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Lannett Reports Fiscal 2012 Second Quarter Financial Results

For the first six months of fiscal 2012, net sales increased to $56.6 million from $55.4 million for the comparable prior year period. Gross profit rose to $16.0 million from $14.3 million for the same period in the prior year. R&D expenses were $4.9 million compared with $3.7 million for the first six months of fiscal 2011. SG&A expenses were $9.2 million compared with $7.5 million in the same period of the prior year. Operating income was $1.9 million compared with $3.1 million for the first six months of fiscal 2011. Net income attributable to Lannett Company was $815,000, or $0.03 per diluted share. This compares to a net income attributable to Lannett Company of $1.9 million, or $0.08 per diluted share, for the first six months of the prior year.

Conference Call Information and Forward-Looking Statements

Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for the fiscal 2012 second quarter and six months ended December 31, 2011. The conference call will be available to interested parties by dialing 800-447-0521 from the U.S. or Canada, or 847-413-3238 from international locations, passcode 31709724. The conference call will also be available through a live audio Internet broadcast at www.lannett.com. A playback of the call will be archived and accessible at this site for at least three months.

Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance and regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.

About Lannett Company, Inc.:

Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of indications. For more information, visit the company’s website at www.lannett.com.

This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, the expected product approvals, the successful commercialization of recently approved products and products applications pending at the FDA, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, Lannett’s estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company’s Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.

LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
       
 
Three months ended Six months ended
December 31, December 31,
  2011     2010     2011     2010  
 
Net sales $ 27,734,079 $ 30,039,257 $ 56,611,983 $ 55,435,184
Cost of sales 19,770,524 21,669,746 39,512,569 40,569,794
Amortization of intangible assets 470,410 473,456 938,606 922,123
Product royalties   66,464     (460,631 )   118,088     (317,360 )
 
Gross profit 7,426,681 8,356,686 16,042,720 14,260,627
 
Research and development expenses 2,512,731 1,660,711 4,939,214 3,703,080
Selling, general, and administrative expenses   4,419,254     2,874,879     9,163,767     7,475,560  
 
Operating income   494,696     3,821,096     1,939,739     3,081,987  
 
Other income (expense):
Foreign currency (loss) gain (7,502 ) 1,550 (2,496 ) 3,965
(Loss) gain on sale of assets (3,464 ) 1,266 3,536 1,266
Realized gain (loss) on investments 26,496 2,124 (146,363 ) 14,765
Unrealized gain (loss) on investments 675,874 - (150,672 ) -
Interest and dividend income 35,698 3,877 88,947 15,108
Interest expense   (72,704 )   (76,008 )   (149,708 )   (146,852 )
  654,398     (67,191 )   (356,756 )   (111,748 )
 
Income before income tax expense 1,149,094 3,753,905 1,582,983 2,970,239
Income tax expense   519,499     1,393,909     731,315     1,004,365  
Net income 629,595 2,359,996 851,668 1,965,874
Less net income attributable to noncontrolling interest   (20,140 )   (6,842 )   (36,604 )   (16,281 )
 
Net income attributable to Lannett Company, Inc. $ 609,455   $ 2,353,154   $ 815,064   $ 1,949,593  
 
Earnings per common share - Lannett Company, Inc.:
Basic $ 0.02 $ 0.09 $ 0.03 $ 0.08
Diluted $ 0.02 $ 0.09 $ 0.03 $ 0.08
 
Weighted average number of shares outstanding:
Basic 28,526,658 25,420,474 28,479,195 25,160,002
Diluted 28,773,477 25,773,609 28,733,435 25,510,792
 
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  (Unaudited)  
December 31, 2011 June 30, 2011
 

ASSETS

Current Assets
Cash and cash equivalents $ 19,949,952 $ 5,276,735
Investment securities 5,214,631 19,382,079
Trade accounts receivable (net of allowance of $123,573 and $123,573, respectively) 36,722,141 33,464,440
Inventories, net 23,868,256 26,902,521
Income taxes receivable 3,592,547 3,636,306
Deferred tax assets 4,894,383 4,537,881
Other current assets   1,821,061     941,902  
Total Current Assets 96,062,971 94,141,864
 
Property, plant and equipment 56,479,375 54,516,229
Less accumulated depreciation   (26,437,539 )   (24,586,448 )
30,041,836 29,929,781
 
Construction in progress 6,045,156 5,760,686
Intangible assets (product rights) - net of accumulated amortization 5,369,430 5,909,636
Deferred tax assets 9,400,017 10,446,500
Other assets   1,178,246     1,555,831  
Total Assets $ 148,097,656   $ 147,744,298  
 

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Current Liabilities
Accounts payable $ 13,654,993 $ 18,377,782
Accrued expenses 1,041,157 1,354,095
Accrued payroll and payroll related 1,674,032 934,504
Current portion of long-term debt 636,518 629,435
Rebates, chargebacks and returns payable   16,885,657     13,564,395  
Total Current Liabilities 33,892,357 34,860,211
 
Long-term debt, less current portion 6,909,314 7,192,496
Other long-term liabilities   -     2,417  
Total Liabilities 40,801,671 42,055,124
Commitment and Contingencies
 

SHAREHOLDERS' EQUITY

Common stock - authorized 50,000,000 shares, par value $0.001;
issued and outstanding, 28,553,469 and 28,403,946 shares, respectively 28,553 28,404
Additional paid in capital 98,371,606 97,082,360
Retained earnings 10,102,796 9,287,732
Noncontrolling interest 156,686 139,082
Accumulated other comprehensive income   (11,920 )   23,899  
108,647,721 106,561,477
Less: Treasury stock at cost - 280,469 and 156,611 shares, respectively   (1,351,736 )   (872,303 )
TOTAL SHAREHOLDERS' EQUITY   107,295,985     105,689,174  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 148,097,656   $ 147,744,298  
 




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