Exhibit 99.1
| Contact: | Robert Jaffe |
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| PondelWilkinson Inc. |
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| (310) 279-5980 |
LANNETT REPORTS FISCAL 2011 FOURTH QUARTER,
FULL-YEAR FINANCIAL RESULTS
Philadelphia, PA — September 7, 2011 — Lannett Company, Inc. (NYSE AMEX: LCI) today reported financial results for the fiscal 2011 fourth quarter and full year ended June 30, 2011.
For fiscal 2011, net sales were $106.8 million compared with $125.2 million for fiscal 2010. Gross profit was $23.3 million compared with $41.3 million for the prior year. Research and development expenses decreased to $8.6 million from $11.3 million in fiscal 2010. Selling, general and administrative (SG&A) expenses declined to $15.9 million from $17.4 million in the prior year. Net loss attributable to Lannett Company was $277,000, or $0.01 per share, compared to net income attributable to Lannett Company of $7.8 million, or $0.31 per diluted share, for fiscal 2010.
For the fiscal 2011 fourth quarter, net sales were $25.5 million compared with $33.8 million for the fourth quarter of fiscal 2010. Gross profit was $3.8 million compared with $11.3 million for the same period in the prior year. Research and development expenses increased to $3.0 million from $2.1 million in the fiscal 2010 fourth quarter. SG&A expenses declined to $4.2 million from $5.2 million in the same quarter of the prior year. Net loss attributable to Lannett Company was $1.9 million, or $0.07 per share, compared to net income attributable to Lannett Company of $2.8 million, or $0.11 per diluted share, for the prior year fourth quarter.
“As expected, our financial results for both the fiscal 2011 fourth quarter and full year were impacted by price and/or volume declines on certain key products, as well as the temporary discontinuation of our Morphine Sulfate Oral Solution product and a lack of product approvals,” said Arthur Bedrosian, president and chief executive officer of Lannett. “The current fiscal year, however, is off to a strong start, with four recent product approvals, including Morphine Sulfate Oral Solution; all of which we expect to launch shortly. Moreover, we anticipate improved sales from our pain management division and have 14 product candidates pending at the FDA, several of which we believe will be approved before calendar year-end.”
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 2011 fiscal fourth quarter and full year ended June 30, 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 30645707. The conference call will also be available through a live audio Internet broadcast at www.lannett.com. 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, including the company’s New Drug Application for Morphine Sulfate Oral Solution, 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.
# # #
FINANCIAL TABLES FOLLOW
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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| Three months ended |
| Fiscal Year ended |
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| June 30, |
| June 30, |
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| 2011 |
| 2010 |
| 2011 |
| 2010 |
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Net sales |
| $ | 25,507,465 |
| $ | 33,760,023 |
| $ | 106,835,132 |
| $ | 125,177,949 |
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Cost of sales |
| 21,231,119 |
| 21,795,016 |
| 81,898,997 |
| 80,890,575 |
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Amortization of intangible assets |
| 489,770 |
| 448,667 |
| 1,875,662 |
| 1,794,667 |
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Product royalties |
| 31,140 |
| 185,011 |
| (259,240 | ) | 1,152,900 |
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Gross profit |
| 3,755,436 |
| 11,331,329 |
| 23,319,713 |
| 41,339,807 |
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Research and development expenses |
| 3,029,750 |
| 2,141,295 |
| 8,587,046 |
| 11,251,421 |
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Selling, general, and administrative expenses |
| 4,156,640 |
| 5,170,175 |
| 15,911,702 |
| 17,375,320 |
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Gain on investments |
| (149,225 | ) | (1,623 | ) | (205,781 | ) | (1,623 | ) | ||||
Loss (gain) on sale of assets |
| 5,396 |
| (295,701 | ) | 21,695 |
| (315,330 | ) | ||||
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Operating (loss) income |
| (3,287,125 | ) | 4,317,183 |
| (994,949 | ) | 13,030,019 |
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Other income (expense): |
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Grant income |
| 410,000 |
| — |
| 410,000 |
| — |
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Foreign currency gain |
| 1,620 |
| 1,837 |
| 7,114 |
| 4,595 |
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Interest and dividend income |
| 51,134 |
| 12,877 |
| 90,986 |
| 62,328 |
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Interest expense |
| (39,637 | ) | (71,838 | ) | (214,519 | ) | (275,870 | ) | ||||
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| 423,117 |
| (57,124 | ) | 293,581 |
| (208,947 | ) | ||||
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(Loss) income before income tax (benefit) expense |
| (2,864,008 | ) | 4,260,059 |
| (701,368 | ) | 12,821,072 |
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Income tax (benefit) expense |
| (1,016,136 | ) | 1,288,071 |
| (461,568 | ) | 4,813,044 |
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Net (loss) income |
| (1,847,872 | ) | 2,971,988 |
| (239,800 | ) | 8,008,028 |
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Less net income attributable to noncontrolling interest |
| (16,560 | ) | (155,737 | ) | (37,100 | ) | (186,961 | ) | ||||
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Net (loss) income attributable to Lannett Company, Inc. |
| $ | (1,864,432 | ) | $ | 2,816,251 |
| $ | (276,900 | ) | $ | 7,821,067 |
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(Loss) earnings per common share - Lannett Company, Inc.: |
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Basic |
| $ | (0.07 | ) | $ | 0.11 |
| $ | (0.01 | ) | $ | 0.32 |
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Diluted |
| $ | (0.07 | ) | $ | 0.11 |
| $ | (0.01 | ) | $ | 0.31 |
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Weighted average number of shares outstanding: |
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Basic |
| 28,393,491 |
| 24,880,253 |
| 26,758,552 |
| 24,743,902 |
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Diluted |
| 28,393,491 |
| 25,261,703 |
| 26,758,552 |
| 25,199,373 |
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LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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| (Unaudited) |
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| June 30, 2011 |
| June 30, 2010 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
| $ | 5,276,735 |
| $ | 21,895,648 |
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Investment securities |
| 19,382,079 |
| 604,464 |
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Trade accounts receivable (net of allowance of $123,573 and $123,192, respectively) |
| 33,464,440 |
| 38,324,258 |
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Inventories, net |
| 26,902,521 |
| 19,056,868 |
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Income taxes receivable |
| 3,636,306 |
| — |
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Deferred tax assets |
| 4,537,881 |
| 5,337,391 |
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Other current assets |
| 941,902 |
| 2,515,745 |
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Total Current Assets |
| 94,141,864 |
| 87,734,374 |
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Property, plant and equipment |
| 54,516,229 |
| 50,160,114 |
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Less accumulated depreciation |
| (24,586,448 | ) | (21,531,845 | ) | ||
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| 29,929,781 |
| 28,628,269 |
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Construction in progress |
| 5,760,686 |
| 2,939,898 |
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Investment securities |
| — |
| 183,742 |
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Intangible assets (product rights) - net of accumulated amortization |
| 5,909,636 |
| 7,785,298 |
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Deferred tax assets |
| 10,446,500 |
| 12,544,330 |
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Other assets |
| 1,555,831 |
| 147,886 |
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Total Assets |
| $ | 147,744,298 |
| $ | 139,963,797 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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LIABILITIES |
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Current Liabilities |
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Accounts payable |
| $ | 18,377,782 |
| $ | 16,280,675 |
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Accrued expenses |
| 1,354,095 |
| 3,464,181 |
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Accrued payroll and payroll related |
| 934,504 |
| 6,304,465 |
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Income taxes payable |
| — |
| 1,479,658 |
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Current portion of long-term debt |
| 629,435 |
| 4,851,278 |
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Rebates, chargebacks and returns payable |
| 13,564,395 |
| 15,249,412 |
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Total Current Liabilities |
| 34,860,211 |
| 47,629,669 |
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Long-term debt, less current portion |
| 7,192,496 |
| 2,868,549 |
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Unearned grant funds |
| — |
| 500,000 |
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Other long-term liabilities |
| 2,417 |
| 7,864 |
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Total Liabilities |
| 42,055,124 |
| 51,006,082 |
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Commitment and Contingencies |
| — |
| — |
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SHAREHOLDERS’ EQUITY |
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Common stock - authorized 50,000,000 shares, par value $0.001; |
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issued and outstanding, 28,403,946 and 24,882,123 shares, respectively |
| 28,404 |
| 24,882 |
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Additional paid in capital |
| 97,082,360 |
| 79,862,940 |
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Retained earnings |
| 9,287,732 |
| 9,564,632 |
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Noncontrolling interest |
| 139,082 |
| 111,982 |
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Accumulated other comprehensive income |
| 23,899 |
| 44,692 |
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| 106,561,477 |
| 89,609,128 |
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Less: Treasury stock at cost - 156,611 and 110,108 shares, respectively |
| (872,303 | ) | (651,413 | ) | ||
TOTAL SHAREHOLDERS’ EQUITY |
| 105,689,174 |
| 88,957,715 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ | 147,744,298 |
| $ | 139,963,797 |
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