Leiner Health Products 10-Q 2007 Q2 Quarterly report

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number333-118532

LEINER HEALTH PRODUCTS INC.

(Exact name of registrant as specified in its charter)

DELAWARE	95-3431709
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

901 East 233rd Street, Carson, California	90745
(Address of principal executive offices)	(Zip Code)

(310) 835-8400

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. YES ý* NO o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $0.01 par value, 1,000 shares outstanding as of September 30, 2006

* No reports were required to be filed under Section 12, 13, or 15(d) of the Securities Exchange Act of 1934.

LEINER HEALTH PRODUCTS INC.

Report on Form 10-Q

For the Quarter ended September 30, 2006

Table of Contents

PART I. Financial Information
ITEM 1. FinancialStatements	3
Condensed Consolidated Balance Sheets at March 25, 2006 and September 30, 2006 (Unaudited)	3
Condensed Consolidated Statements of Operations (Unaudited) - For the three and six months ended September 24, 2005 and September 30, 2006	4
Condensed Consolidated Statements of Cash Flows (Unaudited) - For the six months ended September 24, 2005 and September 30, 2006	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	31
ITEM 4. Controls and Procedures	32
PART II. Other Information
ITEM 1. Legal Proceedings	33
ITEM 1A. Risk Factors	33
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
ITEM 3. Defaults Upon Senior Securities	33
ITEM 4. Submission of Matters to a Vote of Security Holders	33
ITEM 5. Other Information	33
ITEM 6. Exhibits	33
SIGNATURES	34

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PART I Item 1

PART I. Financial Information

Item 1. Financial Statements

Leiner Health Products Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

	March 25, 2006			September 30, 2006
				Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	7,731		$	13,431
Accounts receivable, net of allowances of $3,545 and $3,041 at March 25, 2006
and September 30, 2006, respectively		73,211			66,788
Inventories		165,714			167,182
Prepaid expenses and other current assets		16,540			15,711
Total current assets		263,196			263,112
Property, plant and equipment, net		72,618			74,246
Goodwill		58,245			58,391
Other noncurrent assets		22,039			21,645
Total assets	$	416,098		$	417,394
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable	$	77,648		$	76,832
Accrued compensation and benefits		9,994			10,127
Customer allowances payable		10,522			12,796
Accrued interest		10,436			5,587
Other accrued expenses		14,418			16,717
Current portion of long-term debt		5,498			4,884
Total current liabilities		128,516			126,943
Long-term debt		397,119			390,688
Other noncurrent liabilities		5,545			5,668
Total liabilities		531,180			523,299
Shareholder's deficit:
Common stock, $0.01 par value; 3,000,000 shares authorized,
1,000 issued and outstanding at March 25, 2006 and September 30, 2006		-			-
Capital in excess of par value		13,489			13,459
Accumulated deficit		(130,125	)		(122,072	)
Accumulated other comprehensive income		1,554			2,708
Total shareholder's deficit		(115,082	)		(105,905	)
Total liabilities and shareholder's deficit	$	416,098		$	417,394

See accompanying notes to condensed consolidated financial statements.

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PART I Item 1

Leiner Health Products Inc.

Condensed Consolidated Statements of Operations

Unaudited

(in thousands)

	Three months ended					Six months ended
	September 24, 2005			September 30, 2006		September 24, 2005			September 30, 2006
Net sales	$	168,935		$	197,966	$	314,522		$	361,876
Cost of sales		139,438			146,976		262,722			270,958
Gross profit		29,497			50,990		51,800			90,918
Marketing, selling and distribution expenses		14,251			17,294		28,035			32,488
General and administrative expenses		8,276			10,796		16,257			20,460
Research and development expenses		1,354			1,096		2,445			2,177
Amortization of other intangibles		10			300		20			582
Other operating expense (income)		(36	)		1,179		605			1,112
Operating income		5,642			20,325		4,438			34,099
Interest expense, net		8,911			10,110		17,540			20,155
Income (loss) before income taxes		(3,269	)		10,215		(13,102	)		13,944
Provision for (benefit from) income taxes		(1,836	)		4,149		(7,474	)		5,891
Net income (loss)	$	(1,433	)	$	6,066	$	(5,628	)	$	8,053

See accompanying notes to condensed consolidated financial statements.

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PART I Item 1

Leiner Health Products Inc.

Condensed Consolidated Statements of Cash Flows

Unaudited

(in thousands)

	Six months ended
	September 24, 2005			September 30, 2006
Operating activities
Net income (loss)	$	(5,628	)	$	8,053
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation		7,474			7,901
Amortization of other intangibles and other contracts		482			874
Amortization of deferred financing charges		896			971
Provision for doubtful accounts and allowances		3,543			1,953
Provision for excess and obsolete inventory		7,060			6,004
Deferred income taxes		(1,460	)		-
(Gain) loss on disposal of assets		41			(37	)
Stock option compensation expense		10			12
Translation adjustment		(1,341	)		(1,153	)
Changes in operating assets and liabilities:
Accounts receivable		15,623			4,690
Inventories		3,644			(6,797	)
Income tax receivable/payable		(6,229	)		3,686
Accounts payable		(28,880	)		(937	)
Accrued compensation and benefits		(1,636	)		76
Customer allowances payable		274			2,243
Accrued interest		800			(4,852	)
Other accrued expenses		757			(1,422	)
Other		1,194			901
Net cash provided by (used in) operating activities		(3,376	)		22,166
Investing activities
Additions to property, plant and equipment		(7,648	)		(8,732	)
Increase in other noncurrent assets		(2,361	)		(482	)
Net cash used in investing activities		(10,009	)		(9,214	)
Financing activities
Net borrowings under bank revolving credit facility		9,000			(5,000	)
Payments under bank term credit facility		(1,200	)		(1,800	)
Increase in deferred financing charges		(752	)		-
Proceeds from the exercise of stock options		-			4
Repurchase of restricted stock		-			(46	)
Net payments on other long-term debt		(2,512	)		(1,459	)
Net cash provided by (used in) financing activities		4,536			(8,301	)
Effect of exchange rate changes		1,635			1,049
Net decrease in cash and cash equivalents		(7,214	)		5,700
Cash and cash equivalents at beginning of period		16,951			7,731
Cash and cash equivalents at end of period	$	9,737		$	13,431

See accompanying notes to condensed consolidated financial statements.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

1. Basis of Presentation

General

The accompanying unaudited condensed consolidated financial statements of Leiner Health Products Inc. (“Leiner” or the “Company”) consolidate all of the Company’s subsidiaries, including all of its operating subsidiaries, which are Leiner Health Products, LLC, Leiner Health Services Corp., and Vita Health Products Inc. (“Vita Health”) and its non-operating subsidiaries, which are VH Vita Holdings Inc., Westcan Pharmaceuticals Ltd., and 6062199 Canada Inc. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Such adjustments consist of adjustments of a normal recurring nature. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended March 25, 2006, which are included in the Company’s Annual Report on Form 10-K, on file with the Securities and Exchange Commission (“SEC”), file number 333-118532. Operating results for the three and six months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending March 31, 2007 or any other future periods.

There have been no material changes in the Company’s critical accounting policies and estimates during the second quarter of fiscal 2007. Accordingly, the disclosure provided in the Company’s Annual Report on Form 10-K for the year ended March 25, 2006 remains current.

2. Fiscal Year

The Company maintains a fifty-two/fifty-three week fiscal year. The Company’s fiscal year end will fall on the last Saturday of March each year. The three months ended September 24, 2005 and September 30, 2006 were comprised of 13 and 14 weeks, respectively. The six months ended September 24, 2005 and September 30, 2006 were comprised of 26 and 27 weeks, respectively.

3. Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, which is effective for fiscal years beginning after December 15, 2006. FASB Interpretation No. 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB Interpretation No. 48 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company is currently evaluating the potential impact of the adoption of FASB Interpretation No. 48 on our consolidated financial position, results of operations and cash flows.

4. Fair Values of Debt Instruments

Fair values of the Company’s debt instruments have been determined based on borrowing rates currently available to the Company for loans with similar terms or maturity. The table below provides information about the fair value of the Company’s debt obligations under the Credit Facility and Notes (in thousands):

	September 30, 2006
	Total			Fair Value
Variable rate ($US	$	234,600		$	234,600
Average interest rate		8.88	%
Fixed rate ($US	$	150,000		$	145,125
Average interest rate		11.00	%

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

The fair value of the Industrial Development Revenue Bond Loan, book value of $3,600,000 at September 30, 2006, could not be estimated because there is no active market for such debt instruments.

5. Comprehensive Income (loss)

The only component of other accumulated comprehensive income (loss) is the cumulative foreign currency translation adjustment recorded in shareholder’s deficit. The comprehensive income (loss) is as follows (in thousands):

	Three months ended						Six months ended
	September 24, 2005			September 30, 2006			September 24, 2005			September 30, 2006
Net income (loss)	$	(1,433	)	$	6,066		$	(5,628	)	$	8,053
Foreign currency translation adjustment		1,862			(1	)		1,341			1,153
Comprehensive income (loss)	$	429		$	6,065		$	(4,287	)	$	9,206

6. Acquisition

In the second quarter of fiscal 2006, the Company agreed to acquire substantially all of the assets of Pharmaceutical Formulations Inc. (“PFI”), a manufacturer of private label OTC products in the United States, related to its OTC pharmaceutical business (the “Acquisition”), except for assets related to PFI’s Konsyl Pharmaceuticals Inc. subsidiary and other scheduled assets (the “PFI Business”).

The following unaudited pro forma financial information presents the consolidated results of operations as if the Acquisition had occurred at the beginning of fiscal 2006 and does not purport to be indicative of the results that would have occurred had the Acquisition occurred at such date or of results which may occur in the future (in thousands):

	Three months ended			Six months ended
	September 24, 2005			September 24, 2005
Net sales	$	184,259		$	343,141
Operating income (loss)		1,872			(2,911	)
Net loss		(2,534	)		(10,322	)

7. Restructuring charges

In fiscal 2006, the Company eliminated approximately 104 positions from its Carson, Garden Grove and Valencia, California, Fort Mill, South Carolina, and Wilson, North Carolina locations. Severance and other costs related to such reductions totaled $3,836,000 and were paid to the terminated employees, except for the president, on a weekly basis through July 2006. The restructuring charges also include the severance accrued for the president, who resigned effective March 31, 2006. The accrued severance for the president will be paid on a weekly basis through April 2009.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

The following table summarizes the activities in the Company’s restructuring reserve (in thousands):

	Costs for
	Employees
	Terminated
Balance at March 25, 2006	$	2,346
Cash payments		(1,546	)
Balance at September 30, 2006	$	800

8. Inventories

Inventories consist of the following (in thousands):

	March 25, 2006		September 30, 2006
Inventories:
Raw materials, bulk vitamins and packaging materials	$	36,026	$	35,984
Work-in-process		57,972		65,798
Finished products		71,716		65,400
	$	165,714	$	167,182

9. Debt

Long-term debt consists of (in thousands):

	March 25, 2006			September 30, 2006
Credit Facility:
Revolving facility	$	5,000		$	-
Term facility		236,400			234,600
Total credit facility		241,400			234,600
Senior subordinated notes		150,000			150,000
Capital lease obligations		7,117			7,372
Industrial development revenue bond loan		4,100			3,600
		402,617			395,572
Less current portion		(5,498	)		(4,884	)
Total long-term debt	$	397,119		$	390,688

10. Related Party Transactions

The Company, Leiner Health Products, LLC, a wholly-owned subsidiary, and the Company’s ultimate parent company LHP Holding Corp. (“Holdings”) have a consulting agreement with North Castle Partners, L.L.C., an affiliate of the North Castle Investors, and certain administrative entities affiliated with the Golden Gate Investors (“GGC Administration”) to provide the Company with certain financial, investment banking, management advisory and other services. As compensation for their services, the Company pays a $1,315,000 management fee in arrears annually plus reasonable out-of-pocket expenses to each of North Castle Partners, L.L.C. and GGC Administration as long as the Company meets a certain performance target. As of September 30, 2006, the Company has recorded the accrual for management fees for the first six months of fiscal 2007 in the second quarter of fiscal 2007. Other operating expenses in the accompanying statement of operations for the three months ended September 24, 2005 and September 30, 2006 include management fees, out-of-pocket expenses and related expenses of $(68,000) and $1,344,000, respectively. Other operating expenses for the six months ended September 24, 2005 and September 30, 2006 include management fees, out-of-pocket expenses and related expenses of $604,000 and $1,354,000, respectively.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

On June 1, 2006, the Company made a loan to a senior vice president in the amount of $400,000. In accordance with the terms of the loan, the first obligation of $200,000 will be forgiven over three fiscal years subject to the senior vice president’s continued employment with the Company. If the senior vice president does not complete the three year continued employment term, then the senior vice president must repay the entire amount of the first obligation. The Company is amortizing the total amount of the first obligation over the three year term of the employment and as such charged to expense approximately $24,616 in the first six months of fiscal 2007. The second obligation in the amount of $200,000 will be repaid by the employee starting in the first quarter of fiscal 2008. At September 30, 2006, the aggregate indebtedness under this loan was recorded under the other non-current assets caption in the accompanying condensed consolidated balance sheet. The interest rate on the unpaid principal balance is 8% per annum, subject to certain limitations.

We are party to an agreement, dated August 6, 2004, with Employers Direct, which is partly owned by Golden Gate Capital, one of our equity holders, pursuant to which Employers Direct provides us with certain workers compensation insurance coverage. Pursuant to this agreement, we paid Employers Direct $2.3 million, $2.2 million, and $1.0 million for fiscal year 2005, fiscal year 2006, and for the six months ended September 30, 2006, respectively. The current policy agreement is scheduled to terminate on April 1, 2007. Our agreement with Employers Direct is on arm’s-length terms, which we believe are no less favorable to us than those that would have been obtained in a comparable transaction with an unaffiliated third party.

In August 2006, Infor Global Solutions, a company wholly owned by Golden Gate Capital, one of our equity holders, acquired SSA Global which is the provider of the Company’s core ERP software. The Company has paid approximately $113,755 and $135,672 to SSA Global for the three and six months ended September 24, 2005, respectively. For the six months ended September 30, 2006, the accompanying statement of operation included a payment of $3,570.

11. Income Taxes

Deferred income taxes are computed using the liability method and reflect the effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

In assessing the realizability of deferred tax assets, management considers whether it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment.

The Company recorded an income tax provision of $4,149,000 or a 40.6% effective tax rate for the three months ended September 30, 2006, compared to a tax benefit of $1,836,000 or a 56.2% effective tax rate for the three months ended September 24, 2005. The Company recorded an income tax provision of $5,891,000 or a 42.2% effective tax rate for the six months ended September 30, 2006, compared to a tax benefit of $7,474,000 or a 57.0% effective tax rate for the six months ended September 24, 2005.

The effective tax rate for the three and six months ended September 30, 2006 is substantially different from the effective rate for the three and six months ended September 24, 2005 primarily due to the release of a significant portion of the Canadian valuation allowance against its deferred tax assets during the three months ended June 25, 2005. The release of the valuation allowance was based on the Company’s expected current and future profitable Canadian operations.

The effective tax rate was also affected by recently enacted Canadian federal tax rate reductions phased in over a four year period which became law on June 22, 2006 with the passage of Bill C-13. The scheduling of the expected reversal of Canadian deferred tax assets at the lower effective tax rates is recognized as a first quarter discreet item and thus increased quarterly tax provision.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

12. Employee Benefits

2004 Option Plan

The Board authorized an additional 39,500 of options on September 13, 2006. The options will vest over four years.

The following table summarizes the information on options outstanding as of September 30, 2006:

Outstanding							Excercisable
Exercise price	Number of Shares		Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
$ 2.37		107,732		9.24	$	2.37		25,452	$	2.37

The fair value of options is estimated at the date of grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in valuing options issued in the second quarter of fiscal 2007.

	Six months ended
	September 30, 2006
Risk free interest rate		4.56	%
Expected term in years		5.00
Expected volatility		34.69	%
Expected dividend rate		13.00	%
Expected forfeiture rate		-	%

The Company recorded a total expense of $1,691 and $4,580 as share-based compensation under general and administrative expense in the condensed consolidated statement of operations for the three and six months ended September 30, 2006, respectively. The weighted-average per share fair value of options granted during fiscal 2005, fiscal 2006 and fiscal 2007 was $0.35. As of September 30, 2006, there was $28,238 of total unrecorded and unrecognized compensation expense related to nonvested share-based compensation under the 2004 Option Plan. That cost is expected to be recorded and recognized over a weighted average period of 3.07 years.

Restricted Stock Plan

During the second quarter of fiscal 2007, the Company repurchased 19,568 shares of common stock at $2.37 per share.

The following table summarizes the information on the restricted stock issued as of September 30, 2006.

Outstanding							First Call Rights Released
Purchase price	Number of Shares		Average Remaining Call Right Life (years)		Weighted Average Purchase Price		Number of Shares		Weighted Average Purchase Price
$ 2.37		176,108		3.75	$	2.37		88,054	$	2.37

13. Contingencies

The Company has been named a defendant in six pending cases alleging adverse reactions associated with the ingestion of Phenylpropanolamine (PPA) containing products that the Company allegedly manufactured and sold. Currently, none of the cases has proceeded to trial, although the Company intends to vigorously defend these allegations if trials ensue. These actions have been tendered to the Company’s insurance carrier. The Company has recorded in its consolidated financial statements a liability for the entire estimated potential liability in the amount of $1,100,000, based on the opinion of outside counsel, at September 30, 2006, as to the probable settlement value of the cases based on the Company’s consultations with its primary insurance carrier and broker. For the second quarter and six-months ended September 30, 2006, the company released legal reserves of $629,000. These amounts were recorded in the Statement of Operations under General and Administrative Expenses.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

The Company is subject to other legal proceedings and claims that arise in the normal course of business. While the outcome of any of these proceedings and claims cannot be predicted with certainty, management believes that it has provided adequate reserves for these claims and does not believe the outcome of any of these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

14. Business Segment Information

The Company operates in two business segments. One consists of the Company's U.S. Operations (“Leiner U.S.”) and the other is the Company's Canadian operation (“Vita Health”). The Company's operating segments manufacture a range of vitamins, minerals and nutritional supplements (“VMS”) and OTC pharmaceuticals and distribute their products primarily through FDMC retailers. The accounting policies between the reportable segments are the same as those described in the summary of significant accounting policies. The Company evaluates segment performance based on operating profit, before the effect of non-recurring charges and gains, and inter-segment profit.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

Selected financial information for the Company's reportable segments for the three and six months ended September 24, 2005 and September 30, 2006 is as follows (in thousands):

	Leiner			Vita			Consolidated
	U.S.			Health			Totals
Three months ended September 24, 2005:
Net sales to external customers	$	154,599		$	14,336		$	168,935
Intersegment sales		919			33			-
Depreciation and amortization, excluding deferred financing charges		3,281			620			3,901
Segment operating income		5,138			504			5,642
Interest (income) expense, net (1)		9,315			(404	)		8,911
Income tax expense (benefit)		(2,923	)		1,087			(1,836	)
Segment assets		349,838			47,216			397,054
Additions to property, plant and equipment		7,193			326			7,519
Three months ended September 30, 2006:
Net sales to external customers	$	184,538		$	13,428		$	197,966
Intersegment sales		525			522			-
Depreciation and amortization, excluding deferred financing charges		4,055			402			4,457
Segment operating income		19,607			718			20,325
Interest expense, net (1)		10,071			39			10,110
Income tax expense		4,019			130			4,149
Segment assets		377,650			39,744			417,394
Additions to property, plant and equipment		5,897			749			6,646
Six months ended September 24, 2005:
Net sales to external customers	$	286,536		$	27,986		$	314,522
Intersegment sales		1,234			34			-
Depreciation and amortization, excluding deferred financing charges		6,633			1,323			7,956
Segment operating income (loss)		2,433			2,005			4,438
Interest expense, net (1)		17,604			(64	)		17,540
Income tax expense (benefit)		(8,420	)		946			(7,474	)
Segment assets		349,838			47,216			397,054
Additions to property, plant and equipment		12,494			431			12,925
Six months ended September 30, 2006:
Net sales to external customers	$	336,569		$	25,307		$	361,876
Intersegment sales		1,000			1,110			-
Depreciation and amortization, excluding deferred financing charges		7,972			803			8,775
Segment operating income		32,814			1,285			34,099
Interest (income) expense, net (1)		20,214			(59	)		20,155
Income tax expense		5,319			572			5,891
Segment assets		377,650			39,744			417,394
Additions to property, plant and equipment		8,901			1,044			9,945

_____________

(1) Interest expense, net includes the amortization of deferred financing charges.

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PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

The following table sets forth the net sales of the Company’s VMS, OTC pharmaceutical and other product lines for the periods indicated (dollar amounts in thousands):

	Three months ended										Six months ended
	September 24, 2005		%			September 30, 2006		%			September 24, 2005		%			September 30, 2006		%
VMS products	$	109,824		65	%	$	122,338		62	%	$	194,620		62	%	$	222,444		61	%
OTC products		46,691		28	%		60,483		30	%		93,386		30	%		110,642		31	%
Contract manufacturing
services/Other		12,420		7	%		15,145		8	%		26,516		8	%		28,790		8	%
Total	$	168,935		100	%	$	197,966		100	%	$	314,522		100	%	$	361,876		100	%

15. Financial information for subsidiary guarantor and subsidiary non-guarantor

In connection with the issuance of the 11% senior subordinated notes due 2012 (the “Notes”), the Company’s U.S. based subsidiaries, Leiner Health Services Corp. and Leiner Health Products, LLC, guaranteed the payment of principal, premium and interest on the Notes. Since the Company has no independent assets or operations of its own and owns 100% of the guarantor subsidiaries, the disclosure below is presented consolidating the financial information for the Company and its subsidiary guarantors and subsidiary non-guarantors for the periods indicated.

-13-

PART I Item 1

Leiner Health Products Inc.

Notes to Condensed Consolidated Financial Statements

Unaudited

(in thousands)

	March 25, 2006
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	3,766		$	3,965		$	-		$	7,731
Accounts receivable, net of allowances		68,314			4,897			-			73,211
Inventories		150,922			14,792			-			165,714
Income tax receivable		56			-			-			56
Prepaid expenses and other current assets		13,659			2,825			-			16,484
Total current assets		236,717			26,479			-			263,196
Intercompany receivable		32,875			-			(32,875	)		-
Property, plant and equipment, net		64,378			8,240			-			72,618
Goodwill		55,019			3,226			-			58,245
Other noncurrent assets		22,039			-			-			22,039
Total assets	$	411,028		$	37,945		$	(32,875	)	$	416,098
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable	$	75,122		$	2,526		$	-		$	77,648
Accrued compensation and benefits		8,749			1,245			-			9,994
Customer allowances payable		9,831			691			-			10,522
Accrued interest		10,370			66			-			10,436
Other accrued expenses		12,323			2,095			-			14,418
Current portion of long-term debt		5,487			11			-			5,498
Total current liabilities		121,882			6,634			-			128,516
Intercompany payable		-			32,875			(32,875	)		-
Long-term debt		397,110			9			-			397,119
Other noncurrent liabilities		5,545			-			-			5,545
Total liabilities		524,537			39,518			(32,875	)		531,180
Shareholder's deficit:
Common stock		-			-			-			-
Capital in excess of par value		13,489			-			-			13,489
Accumulated deficit		(126,998	)		(3,127	)		-			(130,125	)
Accumulated other comprehensive income		-			1,554			-			1,554
Total shareholder's deficit		(113,509	)		(1,573	)		-			(115,082	)
Total liabilities and shareholder's deficit	$	411,028		$	37,945		$	(32,875	)	$	416,098

-14-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Balance Sheets

Unaudited

(in thousands)

	September 30, 2006
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	10,188		$	3,243		$	-		$	13,431
Accounts receivable, net of allowances		62,024			4,764			-			66,788
Inventories		150,736			16,446			-			167,182
Prepaid expenses and other current assets.		12,718			2,993			-			15,711
Total current assets		235,666			27,446			-			263,112
Intercompany receivable		32,480			-			(32,480	)		-
Property, plant and equipment, net		65,320			8,926			-			74,246
Goodwill		55,019			3,372			-			58,391
Other noncurrent assets.		21,645			-			-			21,645
Total assets	$	410,130		$	39,744		$	(32,480	)	$	417,394
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable	$	73,082		$	3,750		$	-		$	76,832
Accrued compensation and benefits		8,805			1,322			-			10,127
Customer allowances payable		12,071			725			-			12,796
Accrued interest		5,587			-			-			5,587
Other accrued expenses		15,618			1,099			-			16,717
Current portion of long-term debt		4,868			16			-			4,884
Total current liabilities		120,031			6,912			-			126,943
Intercompany payable		-			32,480			(32,480	)		-
Long-term debt		390,688			-			-			390,688
Other noncurrent liabilities		5,668			-			-			5,668
Total liabilities		516,387			39,392			(32,480	)		523,299
Shareholder's deficit:
Common stock		-			-			-			-
Capital in excess of par value		13,459			-			-			13,459
Accumulated deficit		(119,716	)		(2,356	)		-			(122,072	)
Accumulated other comprehensive income		-			2,708			-			2,708
Total shareholder's deficit		(106,257	)		352			-			(105,905	)
Total liabilities and shareholder's deficit	$	410,130		$	39,744		$	(32,480	)	$	417,394

-15-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Operations

Unaudited

(in thousands)

	Three months ended September 24, 2005
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
Net sales	$	155,518		$	14,369		$	(952	)	$	168,935
Cost of sales		128,288			12,102			(952	)		139,438
Gross profit		27,230			2,267			-			29,497
Marketing, selling and distribution expenses		13,205			1,046			-			14,251
General and administrative expenses		7,555			721			-			8,276
Research and development expenses		1,328			26			-			1,354
Amortization of other intangibles		10			-			-			10
Other operating income		(6	)		(30	)		-			(36	)
Operating income		5,138			504			-			5,642
Interest expense (income), net		9,315			(404	)		-			8,911
Income (loss) before income taxes		(4,177	)		908			-			(3,269	)
Provision for (benefit from) income taxes		(2,923	)		1,087			-			(1,836	)
Net loss	$	(1,254	)	$	(179	)	$	-		$	(1,433	)

-16-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Operations

Unaudited

(in thousands)

	Three months ended September 30, 2006
	Parent & Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
Net sales	$	185,063	$	13,950		$	(1,047	)	$	197,966
Cost of sales		137,074		10,949			(1,047	)		146,976
Gross profit		47,989		3,001			-			50,990
Marketing, selling and distribution expenses		15,954		1,340			-			17,294
General and administrative expenses		9,837		959			-			10,796
Research and development expenses		1,075		21			-			1,096
Amortization of other intangibles		300		-			-			300
Other operating expense (income)		1,216		(37	)		-			1,179
Operating income		19,607		718			-			20,325
Interest expense, net		10,071		39			-			10,110
Income before income taxes		9,536		679			-			10,215
Provision for income taxes		4,019		130			-			4,149
Net income	$	5,517	$	549		$	-		$	6,066

-17-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Operations

Unaudited

(in thousands)

	Six months ended September 24, 2005
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
Net sales	$	287,770		$	28,020		$	(1,268	)	$	314,522
Cost of sales		241,491			22,499			(1,268	)		262,722
Gross profit		46,279			5,521			-			51,800
Marketing, selling and distribution expenses		25,925			2,110			-			28,035
General and administrative expenses		14,822			1,435			-			16,257
Research and development expenses		2,412			33			-			2,445
Amortization of other intangibles		20			-			-			20
Other operating (income) expense		667			(62	)		-			605
Operating income		2,433			2,005			-			4,438
Interest expense (income), net		17,604			(64	)		-			17,540
Income (loss) before income taxes		(15,171	)		2,069			-			(13,102	)
Provision for (benefit from) income taxes		(8,420	)		946			-			(7,474	)
Net income (loss)	$	(6,751	)	$	1,123		$	-		$	(5,628	)

-18-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Operations

Unaudited

(in thousands)

	Six months ended September 30, 2006
	Parent & Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations and Consolidating Entries			Consolidated
Net sales	$	337,569	$	26,417		$	(2,110	)	$	361,876
Cost of sales		252,157		20,911			(2,110	)		270,958
Gross profit		85,412		5,506			-			90,918
Marketing, selling and distribution expenses		30,040		2,448			-			32,488
General and administrative expenses		18,616		1,844			-			20,460
Research and development expenses		2,137		40			-			2,177
Amortization of other intangibles		582		-			-			582
Other operating (income) expense		1,223		(111	)		-			1,112
Operating income		32,814		1,285			-			34,099
Interest expense (income), net…		20,214		(59	)		-			20,155
Income before income taxes		12,600		1,344			-			13,944
Provision for income taxes		5,319		572			-			5,891
Net income	$	7,281	$	772		$	-		$	8,053

-19-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Cash Flows

Unaudited

(in thousands)

	Six months ended September 24, 2005
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
Operating activities
Net income (loss)	$	(6,751	)	$	1,123		$	(5,628	)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation		6,151			1,323			7,474
Amortization of other intangibles and other contracts		482			-			482
Amortization of deferred financing charges		896			-			896
Provision for doubtful accounts and allowances		3,543			-			3,543
Provision for excess and obsolete inventory		6,827			233			7,060
Deferred income taxes		-			(1,460	)		(1,460	)
(Gain) loss on disposal of assets		61			(20	)		41
Stock option compensation expense		10			-			10
Translation adjustment		-			(1,341	)		(1,341	)
Changes in operating assets and liabilities:
Accounts receivable		12,424			3,199			15,623
Inventories		(929	)		4,573			3,644
Income tax receivable		(8,367	)		2,138			(6,229	)
Accounts payable		(23,234	)		(5,646	)		(28,880	)
Accrued compensation and benefits		(1,020	)		(616	)		(1,636	)
Customer allowances payable		341			(67	)		274
Accrued interest		805			(5	)		800
Other accrued expenses		(535	)		1,292			757
Other		1,236			(42	)		1,194
Net cash provided by (used in) operating activities		(8,060	)		4,684			(3,376	)
Investing activities
Additions to property, plant and equipment		(7,217	)		(431	)		(7,648	)
Increase in other noncurrent assets		(2,361	)		-			(2,361	)
Net cash used in investing activities		(9,578	)		(431	)		(10,009	)
Financing activities
Net borrowings under bank revolving credit facility		9,000			-			9,000
Payments under old credit facility		(1,200	)		-			(1,200	)
Increase in deferred financing charges		(752	)		-			(752	)
Net payments on other long-term debt		(1,443	)		(1,069	)		(2,512	)
Net cash provided by (used in) financing activities		5,605			(1,069	)		4,536
Intercompany		1,451			(1,451	)		-
Effect of exchange rate changes		-			1,635			1,635
Net increase (decrease) in cash and cash equivalents		(10,582	)		3,368			(7,214	)
Cash and cash equivalents at beginning of period		11,670			5,281			16,951
Cash and cash equivalents at end of period	$	1,088		$	8,649		$	9,737

-20-

PART I Item 1

Leiner Health Products Inc.

Condensed Consolidating Statement of Cash Flows

Unaudited

(in thousands)

	Six months ended September 30, 2006
	Parent & Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidated
Operating activities
Net income	$	7,281		$	772		$	8,053
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation		7,098			803			7,901
Amortization of other intangibles and other contracts		874			-			874
Amortization of deferred financing charges		971			-			971
Provision for doubtful accounts and allowances		1,953			-			1,953
Provision for excess and obsolete inventory		5,896			108			6,004
Gain on disposal of assets		(36	)		(1	)		(37	)
Stock option compensation expense		12			-			12
Translation adjustment		-			(1,153	)		(1,153	)
Changes in operating assets and liabilities:
Accounts receivable		4,337			353			4,690
Inventories		(5,711	)		(1,086	)		(6,797	)
Income tax payable		4,559			(873	)		3,686
Accounts payable		(2,040	)		1,103			(937	)
Accrued compensation and benefits		55			21			76
Customer allowances payable		2,240			3			2,243
Accrued interest		(4,783	)		(69	)		(4,852	)
Other accrued expenses		(1,207	)		(215	)		(1,422	)
Other		939			(38	)		901
Net cash provided by (used in) operating activities		22,438			(272	)		22,166
Investing activities
Additions to property, plant and equipment		(7,688	)		(1,044	)		(8,732	)
Increase in other noncurrent assets		(482	)		-			(482	)
Net cash used in investing activities		(8,170	)		(1,044	)		(9,214	)
Financing activities
Net borrowings under bank revolving credit facility		(5,000	)		-			(5,000	)
Payments under bank term credit facility		(1,800	)		-			(1,800	)
Proceeds from the exercise of stock options		4			-			4
Repurchase of restricted stock		(46	)		-			(46	)
Net payments on other long-term debt		(1,454	)		(5	)		(1,459	)
Net cash used in financing activities		(8,296	)		(5	)		(8,301	)
Intercompany		450			(450	)		-
Effect of exchange rate changes		-			1,049			1,049
Net increase (decrease) in cash and cash equivalents		6,422			(722	)		5,700
Cash and cash equivalents at beginning of period		3,766			3,965			7,731
Cash and cash equivalents at end of period	$	10,188		$	3,243		$	13,431

-21-

PART I Item 2

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations.

As used in the management’s discussion and analysis section of this report, unless the context indicates otherwise, the terms “our company,” “we,” “our,” and “us” refer collectively to Leiner Health Products Inc. and its subsidiaries (the “Company”), including Vita Health Products Inc. of Canada (“Vita”), a wholly owned subsidiary.

Overview

The following discussion explains significant changes in the condensed consolidated financial condition and results of our operations for the three months ended September 30, 2006 (“second quarter of fiscal 2007”) and the six months ended September 30, 2006, and the significant developments affecting our financial condition since March 25, 2006. The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended March 25, 2006, which are included in our Annual Report on Form 10-K, on file with the Securities and Exchange Commission (“SEC”).

Fiscal Year

We maintain a fifty-two/fifty-three week fiscal year. Our fiscal year end will fall on the last Saturday of March each year. The three months ended September 24, 2005 and September 30, 2006 were comprised of 13 and 14 weeks, respectively. The six months ended September 24, 2005 and September 30, 2006 were comprised of 26 and 27 weeks, respectively.

Results of Operations

The following table summarizes our historical results of operations as a percentage of net sales for the three months and six months ended September 24, 2005 and September 30, 2006, respectively.

	Percentage of Net Sales
	Three months ended						Six months ended
	September 24, 2005			September 30, 2006			September 24, 2005			September 30, 2006
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		82.5			74.2			83.5			74.9
Gross profit		17.5			25.8			16.5			25.1
Selling, general and administrative expenses		13.3			14.2			14.1			14.6
Research and development expenses		0.8			0.6			0.8			0.6
Amortization of other intangibles		-			0.1			-			0.2
Other operating expense		-			0.6			0.2			0.3
Operating income		3.4			10.3			1.4			9.4
Interest expense, net		5.3			5.1			5.6			5.6
Income (loss) before income taxes		(1.9	)		5.2			(4.2	)		3.8
Provision for (benefit from) income taxes		(1.1	)		2.1			(2.4	)		1.6
Net income (loss)		(0.8	)		3.1			(1.8	)		2.2

Net sales were $198.0 million in the second quarter of fiscal 2007, an increase of $29.0 million, or 17.2%, from $168.9 million in the second quarter of fiscal 2006. For the first six months of fiscal 2007, net sales totaled $361.9 million, an increase of $47.4 million, or 15.1%, compared to $314.5 million in the first half of fiscal 2006. The second quarter and the first six months of fiscal 2007 had an extra week compared to the same period in the prior year. Management estimates that due to this extra week, net sales increased by approximately $12.0  to $13.0 million for both the second quarter and the first six months of fiscal 2007.  The increase in net sales for the second quarter was primarily due to higher sales of multivitamins, coenzyme Q10 (CoQ10), fish oil products and analgesics, which was partially offset by a decrease in sales of joint care products. The decrease in joint care product sales for the second quarter reflected pipeline shipments in fiscal 2006 not duplicated in fiscal 2007. The increase in analgesics was primarily due to revenue related to the PFI acquisition, as well as a rebound in our Naproxen product.  Our Naproxen offering is now exceeding revenue levels achieved prior to the negative media about Cox II inhibitors from two years ago. Approximately 3.5% of the overall growth for the second quarter was due to the PFI acquisition. The increase in net sales for the first six months followed the same general trend as the second quarter with the exception of joint care products, which had an increase for the six-month period. Approximately 4.0% of the overall growth for the six-month period was due to the PFI acquisition. The prior year’s net sales for the first six months also included the establishment of a reserve for customer returns related to certain branded products in the first quarter of fiscal 2006.

-22-

PART I Item 2

U.S. net sales were $184.5 million in the second quarter of fiscal 2007, an increase of $29.9 million, or 19.4%, from $154.6 million in the second quarter of fiscal 2006. For the first six months of fiscal 2007, U.S. net sales were $336.6 million, an increase of $50.0 million, or 17.5%, from $286.5 million for the first six months of fiscal 2006. Management estimates that the impact on U.S. net sales due to an extra week was approximately $11 to $12 million for both the second quarter and the first six months of fiscal 2007. The increase in U.S. net sales for the second quarter was primarily due to higher sales of multivitamins, coenzyme Q10 (CoQ10), fish oil products and analgesics, which were partially offset by a decrease in joint care products. The decrease in joint care product sales for the second quarter reflected pipeline shipments in fiscal 2006 not duplicated in fiscal 2007. The increase in analgesics was primarily due to sales related to the PFI acquisition. Approximately 3.7% of the U.S. overall sales growth for the second quarter was due to the PFI acquisition. The increase in U. S. net sales for the first six months followed the same general trend as the second quarter with the exception of joint care products, which increased for the six-month period. In addition, the prior year’s U. S. net sales for the first six months of fiscal 2006 were adversely impacted by the establishment of a reserve for customer returns of certain branded products. Approximately 4.3% of the U.S. overall sales growth for the first six months was due to the PFI acquisition.

Net sales attributable to our Canadian operations were $13.4 million in the second quarter of fiscal 2007, a decrease of $0.9 million, or 6.3%, from $14.3 million in the same period of fiscal 2006. For the first six months of fiscal 2007, Canadian net sales were $25.3 million, a decrease of $2.7 million, or 9.6%, from $28.0 million for the same period of fiscal 2006. Management estimates that the impact on Canadian net sales due to an extra week was approximately $1.0 million for both the second quarter and the first six months of fiscal 2007. The decrease in Canadian net sales for the second quarter and the first six months of fiscal 2007 was primarily due to lower sales of multivitamins, analgesics and allergy products to our major customers in Canada. Canadian net sales have continued to be adversely impacted by the decision of a competitive OTC supplier in Canada to supply retail customers directly on selected items. On a sequential basis, Canadian sales are up from $11.9 million in the first quarter of fiscal 2007, and we do not expect this trend of decreased Canadian net sales to continue in the second half of fiscal 2007.

Regarding our three principal product categories:

· VMS product net sales were $122.3 million in the second quarter of fiscal 2007, an increase of $12.5 million, or 11.4%, from $109.8 million in the second quarter of fiscal 2006. During the first six months of fiscal 2007, VMS net sales were $222.4 million, an increase of $27.8 million, or 14.3%, from $194.6 million for the first six months of fiscal 2006. Management estimates that the impact due to an extra week was approximately $7.7 to $8.3 million for the second quarter and the first six months of fiscal 2007. Excluding the impact of this extra week, the increase in VMS net sales in the second quarter and the first six months of fiscal 2007 was primarily due to increases in sales of multivitamins, CoQ10, and fish oil products. Sales of joint care products were down in the second quarter, but were slightly up for the six month period.

· OTC product net sales were $60.5 million in the second quarter of fiscal 2007, an increase of $13.8 million, or 29.5%, from $46.7 million in the second quarter of fiscal 2006. During the first six months of fiscal 2007, OTC product net sales were $110.6 million, an increase of $17.3 million, or 18.5%, from $93.4 million in the same period in the prior year. Management estimates that the impact due to an extra week was approximately $3.3 to $3.7 million for the second quarter and the first six months of fiscal 2007. The increase in OTC net sales in the second quarter and for the first six months of fiscal 2007 was primarily due an increase in sales of analgesics, which is generally a result of the PFI acquisition, as well as a rebound in our Naproxen product.

· Contract manufacturing services net sales were $15.1 million in the second quarter of fiscal 2007, an increase of $2.7 million, or 21.9%, from $12.4 million in the second quarter of fiscal 2006. During the first six months of fiscal 2007, contract manufacturing services net sales were $28.8 million, an increase of $2.3 million, or 8.6%, from $26.5 million. Management estimates that the impact due to an extra week was approximately $1.0 million for the second quarter and the first six months of fiscal 2007. Excluding the impact of this extra week, the increase was primarily related to the launch of new product sales in the second quarter and promotional activities at our key contract manufacturing customer.

-23-

PART I Item 2

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

(continued)

Cost of sales was $147.0 million, or 74.2%, of net sales, in the second quarter of fiscal 2007, an increase of $7.5 million, or 5.4%, from $139.4 million, or 82.5%, of net sales, in the second quarter of fiscal 2006. During the first six months of fiscal 2007, cost of sales were $271.0 million, or 74.9%, of net sales, an increase of $8.2 million or 3.1%, compared to $262.7 million, or 83.5%, of net sales for the same period in the prior year. The decrease in cost of sales as a percentage of net sales in the second quarter and the first six months of fiscal 2007 was primarily due to the continued stabilization of certain raw material costs, better fixed cost absorption from higher plant utilization and lower production costs resulting from efficiencies achieved in plant operations. In addition, the prior year cost of sales included a reserve established to reduce the carrying value of certain products.

Gross profit was $51.0 million, or 25.8% of net sales, in the second quarter of fiscal 2007, an increase of $21.5 million, or 72.9%, from $29.5 million, or 17.5% of net sales in the second quarter of fiscal 2006. During the first six months of fiscal 2007, gross profit was $90.9 million, or 25.1% of net sales, an increase of $39.1 million, or 75.5% from $51.8 million, or 16.5% of net sales for the same period in the prior year. The prior year’s gross profit was adversely impacted by the establishment of a reserve for customer returns and a reserve to reduce the carrying value of certain branded products.

Selling, general and administrative expenses (“SG&A”) consist of (1) marketing, selling and distribution expenses, which include components such as advertising costs, selling costs, warehousing, shipping and handling and (2) general and administrative expenses, which include components such as administrative functions to support manufacturing activities, salaries, wages and benefit costs, travel and entertainment, professional services and facility costs. SG&A were $28.1 million, or 14.2% of net sales, in the second quarter of fiscal 2007, an increase of $5.6 million, or 24.7%, from $22.5 million, or 13.3% of net sales, in the same period in the prior year. During the first six months of fiscal 2007, SG&A were $52.9 million, or 14.6% of net sales, an increase of $8.7 million, or 19.5% of net sales, from $44.3 million, or 14.1% of net sales, in the same period in the prior year. The second quarter and the first six months of fiscal 2007 included the expenses for one extra week. The increase in SG&A was primarily attributable to employee compensation, broker commissions, freight and consultant expenses.

Research and development expenses (“R&D”) were $1.1 million and $2.2 million in the second quarter and the first six months of fiscal 2007, respectively. The R&D expenses were lower by $0.3 million for the second quarter and the first six months of fiscal 2007 compared to the same period in the prior year due primarily to the reimbursement of certain product development expenses by our customers.

Amortization of other intangibles in the second quarter and the first six months of fiscal 2007 were higher by $0.3 million and $0.6 million, respectively, due primarily to intangibles recorded in the fourth quarter of fiscal 2006 related to the PFI acquisition.

Other operating expense was higher by $1.2 million for the second quarter of fiscal 2007 compared to the same period in the prior year. During the first six months of fiscal 2007, operating expense was $1.1 million, an increase of $0.5 million, compared to $0.6 million, for the same period in the prior year. The increase in other operating expense for the second quarter and the first six months of fiscal 2007 was due primarily to the accrual of management fees of $1.3 million recorded in the second quarter of fiscal year 2007 partially offset by miscellaneous income. The prior year operating expense for the first six months included professional fees incurred primarily in connection with the Credit Agreement Amendment.

In the second quarter of fiscal 2007, net interest expense was $10.1 million, an increase of $1.2 million compared to $8.9 million for the same period in the prior year. During the first six months of fiscal 2007, net interest expense was $20.2 million, an increase of $2.6 million compared to $17.5 million for the same period in the prior year. The increase in interest expense for the second quarter and the first six months of fiscal 2007 was primarily due to an increase in the average interest rate charged on the average outstanding indebtedness.

We recorded an income tax provision of $4.1 million or a 40.6% effective tax rate for the second quarter of fiscal 2007, compared to a tax benefit of $1.8 million or a 56.2% effective tax rate for the second quarter of fiscal 2006. During the first six months of fiscal 2007, we recorded an income tax provision of $5.9 million or a 42.2% effective tax rate, compared to a tax benefit of $7.5 million or a 57.0% effective tax rate for the first six months of fiscal 2006. The effective tax rate for the second quarter and first six months of fiscal 2007 is substantially different from the effective rate for the second quarter and first six months of fiscal 2006 primarily due to the release of a significant portion of the Canadian valuation allowance against its deferred tax assets during the three months ended June 25, 2005. The release of the valuation allowance was based on our expected current and future profitable Canadian operations. The effective tax rate was also affected by recently enacted Canadian federal tax rate reductions phased in over a four year period, which became law on June 22, 2006 with the passage of Bill C-13. The scheduling of the expected reversal of Canadian deferred tax assets at the lower effective tax rates is recognized as a first quarter fiscal 2007 discreet item and thus increased the quarterly tax provision.

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PART I Item 2

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

(continued)

Primarily as a result of factors discussed above, net income of $6.1 million was recorded in the second quarter of fiscal 2007 compared to a net loss of $1.4 million in the second quarter of fiscal 2006. For the first six months of fiscal 2007, we recorded net income of $8.1 million compared to a net loss of $5.6 million in the same period in the prior year.

Credit Agreement EBITDA was $26.1 million and $44.2 million for the second quarter and the first six months of fiscal 2007, respectively, compared to the Credit Agreement EBITDA of $22.2 million and $31.4 million for the second quarter and the first six months of fiscal 2006, respectively. Our Credit Agreement EBITDA on a trailing twelve month basis was $87.7 million. Details of the definition and calculation of the Credit Agreement EBITDA can be found under “Covenant Restrictions” and “Credit Agreement EBITDA,” below.

Concentration of Credit Risk and Significant Customers, Suppliers and Products

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of trade receivables. We sell our products to a geographically diverse customer base in the food, drug, mass merchant and warehouse club (“FDMC”) retail market. We perform ongoing credit evaluations of our customers and maintain adequate reserves for potential losses.

Our two largest customers accounted for the following percentage of gross sales in each respective period:

	Three months ended				Six months ended
	September 24, 2005		September 30, 2006		September 24, 2005		September 30, 2006
Customer A		46%		44%		45%		44%
Customer B		23%		25%		22%		24%

Our largest customer has two retail divisions that, if viewed as separate entities, would constitute the following percentage of gross sales in each respective period:

	Three months ended				Six months ended
	September 24, 2005		September 30, 2006		September 24, 2005		September 30, 2006
Division 1		23%		24%		24%		24%
Division 2		23%		20%		21%		20%

Our top ten customers in the aggregate accounted for the following percentage of gross sales in each respective period:

	Three months ended				Six months ended
	September 24, 2005		September 30, 2006		September 24, 2005		September 30, 2006
Top ten customers		88%		86%		87%		86%

At March 25, 2006 and September 30, 2006, we had gross receivables from two U.S. customers representing approximately 43% and 32% and 39% and 29%, respectively, of total receivables.

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PART I Item 2

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

(continued)

For the second quarter and the first six months of fiscal 2006 and 2007, no supplier, excluding purchases by Vita Health, provided more than 10% of the Company’s raw material purchases.

Liquidity and Capital Resources

Our liquidity needs arise primarily from debt service on our substantial indebtedness and from the funding of our capital expenditures, ongoing operating costs and working capital.

As of September 30, 2006, we had outstanding debt of an aggregate amount of $395.6 million, consisting primarily of $234.6 million in principal amount under the term facility (the “Term Facility”), $150 million of 11% senior subordinated notes due 2012 (the “Notes”) and an aggregate amount of $11.0 million under our other debt facilities.

Principal and interest payments under the Term Facility and the Revolving Facility, together with principal and interest payments on the Notes, represent significant liquidity requirements for us. We are required to repay the $234.6 million in term loan outstanding as of September 30, 2006 under the Credit Facility by May 27, 2011 with scheduled principal payments of $1.2 million in the remaining periods of fiscal 2007, $1.8 million in fiscal 2008, $2.4 million in fiscal 2009 through fiscal 2011 and $224.4 million in fiscal 2012. All outstanding revolving credit borrowings under the Credit Facility will become due on May 27, 2009. We are also required to repay the $150.0 million of the Notes in fiscal 2013.

In connection with our PFI acquisition and to provide us with additional operating flexibility, on September 23, 2005, we entered into Amendment No. 1 and Acknowledgement (the “Amendment”) with our senior lenders to the Credit Facility. The Amendment, among other things, (a) modified the “applicable margin” rate, (b) modified existing financial and operating covenants that require, among other things, the maintenance of certain financial ratios, (c) added a new financial covenant of Minimum Liquidity provision (as defined) of not less than $20.0 million, and (d) modified the calculation of consolidated credit agreement EBITDA. As a condition to obtaining the consent of the lenders to the foregoing amendments, we paid a fee equal to 0.25% of the aggregate total commitments of our senior lenders, or approximately $0.7 million, and recorded it under other non-current assets in the condensed consolidated balance sheet at March 25, 2006. The Amendment was effective for the quarter ended September 24, 2005 and subsequent quarters through the maturity of the Credit Facility. For additional details see “Covenant Restrictions” and “Credit Agreement EBITDA” below.

Borrowings under the Credit Facility bear interest at a rate per annum, at our option, at a margin above the base rate (the higher of federal funds effective rate plus 0.50% and the prime commercial lending rate of UBS AG) or the LIBOR rate (determined based on interest periods of one, two, three or six months, at our option), as the case may be, plus an “applicable margin.” The amended “applicable margin” is based on our debt rating and leverage ratio. As of September 30, 2006, our weighted average interest rates were 8.88% under the Credit Facility. In addition to specified agent and up-front fees, the Credit Facility requires a commitment fee of up to 0.5% per annum of the average daily unused portion of the Revolving Facility. The Notes bear interest at a rate of 11% per annum.

The Amendment, among other things, requires us to maintain a Minimum Liquidity amount of not less than $20.0 million as of the last day of any fiscal month. Our Minimum Liquidity provision as of September 30, 2006, was $54.7 million, well above the $20.0 million Minimum Liquidity requirement. At September 30, 2006, we had $41.2 million available under our Revolving Facility. In accordance with our debt agreements, the availability under the Revolving Facility has been reduced by the amount of standby letters of credit issued of approximately $8.8 million as of September 30, 2006. These letters of credit are used as security against our lease obligations, inventory purchasing obligations, and an outstanding note payable. These letters of credit expire annually and need extensions each year to various dates through 2014. In addition to our Revolving Facility, our cash on hand was $13.4 million, an increase of $5.9 million over our June, 2006 balance of $7.5 million.

In the event the net revolver availability plus the cash balance falls below the $20.0 million Minimum Liquidity amount, our equity sponsors have committed to contributing to us an additional $6.5 million in equity.

Based upon current levels of operations, anticipated cost-savings and expectations as to future growth, we believe that cash generated from operations, together with amounts available under our Revolving Facility, will be adequate to permit us to meet our debt service obligations, capital expenditure program requirements, ongoing operating costs and working capital needs, although no assurance can be given in this regard. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with the covenants and restrictions contained in the Amendment will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control and will be substantially dependent on the selling prices and demand for our products, raw material costs, and our ability to successfully implement our overall business strategy.

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PART I Item 2

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

(continued)

If our future cash flow from operations and other capital resources is insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity capital or restructure or refinance all or a portion of our debt, including the Notes, on or before maturity. We cannot assure you that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our existing and future indebtedness, including the Notes and Credit Facility, may limit our ability to pursue any of these alternatives.

Covenant Restrictions

The Credit Facility contains various restrictive covenants. It prohibits us from prepaying other indebtedness, including the Notes, and it requires us to satisfy financial condition tests and to maintain specified financial ratios, such as a minimum liquidity, maximum total leverage ratio, minimum interest coverage ratio and limitation on capital expenditures. In addition, the Credit Facility prohibits us from declaring or paying any dividends and from making any payments with respect to the Notes if we fail to perform our obligations under, or fail to meet the conditions of, the Credit Facility or if such payment creates a default under the Credit Facility.

The indenture governing the Notes, among other things: (1) restricts our ability and the ability of our subsidiaries to incur additional indebtedness, issue shares of preferred stock, incur liens, pay dividends or make other specified restricted payments and enter into some transactions with affiliates; (2) imposes specific restrictions on the ability of some of our subsidiaries to pay dividends or make certain payments to us; and (3) places restrictions on our ability and the ability of our subsidiaries to merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of our assets. The indenture related to the Notes, the Credit Facility and Amendment also contains various covenants that limit our discretion in operating our businesses.

The financial covenants in the Credit Facility specify, among other things, the following requirements as of the last day of any test period during any period set forth in the table below:

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PART I Item 2

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

(continued)

	Consolidated Indebtedness to
	Credit Agreement EBITDA (1)
Test Period	Leverage Ratio
September 23, 2006		5.65 to 1.00
December 23, 2006		5.65 to 1.00
March 31, 2007		5.50 to 1.00
June 30, 2007		5.50 to 1.00
September 29, 2007		5.00 to 1.00
December 29, 2007		5.00 to 1.00
March 29, 2008		4.50 to 1.00
June 28, 2008		4.50 to 1.00
September 27, 2008		4.00 to 1.00
December 27, 2008		4.00 to 1.00
March 28, 2009 and thereafter		3.75 to 1.00
		Credit Agreement EBITDA (1)
		to Consolidated
		Interest Expense Ratio
September 23, 2006		1.85 to 1.00
December 23, 2006		1.85 to 1.00
March 31, 2007		1.85 to 1.00
June 30, 2007…		2.00 to 1.00
September 29, 2007		2.00 to 1.00
December 29, 2007		2.25 to 1.00
March 29, 2008		2.25 to 1.00
June 28, 2008		2.25 to 1.00
September 27, 2008		2.25 to 1.00
December 27, 2008		2.50 to 1.00
March 28, 2009 and thereafter		2.75 to 1.00

Note:

(1) See “Credit Agreement EBITDA” for more information regarding this term.

We were in compliance with all such financial covenants, as of September 30, 2006, and our Minimum Liquidity provision as of September 30, 2006 was $54.7 million, well above the $20.0 million Minimum Liquidity requirement. Our ability to comply in future periods with the financial covenants in the Amendment will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, business and other factors, many of which are beyond our control and will be substantially dependent on the selling prices and demand for our products, raw material costs, and our ability to successfully implement our overall business strategy. If a violation of any of the covenants occurred, we would attempt to obtain a waiver or an amendment from our lenders, although no assurance can be given that we would be successful in this regard. The Credit Facility and the indenture governing the Notes have covenants as well as specified cross-default or cross-acceleration provisions; failure to comply with these covenants in any agreement could result in a violation of such agreement which could, in turn, lead to violations of other agreements pursuant to such cross-default or cross-acceleration provisions.

The Credit Facility is collateralized by substantially all of our assets. Borrowings under the Credit Facility are a key source of our liquidity. Our ability to borrow under the Credit Facility is dependent on, among other things, our compliance with the financial ratio covenants referred to in the preceding paragraphs. Failure to comply with the financial ratio covenants would result in a violation of the Credit Facility and, absent a waiver or amendment from the lenders under such agreement, permit the acceleration of all outstanding borrowings under the Credit Facility.

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PART I Item 2

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

(continued)

Credit Agreement EBITDA

The table below sets forth our EBITDA as defined in our Amendment, which we refer to as “Credit Agreement EBITDA.” Credit Agreement EBITDA as presented below is a financial measure that is used in our Amendment. Credit Agreement EBITDA is not a defined term under U.S. generally accepted accounting principles and should not be considered as an alternative to income from operations or net income (loss) as a measure of operating results or cash flows as a measure of liquidity. Credit Agreement EBITDA is calculated by adjusting net income (loss) to exclude interest expense, depreciation and amortization, income tax expense, expenses incurred in connection with the recapitalization, aggregate amount of all other non-cash items (including non-cash compensation charges), proceeds from business interruption insurance, management fees, expenses related to any permitted acquisition (other than the PFI Acquisition), fees and expenses in connection with the exchange of the Notes, expenses incurred to the extent reimbursed by third parties pursuant to indemnification provisions, any non-cash charges outside the normal course of business that result in an accrual of a reserve for cash charges in any future period, expenses incurred or accrued representing joint care customer in-stock investments, inventory reduction impact and other expenses, expenses incurred in connection with any restructuring, expenses incurred in connection with the employment of professionals to assist restructuring, integration of the PFI Business and the Amendment, non-capitalized transition and integration expenses incurred in connection with the PFI Acquisition, any non-cash charges that result from final accounting adjustments associated with the PFI Acquisition, and expenses incurred in connection with operating facilities to provide adequate inventory and to ensure continuous supplies to customers of the PFI Business. In addition, Credit Agreement EBITDA also adjusts net income by all non-cash items increasing consolidated net income (other than accrual of revenue or recording of receivables in the ordinary course of the business) and the reversal of any reserve or the payment of any amount that was reserved. The Credit Facility also provides for adjustments to consolidated net income including, among other things, for asset write-downs. The Amendment requires us to comply with a specified debt to Credit Agreement EBITDA leverage ratio and a specified consolidated Credit Agreement EBITDA to interest expense ratio for specified periods. The specific ratios are set out under “Liquidity and Capital Resources” above.

The calculation of Credit Agreement EBITDA is set forth below (in thousands):

	Three months ended					Six months ended
	September 24, 2005			September 30, 2006		September 24, 2005			September 30, 2006
Net income (loss)	$	(1,433	)	$	6,066	$	(5,628	)	$	8,053
Provision for (benefit from) income taxes		(1,836	)		4,149		(7,474	)		5,891
Interest expense, net		8,911			10,110		17,540			20,155
Depreciation and amortization		3,901			4,457		7,956			8,775
Asset write-down (1)		-			-		5,659			-
Non-cash stock compensation expense		5			5		10			12
Expenses related to permitted acquisition		301			-		323			-
Expenses related to joint care and other products (2)		12,400			-		12,400			-
Management fees (3)		(68	)		1,344		604			1,354
Credit Agreement EBITDA (4)	$	22,181		$	26,131	$	31,390		$	44,240

______________

(1) Represents the establishment of a reserve for anticipated customer returns and the reduction of the carrying value of inventory related to certain branded products in the first quarter of fiscal 2006. This charge resulted in a reduction to gross profit in the condensed consolidated statement of operations and in operating activities in the condensed consolidated statement of cash flows at September 24, 2005.

(2) Represents add back of expense incurred in connection with the joint care customer in-stock investments, inventory reduction impact and other expenses as stipulated in the Amendment. These expenses resulted in a reduction to gross profit in the condensed consolidated statement of operations for the three and six month periods ended September 24, 2005.

(3) Management fees are included in other operating expenses in the condensed consolidated statement of operations and in operating activities in the condensed consolidated statement of cash flows.

(4) Credit Agreement EBITDA is calculated in accordance with the definitions contained in our Amendment described under “Credit Agreement EBITDA.”

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PART I Item 2

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

(continued)

Sources and Uses of Cash

Net cash used in operating activities totaled $3.4 million in the first six months of fiscal 2006 compared to net cash provided by operating activities of $22.2 million in the first six months of fiscal 2007. The most significant change in operating activities for the first six months of fiscal 2006 was the reduction of accounts payable due primarily to the product mix change in our business and the movement toward Chinese and Indian raw materials. The significant changes in the operating activities for the first six months of fiscal 2007 were reductions of inventory and accrued interest partly offset by increases in accounts receivable and income tax payable.

Net cash used in investing activities totaled $10.0 million and $9.2 million in the first six months of fiscal 2006 and fiscal 2007, respectively. The prior year other non-current assets included the deposit and the acquisition costs related to the PFI acquisition.

Net cash provided by financing activities was $4.5 million compared to the net cash used in financial activities of $8.3 million in the first six months of fiscal 2007. Net cash used in the first six months of fiscal 2007 primarily represents repayment of our Revolving Facility, and scheduled payments of our Term Facility and other long-term debt.

Critical Accounting Policies and Estimates

Revenue Recognition

The following table summarizes the activities in our accruals for contractual allowances, future charge-backs and product returns (in thousands):

	Reserve for Contractual Allowances			Reserve for Future Charge-backs			Reserve for Product Returns
Balance at March 25, 2006	$	11,187		$	1,071		$	2,865
Current provision		19,521			3,844			(7	)
Actual returns or credits		(17,386	)		(4,205	)		(1,216	)
Balance at September 30, 2006	$	13,322		$	710		$	1,642

Actual returns included products sold in prior fiscal periods of $2,058,000 and $372,000 for the first six months of fiscal 2006 and 2007, respectively. We do not have the ability to track actual credits for contractual allowances and future charge-backs by fiscal period because a significant time lag exists between the date on which we determine our contractual liability and when we actually pay the liability. In addition, the documentation provided to us by our customers for such deductions are generally insufficient for us to determine the exact date when the liability may have been accrued on our balance sheet.

Forward-looking Statements

This report contains “forward-looking statements” that are subject to risks and uncertainties. These statements often include words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or similar expressions. These statements are only predictions. In addition to risks and uncertainties noted in this report, there are risks and uncertainties that could cause our actual operating results to differ materially from those anticipated by some of the statements made. Such risks and uncertainties include: (i) slow or negative growth in the vitamin, mineral, supplement or over-the-counter pharmaceutical industry; (ii) adverse publicity regarding the consumption of vitamins, minerals, supplements or over-the-counter pharmaceuticals; (iii) increased competition; (iv) increased costs; (v) increases in the cost of borrowings and/or unavailability of additional debt or equity capital; (vi) changes in general worldwide economic and political conditions in the markets in which we may compete from time to time; (vii) our inability to gain and/or hold market share with our customers; (viii) exposure to and expenses of defending and resolving product liability claims and other litigation; (ix) our ability to successfully implement our business strategy; (x) our inability to manage our operations efficiently; (xi) consumer acceptance of our products; (xii) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators; (xiii) the mix of our products and the profit margins thereon; and (xiv) the availability and pricing of raw materials. We expressly disclaim any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I Item 3

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our market risk during the second quarter of fiscal 2007. Accordingly, the disclosure provided in our Annual Report on Form 10-K for the year ended March 25, 2006 remains current.

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PART I Item 4

Item 4. Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Executive Vice President and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2006. Based on that evaluation, the Company’s Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2006. There were no material changes in the Company’s internal control over financial reporting during the second quarter of fiscal 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II Other Information

Item 1.

Legal Proceedings.

There are currently six pending individual product liability complaints filed against us and/or our customers alleging damages associated with the ingestion of PPA, a substance that previously was an ingredient in some of our diet aid and cold remedy products. These complaints were filed between August 9, 2001 and August 27, 2003 in both state and federal courts in Pennsylvania, New York, Arkansas, Texas, Louisiana, Michigan and Washington. The complaints include allegations such as subarachnoid hemorrhage, aneurysm, intracranial hemorrhage, debilitating neurological injuries and headaches. We previously manufactured products that contained PPA, but removed that ingredient from all of our product formulations promptly after the FDA revised its opinion regarding PPA in November 2000. Two of the six PPA claims involve products that were neither manufactured nor distributed by us.

Item 1 A.	Risk Factors.
	There have been no material changes to the Risk Factors previously disclosed in “Item 1A− Risk Factors” of our Annual Report on Form 10-K for the year ended March 25, 2006.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
	Not applicable
Item 3.	Defaults Upon Senior Securities.
	Not applicable
Item 4.	Submission of Matters to a Vote of Security Holders.
	Not applicable
Item 5.	Other Information.
	None
Item 6.	Exhibits.
	31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
	31.2 Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
	32.1 Certification of Chief Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2 Certification of Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

-33-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Leiner Health Products Inc.
Date: November 14, 2006	By:	/s/  Kevin McDonnell
		Kevin McDonnell
		Executive Vice President and Chief Financial Officer

 

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