 5. Interest in Securities of the Issuer.
(a) Dennis M. Jones and Judith A. Jones 8,865,111 shares* 5.3%**
* includes 1,708,593 shares which may be acquired upon
exercise of non-statutory options.
**percent of class is based upon: (i) number of shares of the
Issuer outstanding on August 10, 2000, plus (ii) 1.125 times
the number of shares of Jones Pharma Incorporated
outstanding on August 10, 2000, plus (iii) the shares which
may be acquired under such non-statutory options.
(b) Although each of Mr. and Mrs. Jones individually have sole
power to vote their respective shares and sole dispositive
powers, each of them may be deemed to possess shared voting
and dispositive powers over the shares owned by the other.
Each of Mr. and Mrs. Jones have historically disclaimed
economic ownership of shares held by the other, however, the
shares of both parties are subject to the dispositive terms of
the redemption agreement described in Item 6 below.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
During August 1998 Jones Pharma Incorporated purchased "key employee"
insurance policies on the joint lives of Mr. and Mrs. Jones in policies having
an aggregate death benefit of $40,000,000. The policies represent a combination
of term and whole life insurance intended to provide for level premium expense
aggregating approximately $865,000 per year. Contemporaneously with the purchase
of these policies, Jones Pharma Incorporated entered into an agreement with Mr.
and Mrs. Jones (individually and as the trustees of their respective revocable
trusts holding shares of the common stock of Jones Pharma Incorporated).
Pursuant to such agreement, at the time of the death of the second to die of Mr.
or Mrs. Jones, their estates or the successor trustees of their trusts or any
beneficiary of such trusts receiving a distribution of shares of Jones Pharma
Incorporated or its successor is given the option to require Jones Pharma
Incorporated or its successor to repurchase some or all of such shares of common
stock.
For purposes of such redemption agreement, the Issuer may be deemed to
constitute a "successor" to Jones Pharma Incorporated and accordingly the
agreement remains in effect and could require that the Issuer (or Jones Pharma
Incorporated, depending on which owns the policies at the time of death)
repurchase shares of the Common Stock of the Issuer held by the estates, trusts
or beneficiaries of Mr. and Mrs. Jones.
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CUSIP No. 49558210-8 13D Page 6 of 6 Pages
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The purchase price applicable to any such repurchase will equal the
average closing price for such stock for the ten days preceding the date of
death giving rise to the exercise of the option. The option may only be
exercised by notice given not later earlier than seven nor later than eight
months after the date of death giving rise to the option and any resulting
repurchase shall be made within thirty days of such notice of exercise. The
agreement limits the obligation to effect such repurchases to the amount of the
proceeds received under the policies. The agreement also provides that no
borrowings against the cash values in the policies may be made nor may the
insurance be cancelled without the consent of Mr. and Mrs. Jones. Mr. and Mrs.
Jones agreed with Jones Pharma Incorporated that in the event of any termination
of the policies under circumstances in which Jones Pharma Incorporated does not
recover its full premium costs, they will reimburse such unrecovered cost.
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1: Stock Redemption Agreement dated as of August 31, 1998, by
and among Jones Pharma Incorporated and Dennis M. Jones
(individually and as trustee of the Dennis M. Jones Amended
and Restated Revocable Trust dated March 16, 1993) and Judith
A. Jones (individually and as trustee of the Judith A. Jones
Amended and Restated Revocable Trust dated June 8, 1993).
[INCORPORATED BY REFERENCE TO EXHIBIT 1 TO SCHEDULE 13D FILED
BY DENNIS M. JONES AND JUDITH A. JONES IN RESPECT OF JONES
PHARMA INCORPORATED ON APRIL 20, 1999.]
Exhibit 2: Rule 13d-1(k)(1) Joint Filing Agreement.
After reasonable inquiry, and to the best of the undersigneds'
knowledge and belief, the undersigned certify that the information set forth in
this statement is true, complete and correct.
/s/ Dennis M. Jones
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Dennis M. Jones
Individually and as Trustee of the
Dennis M. Jones Amended and Restated
Revocable Trust dated March 16, 1993
Date: September 1, 2000
/s/ Judith A. Jones
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Judith A. Jones
Individually and as Trustee of the
Judith A. Jones Amended and Restated
Revocable Trust dated June 8, 1993
Date: September 1, 2000
