Lannett (LCINQ) 10-Q 5 Nov 15 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Document and Entity Information
Entity Registrant Name	LANNETT CO INC
Entity Central Index Key	57,725
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		36,527,543
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Current assets:
Cash and cash equivalents	$ 207,768	$ 200,340
Investment securities	14,890	13,467
Accounts receivable, net	107,216	91,103
Inventories	45,231	46,191
Prepaid income taxes	4,953
Deferred tax assets	15,854	16,270
Other current assets	4,512	3,175
Total current assets	400,424	370,546
Property, plant and equipment, net	98,621	94,556
Intangible assets, net	28,903	29,090
Goodwill	141	141
Deferred tax assets	12,471	12,495
Other assets	2,441	1,938
TOTAL ASSETS	543,001	508,766
Current liabilities:
Accounts payable	17,259	19,195
Accrued expenses	6,675	4,928
Accrued payroll and payroll-related expenses	4,748	10,397
Rebates payable	11,458	7,553
Income taxes payable		1,918
Current portion of long-term debt	137	135
Total current liabilities	40,277	44,126
Long-term debt, less current portion	839	874
TOTAL LIABILITIES	$ 41,116	$ 45,000
Commitments and Contingencies (Note 13 and 14)
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 36,896,482 and 36,783,381 shares issued; 36,362,052 and 36,264,585 shares outstanding at September 30, 2015 and June 30, 2015, respectively)	$ 37	$ 37
Additional paid-in capital	242,025	236,178
Retained earnings	266,754	233,573
Accumulated other comprehensive loss	(311)	(295)
Treasury stock (534,430 and 518,796 shares at September 30, 2015 and June 30, 2015, respectively)	(6,988)	(6,080)
Total Lannett Company, Inc. stockholders' equity	501,517	463,413
Noncontrolling Interest	368	353
Total stockholders' equity	501,885	463,766
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 543,001	$ 508,766

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Jun. 30, 2015
CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, issued shares	36,896,482	36,783,381
Common stock, outstanding shares	36,362,052	36,264,585
Treasury stock, shares	534,430	518,796

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 106,433	$ 93,387
Cost of sales	28,819	21,800
Amortization of intangibles	187	20
Gross profit	77,427	71,567
Operating expenses:
Research and development expenses	6,528	6,363
Selling, general, and administrative expenses	15,536	10,483
Acquisition-related expenses	3,942	70
Total operating expenses	26,006	16,916
Operating income	51,421	54,651
Other income (loss):
Gain on sale of assets		20
Gain (loss) on investment securities	(1,196)	15
Interest and dividend income	86	102
Interest expense	(60)	(38)
Total other income (loss)	(1,170)	99
Income before income tax	50,251	54,750
Income tax expense	17,055	19,800
Net income	33,196	34,950
Less: Net income attributable to noncontrolling interest	15	18
Net income attributable to Lannett Company, Inc.	$ 33,181	$ 34,932
Earnings per common share attributable to Lannett Company, Inc.:
Basic (in dollars per share)	$ 0.91	$ 0.98
Diluted (in dollars per share)	$ 0.89	$ 0.94
Weighted average common shares outstanding:
Basic (in shares)	36,310,653	35,597,931
Diluted (in shares)	37,414,724	36,972,646

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net Income	$ 33,196	$ 34,950
Other comprehensive income (loss), before tax:
Foreign currency translation gain (loss)	(16)
Total other comprehensive income (loss), before tax	(16)
Total other comprehensive income (loss), net of tax	(16)
Comprehensive income	33,180	34,950
Less: Total comprehensive income attributable to noncontrolling interest	15	18
Comprehensive income attributable to Lannett Company, Inc.	$ 33,165	$ 34,932

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Stockholders' Equity Attributable to Lannett Co., Inc.	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock	Noncontrolling Interest	Total
Balance at Jun. 30, 2015	$ 463,413	$ 37	$ 236,178	$ 233,573	$ (295)	$ (6,080)	$ 353	$ 463,766
Balance (in shares) at Jun. 30, 2015		36,783
Increase (Decrease) in Shareholders' Equity
Shares issued in connection with share-based compensation plans	865		865					865
Shares issued in connection with share-based compensation plans (in shares)		113
Share-based compensation	4,374		4,374					4,374
Excess tax benefits on share-based compensation awards	608		608					608
Purchase of Treasury Stock	(908)					(908)		(908)
Other comprehensive loss, net of tax	(16)				(16)			(16)
Net income	33,181			33,181			15	33,196
Balance at Sep. 30, 2015	$ 501,517	$ 37	$ 242,025	$ 266,754	$ (311)	$ (6,988)	$ 368	$ 501,885
Balance (in shares) at Sep. 30, 2015		36,896

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
OPERATING ACTIVITIES:
Net Income	$ 33,196	$ 34,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,909	1,306
Deferred income tax expense (benefit)	440	(1,670)
Share-based compensation	4,374	1,647
Excess tax benefits on share-based compensation awards	(608)	(495)
Gain on sale of assets		(20)
Loss (gain) on investment securities	1,196	(15)
Other noncash expenses	50	21
Changes in assets and liabilities which provided (used) cash:
Accounts receivable, net	(16,113)	(14,510)
Inventories	960	774
Prepaid income taxes/Income taxes payable	(6,263)	9,661
Prepaid expenses and other assets	(1,358)	(1,509)
Rebates payable	3,905	1,594
Accounts payable	(1,936)	(7,023)
Accrued expenses	1,747	(1,323)
Accrued payroll and payroll-related expenses	(5,649)	(8,997)
Net cash provided by operating activities	15,850	14,391
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(5,787)	(9,374)
Proceeds from sale of property, plant and equipment		76
Purchases of intangible assets		(300)
Proceeds from sale of investment securities	11,387	34,213
Purchase of investment securities	(14,006)	(8,434)
Net cash provided by (used in) investing activities	(8,406)	16,181
FINANCING ACTIVITIES:
Repayments of debt	(33)	(32)
Proceeds from issuance of stock	865	773
Excess tax benefits on share-based compensation awards	608	495
Deferred financing fees	(532)
Purchase of treasury stock	(908)
Net cash provided by financing activities		1,236
Effect on cash and cash equivalents of changes in foreign exchange rates	(16)
NET INCREASE IN CASH AND CASH EQUIVALENTS	7,428	31,808
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	200,340	105,587
CASH AND CASH EQUIVALENTS, END OF PERIOD	207,768	137,395
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	11	25
Income taxes paid	$ 22,879	$ 11,809

Interim Financial Information

Interim Financial Information	3 Months Ended
	Sep. 30, 2015
Interim Financial Information
Interim Financial Information	Note 1. Interim Financial Information The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for the presentation of interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the financial position, results of operations, and cash flows for the periods presented. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. Operating results for the three months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2016. These unaudited financial statements should be read in combination with the other Notes in this section; “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in Item 2; and the Consolidated Financial Statements, including the Notes to the Consolidated Financial Statements, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015.

The Business And Nature of Oper

The Business And Nature of Operations	3 Months Ended
	Sep. 30, 2015
The Business And Nature of Operations
The Business And Nature of Operations	Note 2. The Business And Nature of Operations Lannett Company, Inc. (a Delaware corporation) and its subsidiaries (collectively, the “Company” or “Lannett”) develop, manufacture, package, market, and distribute solid oral (tablets and capsules), extended release, topical, and oral solution finished dosage forms of drugs, that address a wide range of therapeutic areas. Certain of these products are manufactured by others and distributed by the Company. The Company also manufactures active pharmaceutical ingredients through its Cody Laboratories, Inc. (“Cody Labs”) subsidiary, providing a vertical integration benefit. Additionally, the Company distributes products under various distribution agreements, most notably the Jerome Stevens Distribution Agreement. The Company operates pharmaceutical manufacturing plants in Philadelphia, Pennsylvania, Cody, Wyoming, and Carmel, New York. The Company’s customers include generic pharmaceutical distributors, drug wholesalers, chain drug stores, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities and health maintenance organizations.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 3. Summary of Significant Accounting Policies Principles of consolidation The Consolidated Financial Statements include the accounts of Lannett Company, Inc., and its wholly owned subsidiaries, as well as Cody LCI Realty, LLC (“Realty”), a variable interest entity (“VIE”) in which the Company has a 50% ownership interest. Noncontrolling interest in Realty is recorded net of tax as net income attributable to the noncontrolling interest. Additionally, all intercompany accounts and transactions have been eliminated. Business Combinations Acquired businesses are accounted for using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective estimated fair values. The fair values and useful lives assigned to each class of assets acquired and liabilities assumed are based on, among other factors, the expected future period of benefit of the asset, the various characteristics of the asset and projected future cash flows. Significant judgment is employed in determining the assumptions utilized as of the acquisition date and for each subsequent measurement period. Accordingly, changes in assumptions described above, could have a material impact on our consolidated results of operations. Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition and sales deductions for estimated chargebacks, rebates, returns and other adjustments including a provision for the Company’s liability under the Medicare Part D program. Additionally, significant estimates and assumptions are required when determining the fair value of long-lived assets, income taxes, contingencies, and share-based compensation. Because of the inherent subjectivity and complexity involved in these estimates and assumptions, actual results could differ from those estimates. Foreign currency translation The Consolidated Financial Statements are presented in U.S. Dollars, the reporting currency of the Company. The financial statements of the Company’s foreign subsidiary are maintained in local currency and translated into U.S. dollars at the end of each reporting period. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The adjustments resulting from the use of differing exchange rates are recorded as part of stockholders’ equity in accumulated comprehensive income (loss). Gains and losses resulting from transactions denominated in foreign currencies are recognized in the Consolidated Statements of Operations under Other income (loss). Amounts recorded due to foreign currency fluctuations are immaterial to the Consolidated Financial Statements. Cash and cash equivalents The Company considers all highly liquid investments with original maturities less than or equal to three months at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value, and consist of bank deposits and certificates of deposit that are readily convertible into cash. The Company maintains its cash deposits and cash equivalents at well-known, stable financial institutions. Such amounts frequently exceed insured limits. Investment securities The Company’s investment securities consist of publicly traded equity securities which are classified as trading investments. Investment securities are recorded at fair value based on quoted market prices from broker or dealer quotations or transparent pricing sources at each reporting date. Gains and losses are included in the Consolidated Statements of Operations under Other income (loss). Allowance for doubtful accounts The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time balances are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are determined to be uncollectible. Inventories Inventories are stated at the lower of cost or market determined by the first-in, first-out method. Inventories are regularly reviewed and provisions for excess and obsolete inventory are recorded based primarily on current inventory levels and estimated sales forecasts. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the assets’ estimated useful lives. Depreciation expense for the three months ended September 30, 2015 and 2014 was $1.7 million and $1.3 million, respectively. Intangible Assets Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization of definite-lived intangible assets is computed on a straight-line basis over the assets’ estimated useful lives, generally for periods ranging from 10 to 15 years. The Company continually evaluates the reasonableness of the useful lives of these assets. Indefinite-lived intangible assets are not amortized, but instead are tested at least annually for impairment. Costs to renew or extend the term of a recognized intangible asset are expensed as incurred. Valuation of Long-Lived Assets, including Intangible Assets The Company’s long-lived assets primarily consist of property, plant and equipment and definite and indefinite-lived intangible assets. Property, plant and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances (“triggering events”) indicate that the carrying amount of the asset may not be recoverable. If a triggering event is determined to have occurred, the asset’s carrying value is compared to the future undiscounted cash flows expected to be generated by the asset. If the carrying value exceeds the undiscounted cash flow of the asset, then impairment exists. Indefinite-lived intangible assets are tested for impairment at least annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. An impairment loss is measured as the excess of the asset’s carrying value over its fair value. The judgments made in determining estimated fair values can materially impact our results of operations. In-Process Research and Development Amounts allocated to in-process research and development (“IPR&D”) in connection with a business combination are recorded at fair value and are considered indefinite-lived intangible assets subject to the impairment testing in accordance with the Company’s impairment testing policy for indefinite-lived intangible assets. As products in development are approved for sale, amounts will be allocated to product rights and will be amortized over their estimated useful lives. These valuations reflect, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. Changes in any of the Company’s assumptions may result in a reduction to the estimated fair value of the IPR&D asset and could result in future impairment charges. Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is tested for impairment on an annual basis during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company first performs a qualitative assessment to determine if the quantitative impairment test is required. If changes in circumstances indicate an asset may be impaired, the Company performs the quantitative impairment test. In accordance with accounting standards, a two-step quantitative method is used for determining goodwill impairment. In the first step, we determine the fair value of our reporting unit (generic pharmaceuticals). If the net book value of our reporting unit exceeds its fair value, we would then perform the second step of the impairment test which requires allocation of our reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations. Any residual fair value is allocated to goodwill. An impairment charge is recognized only if the implied fair value of our reporting unit’s goodwill is less than its carrying amount. Segment Information The Company operates in one reportable segment, generic pharmaceuticals. As such, the Company aggregates its financial information for all products. The following table identifies the Company’s net sales by medical indication for the three months ended September 30, 2015 and 2014: (In thousands) Three Months Ended September 30, Medical Indication 2015 2014 Antibiotic $ $ Cardiovascular Gallstone Glaucoma Gout Migraine Muscle Relaxant Obesity Pain Management Thyroid Deficiency Other Total $ $ Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the three months ended September 30, 2015 and 2014, for certain of the Company’s products, defined as products containing the same active ingredient or combination of ingredients, which accounted for at least 10% of net sales in any of those periods: 2015 2014 Product 1 % % Product 2 % % Product 3 % % The following table presents the percentage of total net sales, for the three months ended September 30, 2015 and 2014, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: 2015 2014 Customer A % % Customer B % % Customer C % % At September 30, 2015 and June 30, 2015, four customers accounted for 82% and 84% of the Company’s net accounts receivable balance, respectively. Credit terms are offered to customers based on evaluations of the customers’ financial condition, and collateral is generally not required. The Company’s primary finished goods inventory supplier is Jerome Stevens Pharmaceuticals, Inc. (“JSP”), in Bohemia, New York. Purchases of finished goods inventory from JSP accounted for approximately 65% and 67% of the Company’s inventory purchases during the three months ended September 30, 2015 and 2014, respectively. See Note 21 “Material Contracts with Suppliers” for more information. Revenue Recognition The Company recognizes revenue when title and risk of loss have transferred to the customer and provisions for rebates, promotional adjustments, price adjustments, returns, chargebacks, and other potential adjustments are reasonably determinable. The Company also considers all other relevant criteria specified in Securities and Exchange Commission Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition”, in determining when to recognize revenue. Net Sales Adjustments When revenue is recognized a simultaneous adjustment to gross sales is made for chargebacks, rebates, returns, promotional adjustments, and other potential adjustments. These provisions are primarily estimated based on historical experience, future expectations, contractual arrangements with wholesalers and indirect customers, and other factors known to management at the time of accrual. Accruals for provisions are presented in the Consolidated Financial Statements as a reduction to gross sales with the corresponding reserve presented as a reduction of accounts receivable or included as rebates payable, depending on the nature of the reserve. The reserves, presented as a reduction of accounts receivable, totaled $70.0 million and $69.4 million at September 30, 2015 and June 30, 2015, respectively. Rebates payable at September 30, 2015 and June 30, 2015 included $11.5 million and $7.6 million, respectively, for certain rebate programs, primarily related to Medicare Part D and Medicaid, and certain sales allowances and other adjustments paid to indirect customers. Cost of Sales, including amortization of intangibles Cost of sales includes all costs related to bringing products to their final selling destination, which includes direct and indirect costs, such as direct material, labor, and overhead expenses. Additionally, cost of sales includes product royalties, depreciation, amortization and costs to renew or extend recognized intangible assets, freight charges and other shipping and handling expenses. Product royalties included in cost of sales for the three months ended September 30, 2015 and 2014 were $1.3 million and $42 thousand, respectively. Research and Development Research and development costs are expensed as incurred, including all production costs until a drug candidate is approved by the Food and Drug Administration (“FDA”). Research and development expenses include costs associated with internal projects as well as costs associated with third-party research and development contracts. Contingencies Loss contingencies, including litigation-related contingencies, are included in the Consolidated Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees related to litigation matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative line item. Share-based Compensation Share-based compensation costs are recognized over the vesting period, using a straight-line method, based on the fair value of the instrument on the date of grant less an estimate for expected forfeitures. The Company uses the Black-Scholes valuation model to determine the fair value of stock options and the stock price on the grant date to value restricted stock. The Black-Scholes valuation model includes various assumptions, including the expected volatility, the expected life of the award, dividend yield, and the risk-free interest rate. These assumptions involve inherent uncertainties based on market conditions which are generally outside the Company’s control. Changes in these assumptions could have a material impact on share-based compensation costs recognized in the financial statements. Income Taxes The Company uses the asset and liability method to account for income taxes as prescribed by Accounting Standards Codification (“ASC”) 740, Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense (benefit) is the result of changes in deferred tax assets and liabilities. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates in the period during which they are signed into law. The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative standards issued by the Financial Accounting Standards Board (“FASB”) also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The factors used to assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Under ASC 740, Income Taxes, a valuation allowance is required when it is more likely than not that all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings. Earnings Per Common Share Basic earnings per common share attributable to Lannett Company, Inc. is computed by dividing net income attributable to Lannett Company, Inc. common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings per common share attributable to Lannett Company, Inc. is computed by dividing net income attributable to Lannett Company, Inc. common stockholders by the weighted average number of shares outstanding during the period including additional shares that would have been outstanding related to potentially dilutive securities. These potentially dilutive securities primarily consist of stock options and unvested restricted stock. Anti-dilutive securities are excluded from the calculation. Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss), but excluded from net income as these amounts are recorded directly as an adjustment to stockholders’ equity. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The authoritative guidance is effective for annual reporting periods beginning after December 15, 2016. In July 2015, the FASB extended the effective date of the guidance by one year to December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory — Simplifying the Measurement of Inventory . ASU 2015-11 requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. The Company is evaluating the impact, if any, of adopting this new accounting guidance on its financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations — Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 also requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for reporting periods beginning after December 15, 2015 and is applied prospectively. Early adoption is permitted. The Company is evaluating the impact, if any, of adopting this new accounting guidance on its financial statements.

Acquisitions

Acquisitions	3 Months Ended
	Sep. 30, 2015
Acquisitions
Acquisitions	Note 4. Acquisitions On June 1, 2015, the Company completed the acquisition of Silarx Pharmaceuticals, Inc., a New York corporation, and Stoneleigh Realty, LLC, a New York limited liability company (together “Silarx”), pursuant to the terms and conditions of a Stock Purchase Agreement. Silarx manufactures and markets high-quality liquid pharmaceutical products, including generic prescription and over-the-counter products. Silarx operates within a manufacturing facility located in Carmel, New York. Strategic benefits of the acquisition include an FDA-approved manufacturing facility, research and development expertise and added diversity to Lannett’s portfolio of existing and pipeline products. Pursuant to the terms of the Stock Purchase Agreement, Lannett purchased 100% of the outstanding equity interests of Silarx for cash consideration totaling $42.5 million, subject to a post-closing working capital adjustment. The Company used the acquisition method of accounting to account for this transaction. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at the date of acquisition at their respective fair values using assumptions that are subject to change. Any adjustments, if necessary, will be recorded in the measurement period. The preliminary purchase price has been allocated to the assets acquired and liabilities assumed for the Silarx business as follows: (In thousands) Silarx Pharmaceuticals, Inc. Cash $ Accounts receivable, net of revenue-related reserves Inventories Property, plant and equipment Silarx product rights Silarx in-process research and development Goodwill Other current assets Other assets Total assets acquired Accounts payable ) Income taxes payable ) Total fair value of acquisition $ The amounts allocated to acquired in-process research and development represent an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not yet reached technological feasibility and had no alternative future use. The fair value of in-process research and development was based on the excess earnings method, which utilizes forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges, on a project-by-project basis, and will be tested for impairment in accordance with the Company’s policy for testing indefinite-lived intangible assets. Product rights totaling $10.0 million are comprised of currently marketed products that have an estimated useful life of 15 years. The goodwill of $141 thousand arising from the acquisition consists largely of the value of the employee workforce and the value of products to be developed in the future. The goodwill was assigned to the Company’s only operating segment, generic pharmaceuticals. Goodwill recognized is expected to be fully deductible for income tax purposes. Unaudited Pro Forma financial results The results of Silarx are included in the Company’s Consolidated Financial Statements from the date of acquisition. The pro forma impacts assuming the acquisition had occurred as of July 1, 2013 were not material to the Company’s revenues, net income, and earnings per share.

Accounts Receivable

Accounts Receivable	3 Months Ended
	Sep. 30, 2015
Accounts Receivable
Accounts Receivable	Note 5. Accounts Receivable Accounts receivable consisted of the following components at September 30, 2015 and June 30, 2015: (In thousands) September 30, 2015 June 30, 2015 Gross accounts receivable $ $ Less Chargebacks reserve ) ) Less Rebates reserve ) ) Less Returns reserve ) ) Less Other deductions ) ) Less Allowance for doubtful accounts ) ) Accounts receivable, net $ $ For the three months ended September 30, 2015, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns, and other deductions of $88.6 million, $27.8 million, $3.7 million, and $6.4 million, respectively. For the three months ended September 30, 2014, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns, and other deductions of $77.9 million, $18.6 million, $4.1 million, and $9.0 million, respectively.

Inventories

Inventories	3 Months Ended
	Sep. 30, 2015
Inventories
Inventories	Note 6. Inventories Inventories at September 30, 2015 and June 30, 2015 consisted of the following: (In thousands) September 30, 2015 June 30, 2015 Raw Materials $ $ Work-in-process Finished Goods Packaging Supplies Total $ $ The reserve for excess and obsolete inventory was $4.5 million and $5.0 million at September 30, 2015 and June 30, 2015, respectively.

Property, Plant and Equipment

Property, Plant and Equipment	3 Months Ended
	Sep. 30, 2015
Property, Plant and Equipment
Property, Plant and Equipment	Note 7. Property, Plant and Equipment Property, plant and equipment at September 30, 2015 and June 30, 2015 consisted of the following: (In thousands) Useful Lives September 30, 2015 June 30, 2015 Land — $ $ Building and improvements 10 - 39 years Machinery and equipment 5 - 10 years Furniture and fixtures 5 - 7 years Construction in progress — Property, plant and equipment, gross Less accumulated depreciation ) ) Property, plant and equipment, net $ $ During the three months ended September 30, 2015 and 2014, the Company had no impairment charges. Property, plant and equipment, net included amounts held in foreign countries in the amount of $1.1 million and $1.2 million at September 30, 2015 and June 30, 2015, respectively.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Sep. 30, 2015
Fair Value Measurements
Fair Value Measurements	Note 8. Fair Value Measurements The Company’s financial instruments recorded in the Consolidated Balance Sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable, accrued expenses, and debt obligations. Included in cash and cash equivalents are certificates of deposit with maturities less than or equal to three months at the date of purchase and money market funds. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their estimated fair values based upon the short-term nature of their maturity dates. The carrying amount of the Company’s debt obligations approximates fair value based on current interest rates available to the Company on similar debt obligations. The Company follows the authoritative guidance of ASC Topic 820 “Fair Value Measurements and Disclosures.” Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial assets and liabilities measured at fair value are entirely within Level 1 of the hierarchy as defined below: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2 — Directly or indirectly observable inputs, other than quoted prices, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 — Unobservable inputs that are supported by little or no market activity and that are material to the fair value of the asset or liability. Financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation are examples of Level 3 assets and liabilities. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company’s financial assets and liabilities measured at fair value at September 30, 2015 and June 30, 2015, were as follows: September 30, 2015 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Investment Securities $ $ — $ — $ June 30, 2015 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Investment Securities $ $ — $ — $

Investment Securities

Investment Securities	3 Months Ended
	Sep. 30, 2015
Investment Securities
Investment Securities	Note 9. Investment Securities The Company uses the specific identification method to determine the cost of securities sold, which consisted entirely of securities classified as trading. The Company had a net loss on investment securities of $1.2 million during the three months ended September 30, 2015, which was primarily due to an unrealized loss related to securities still held at September 30, 2015 of $1.2 million. The Company had a net gain on investment securities of $15 thousand during the three months ended September 30, 2014, which included an unrealized loss related to securities still held at September 30, 2014 of $81 thousand.

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Sep. 30, 2015
Goodwill and Intangible Assets
Goodwill and Intangible Assets	Note 10. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the three months ended September 30, 2015 are as follows: (In thousands) Generic Pharmaceuticals Balance at June 30, 2015 $ Goodwill acquired — Impairments — Balance at September 30, 2015 $ Intangible assets, net as of September 30, 2015 and June 30, 2015, consisted of the following: Gross Carrying Amount Accumulated Amortization Intangible Assets, Net (In thousands) Weighted Avg. Life (Yrs.) September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 Definite-lived: Cody Labs import license 15 ) ) Silarx product rights 15 ) ) Other product rights 14 ) ) Total definite-lived ) ) Indefinite-lived: Other product rights — — — Silarx in-process research and development — — — Total indefinite-lived — — Total intangible assets, net $ $ $ ) $ ) $ $ For the three months ended September 30, 2015 and 2014, the Company incurred amortization expense of approximately $187 thousand and $20 thousand, respectively. There were no impairments related to intangible assets during each of the three months ended September 30, 2015 and 2014. Future annual amortization expense consisted of the following as of September 30, 2015: (In thousands) Fiscal Year Ending June 30, Annual Amortization Expense 2016 $ 2017 2018 2019 2020 Thereafter $ The amounts above do not include the product line covered by the ANDA purchased in August 2009 for $149 thousand and ANDAs purchased in September 2014 for $300 thousand. Amortization on these assets will begin when the Company begins shipping the product.

Bank Line of Credit

Bank Line of Credit	3 Months Ended
	Sep. 30, 2015
Bank Line of Credit
Bank Line of Credit	Note 11. Bank Line of Credit In December 2013, the Company entered into a credit agreement (the “Credit Agreement”) with Citibank, N.A., as administrative agent, and another financial institution. Any loans under the Credit Agreement will bear interest at either a “Eurodollar Rate” or a “Base Rate” plus a specified margin. The Company is also required to pay a commitment fee on any undrawn commitments under the Credit Agreement ranging from 0.2% - 0.3% per annum according to the average daily balance of borrowings under the agreement. The Credit Agreement is collateralized by substantially all of the Company’s assets. In connection with securing the Credit Agreement, the Company repaid substantially all of its outstanding debt. See Note 12 “Long-Term Debt” for more information. On April 21, 2015, the Company entered into a First Amendment to the Credit Agreement (the “First Amendment”), pursuant to which the parties amended the terms of the Credit Agreement originally entered into on December 18, 2013 with Citibank, N.A., as administrative agent and certain other financial institutions party thereto as lenders. The First Amendment increases the Company’s revolving line of credit from $50.0 million to $120.0 million (the “Credit Facility”), consisting of revolving loans, swingline loans not to exceed an aggregate principal amount of $5.0 million and letters of credit not to exceed a maximum aggregate principal amount of $5.0 million. The First Amendment also includes an accordion feature that will allow the Company to increase the Credit Facility by a total of up to an additional $30.0 million, subject to securing additional commitments from existing lenders or new lending institutions. The First Amendment also modified certain financial covenants, most notably permitted acquisitions and capital expenditures. Permitted acquisitions increased from $100.0 million to $200.0 million individually and in the aggregate for each fiscal year. Total permitted acquisitions over the remaining term of the Credit Agreement were increased to $600.0 million. Capital expenditure covenants were also increased over the term of the Credit Agreement based on certain leverage ratios, as defined. As of September 30, 2015, the Company had $120.0 million available under the Credit Agreement. The Credit Agreement contains representations and warranties, affirmative, negative and financial covenants, and events of default, applicable to the Company and its subsidiaries which are customary for credit facilities of this type. As of September 30, 2015, the Company was in compliance with all financial covenants.

Long-Term Debt

Long-Term Debt	3 Months Ended
	Sep. 30, 2015
Long-Term Debt
Long-Term Debt	Note 12. Long-Term Debt Long-term debt consisted of the following: September 30, June 30, (In thousands) 2015 2015 First National Bank of Cody mortgage $ $ Less current portion Long-term debt $ $ The Company is the primary beneficiary to a VIE called Realty. The VIE owns land and a building which is leased to Cody Labs. A mortgage loan with First National Bank of Cody has been consolidated in the Company’s financial statements, along with the related land and building. The mortgage requires monthly principal and interest payments of $15 thousand. As of September 30, 2015 and June 30, 2015, the effective interest rate was 4.5%. The mortgage is collateralized by the land and building with a net book value of $1.5 million. Long-term debt amounts due for the twelve month periods ending September 30 were as follows: Amounts Payable (In thousands) to Institutions 2016 $ 2017 2018 2019 2020 Thereafter Total $

Legal and Regulatory Matters

Legal and Regulatory Matters	3 Months Ended
	Sep. 30, 2015
Legal And Regulatory Matters
Legal and Regulatory Matters	Note 13. Legal and Regulatory Matters Richard Asherman On April 16, 2013, Richard Asherman (“Asherman”), the former President of and a member in Realty, filed a complaint (“Complaint”) in Wyoming state court against the Company and Cody Labs. At the same time, he also filed an application for a temporary restraining order to enjoin certain operations at Cody Labs, claiming, among other things, that Cody Labs is in violation of certain zoning laws and that Cody Labs is required to increase the level of its property insurance and to secure performance bonds for work being performed at Cody Labs. Mr. Asherman claims Cody Labs is in breach of his employment agreement and is required to pay him severance under his employment agreement, including 18 months of base salary, vesting of unvested stock options and continuation of benefits. The Company estimates that the aggregate value of the claimed severance benefits is approximately $350 thousand to $400 thousand, plus the value of any stock options that he can prove was lost as a result of his termination. Mr. Asherman also asserts that the Company is in breach of the Realty Operating Agreement and, among other requested remedies, he seeks to have the Company (i) pay him 50% of the value of 1.66 acres of land that Realty previously agreed to donate to an economic development entity associated with the City of Cody, Wyoming, which contemplated transaction has since been avoided and cancelled. Although Mr. Asherman originally sought to require that Lannett acquire his interest in Realty for an unspecified price and/or to dissolve Realty, those claims have been dismissed. The Company strongly disputes the claims in the Complaint. If Mr. Asherman is successful on his claim for breach of his employment agreement, he would be entitled to his contractual severance — 18 months salary plus the vesting of any stock options which Mr. Asherman can prove were capable of being exercised and were actually exercised within three months of his termination. The Company does not believe that he is entitled to any payments with respect to the options, plus a continuation of benefits. At this time the Company is unable to reasonably estimate a range or aggregate dollar amount of Mr. Asherman’s claims or of any potential loss, if any, to the Company. The Company does not believe that the ultimate resolution of the matter will have a significant impact on the Company’s financial position, results of operations or cash flows. Connecticut Attorney General Inquiry In July 2014, the Company received interrogatories and subpoena from the State of Connecticut Office of the Attorney General concerning its investigation into pricing of digoxin. According to the subpoena, the Connecticut Attorney General is investigating whether anyone engaged in any activities that resulted in (a) fixing, maintaining or controlling prices of digoxin or (b) allocating and dividing customers or territories relating to the sale of digoxin in violation of Connecticut antitrust law. The Company maintains that it acted in compliance with all applicable laws and regulations and continues to cooperate with the Connecticut Attorney General’s investigation. Federal Investigation into the Generic Pharmaceutical Industry In fiscal year 2015, the Company and certain affiliated individuals each were served with a grand jury subpoena relating to a federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act. The subpoenas request corporate documents of the Company relating to corporate, financial, and employee information, communications or correspondence with competitors regarding the sale of generic prescription medications, and the marketing, sale, or pricing of certain products, generally for the period of 2005 through the dates of the subpoenas. Based on reviews performed to date by outside counsel, the Company currently believes that it has acted in compliance with all applicable laws and regulations and continues to cooperate with the federal investigation. Patent Infringement (Paragraph IV Certification) There is substantial litigation in the pharmaceutical industry with respect to the manufacture, use, and sale of new products which are the subject of conflicting patent and intellectual property claims. Certain of these claims relate to paragraph IV certifications, which allege that an innovator patent is invalid or would not be infringed upon by the manufacture, use, or sale of the new drug. Zomig® The Company filed with the Food and Drug Administration an Abbreviated New Drug Application (ANDA) No. 206350, along with a paragraph IV certification, alleging that the two patents associated with the Zomig® nasal spray product (U.S. Patent No. 6,750,237 and U.S. Patent No. 67,220,767) are invalid. In July 2014, AstraZeneca AB, AstraZeneca UK Limited, and Impax Laboratories, Inc. filed two patent infringement lawsuits in the United States District Court for the District of Delaware, alleging that the Company’s filing of ANDA No. 206350 constitutes an act of patent infringement and seeking a declaration that the two patents at issue are valid and infringed. In September 2014, the Company filed a motion to dismiss one patent infringement lawsuit for lack of standing and responded to the second lawsuit by denying that any valid patent claim would be infringed. In the second lawsuit, the Company also counterclaimed for a declaratory judgment that the patent claims are invalid and not infringed. The Court has consolidated the two actions and denied the motion to dismiss the first action without prejudice. In July 2015, the Company filed with the United States Patent and Trademark Office (USPTO) a Petition for Inter Partes Review of each of the patents in suit seeking to reject as invalid all claims of the patents in suit. Thalomid® The Company filed with the Food and Drug Administration an Abbreviated New Drug Application (ANDA) No. 206601, along with a paragraph IV certification, alleging that the fifteen patents associated with the Thalomid drug product (U.S. Patent Nos. 6,045,501; 6,315,720; 6,561,976; 6,561,977; 6,755,784; 6,869,399; 6,908,432; 7,141,018; 7,230,012; 7,435,745; 7,874,984; 7,959,566; 8,204,763; 8,315,886; 8,589,188 and 8,626,53) are invalid, unenforceable and/or not infringed. On January 30, 2015, Celgene Corporation and Children’s Medical Center Corporation filed a patent infringement lawsuit in the United States District Court for the District of New Jersey, alleging that the Company’s filing of ANDA No. 206601 constitutes an act of patent infringement and seeking a declaration that the patents at issue are valid and infringed. The Company has responded to the complaint by filing a motion challenging personal jurisdiction. The court has decided to allow limited discovery on the issue of personal jurisdiction and has administratively terminated the motion while discovery is taken on the issue. Dilaudid® The Company filed with the Food and Drug Administration an Abbreviated New Drug Application (ANDA) No. 207108, along with a paragraph IV certification, alleging that US Patent 6,589,960 associated with the Dilaudid® (hydromorphone oral solution) would not be infringed by the Company’s proposed hydromorphone oral solution product and/or that the patent is invalid. On August 8, 2015, Purdue Pharmaceutical Products L.P, Purdue Pharma L.P, and Purdue Pharma Technologies Inc. filed a patent infringement lawsuit in the United States District Court for the District of New Jersey, alleging that the Company’s filing of ANDA No. 207108 constitutes an act of patent infringement and seeking a declaration that the patent at issue was infringed by the submission of ANDA No, 207108. The Company is currently in the process of responding to the complaint. Although the Company cannot currently predict the length or outcome of pargraph IV litigation, legal expenses associated with these lawsuits could have a significant impact on the financial position, results of operations and cash flows of the Company. Other Litigation Matters The Company is also subject to various legal proceedings arising out of the normal course of its business including, but not limited to, product liability, intellectual property, patent infringement claims, and antitrust matters. It is not possible to predict the outcome of these various proceedings. An adverse determination in any of these proceedings in the future might have a significant impact on the financial position, results of operations and cash flows of the Company.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Sep. 30, 2015
Commitments and Contingencies
Commitments and Contingencies	Note 14. Commitments and Contingencies Leases The Company leases certain manufacturing and office equipment, in the ordinary course of business, with initial lease terms not greater than 12 months. These assets are typically renewed annually. Rental and lease expense was not material for all periods presented.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	3 Months Ended
	Sep. 30, 2015
Accumulated Other Comprehensive Loss.
Accumulated Other Comprehensive Loss	Note 15. Accumulated Other Comprehensive Loss The Company’s Accumulated Other Comprehensive Loss was comprised of the following components as of September 30, 2015 and 2014: (In thousands) September 30, 2015 September 30, 2014 Foreign Currency Translation Beginning Balance, July 1 $ ) $ ) Net gain (loss) on foreign currency translation (net of tax of $0 and $0) ) — Reclassifications to net income (net of tax of $0 and $0) — — Other comprehensive income (loss), net of tax ) — Ending Balance, September 30 ) ) Total Accumulated Other Comprehensive Loss $ ) $ )

Earnings Per Common Share

Earnings Per Common Share	3 Months Ended
	Sep. 30, 2015
Earnings Per Common Share
Earnings Per Common Share	Note 16. Earnings Per Common Share A dual presentation of basic and diluted earnings per common share is required on the face of the Company’s Consolidated Statement of Operations as well as a reconciliation of the computation of basic earnings per common share to diluted earnings per common share. Basic earnings per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net income attributable to Lannett Company, Inc. by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed using the treasury stock method and includes the effect of potential dilution from the exercise of outstanding stock options and treats unvested restricted stock as if it were vested. Potentially dilutive securities have been excluded in the weighted average number of common shares used for the calculation of earnings per share in periods of net loss because the effect of such securities would be anti-dilutive. A reconciliation of the Company’s basic and diluted earnings per common share was as follows: Three Months Ended September 30, (In thousands, except share and per share data) 2015 2014 Net Income Attributable to Lannett Company, Inc. $ $ Basic weighted average common shares outstanding Effect of potentially dilutive options and restricted stock awards Diluted weighted average common shares outstanding Earnings per common share attributable to Lannett Company, Inc.: Basic $ $ Diluted $ $ The number of anti-dilutive shares that have been excluded in the computation of diluted earnings per share for the three months ended September 30, 2015 and 2014 were 139 thousand and 436 thousand, respectively.

Share-based Compensation

Share-based Compensation	3 Months Ended
	Sep. 30, 2015
Share-based Compensation
Share-based Compensation	Note 17. Share-based Compensation At September 30, 2015, the Company had four share-based employee compensation plans (the “2003 Plan”, the 2006 Long-term Incentive Plan (“LTIP”), or “2006 LTIP”, the 2011 LTIP and the 2014 LTIP). Together these plans authorized an aggregate total of 8.1 million shares to be issued. The plans have a total of 2.3 million shares available for future issuances. The Company issues share-based compensation awards with a vesting period ranging up to 3 years and a maximum contractual term of 10 years. The Company issues new shares of stock when stock options are exercised. As of September 30, 2015, there was $14.1 million of total unrecognized compensation cost related to non-vested share-based compensation awards. That cost is expected to be recognized over a weighted average period of 2.2 years. Stock Options The Company measures share-based compensation cost for options using the Black-Scholes option pricing model. The following table presents the weighted average assumptions used to estimate fair values of the stock options granted during the three months ended September 30, 2015 and 2014, the estimated annual forfeiture rates used to recognize the associated compensation expense and the weighted average fair value of the options granted: September 30, 2015 September 30, 2014 Risk-free interest rate % % Expected volatility % % Expected dividend yield % % Forfeiture rate % % Expected term (in years) 5.2 years 5.5 years Weighted average fair value $ $ Expected volatility is based on the historical volatility of the price of our common shares during the historical period equal to the expected term of the option. The Company uses historical information to estimate the expected term, which represents the period of time that options granted are expected to be outstanding. The risk-free rate for the period equal to the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The forfeiture rate assumption is the estimated annual rate at which unvested awards are expected to be forfeited during the vesting period. This assumption is based on our actual forfeiture rate on historical awards. Periodically, management will assess whether it is necessary to adjust the estimated rate to reflect changes in actual forfeitures or changes in expectations. Additionally, the expected dividend yield is equal to zero, as the Company has not historically issued, and has no immediate plans to issue, a dividend. A stock option roll-forward as of September 30, 2015 and changes during the three months then ended, is presented below: Weighted Weighted- Average Average Aggregate Remaining Exercise Intrinsic Contractual (In thousands, except for weighted average price and life data) Awards Price Value Life (yrs.) Outstanding at July 1, 2015 $ Granted $ Exercised ) $ $ Forfeited, expired or repurchased ) $ Outstanding at September 30, 2015 $ $ Vested and expected to vest at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ Restricted Stock The Company measures restricted stock compensation costs based on the stock price at the grant date less an estimate for expected forfeitures. The annual forfeiture rate used to calculate compensation expense was 6.5% for the three months ended September 30, 2015 and 2014. A summary of restricted stock awards as of September 30, 2015 and changes during the three months then ended, is presented below: (In thousands, except for weighted average price data) Awards Weighted Average Grant - date Fair Value Aggregate Intrinsic Value Non-vested at July 1, 2015 Granted Vested ) $ Forfeited ) Non-vested at September 30, 2015 $ Employee Stock Purchase Plan In February 2003, the Company’s stockholders approved an Employee Stock Purchase Plan (“ESPP”). Employees eligible to participate in the ESPP may purchase shares of the Company’s stock at 85% of the lower of the fair market value of the common stock on the first day of the calendar quarter, or the last day of the calendar quarter. Under the ESPP, employees can authorize the Company to withhold up to 10% of their compensation during any quarterly offering period, subject to certain limitations. The ESPP was implemented on April 1, 2003 and is qualified under Section 423 of the Internal Revenue Code. The Board of Directors authorized an aggregate total of 1.1 million shares of the Company’s common stock for issuance under the ESPP. During the three months ended September 30, 2015 and 2014, 5 thousand shares and 3 thousand shares were issued under the ESPP, respectively. As of September 30, 2015, 442 thousand total cumulative shares have been issued under the ESPP. The following table presents the allocation of share-based compensation costs recognized in the Consolidated Statements of Operations by financial statement line item: Three Months Ended September 30, (In thousands) 2015 2014 Selling, general and administrative $ $ Research and development Cost of sales Total $ $ Tax benefit at statutory rate $ $

Employee Benefit Plan

Employee Benefit Plan	3 Months Ended
	Sep. 30, 2015
Employee Benefit Plan
Employee Benefit Plan	Note 18. Employee Benefit Plan The Company has a 401k defined contribution plan (the “Plan”) covering substantially all employees. Pursuant to the Plan provisions, the Company is required to make matching contributions equal to 50% of each employee’s contribution, not to exceed 4% of the employee’s compensation for the Plan year. Contributions to the Plan during the three months ended September 30, 2015 and 2014 were approximately $250 thousand and $214 thousand, respectively.

Income Taxes

Income Taxes	3 Months Ended
	Sep. 30, 2015
Income Taxes
Income Taxes	Note 19. Income Taxes The Company uses the liability method to account for income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense/(benefit) is the result of changes in deferred tax assets and liabilities. The federal, state and local income tax expense for the three months ended September 30, 2015 and 2014 was $17.1 million and $19.8 million, respectively. The effective tax rates for the three months ended September 30, 2015 and 2014 were 33.9% and 36.2%, respectively. The effective tax rate for the three months ended September 30, 2015 was lower compared to the three months ended September 30, 2014 primarily due to the effect of changes in local tax laws and higher domestic manufacturing deductions recorded in Fiscal 2016. The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2015 and June 30, 2015, the Company reported total unrecognized benefits of $578 thousand. As a result of the positions taken during the period, the Company has not recorded any interest and penalties for the period ended September 30, 2015 in the statement of operations and no cumulative interest and penalties have been recorded either in the Company’s statement of financial position as of September 30, 2015 and June 30, 2015. The Company will recognize interest accrued on unrecognized tax benefits in interest expense and any related penalties in operating expenses. The Company does not believe that the total unrecognized tax benefits will significantly increase or decrease in the next twelve months. The Company files income tax returns in the United States federal jurisdiction, Pennsylvania, and New Jersey. The Company’s tax returns for Fiscal Year 2011 and prior generally are no longer subject to review as such years generally are closed. The Company believes that an unfavorable resolution for open tax years would not be material to the financial position of the Company.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Sep. 30, 2015
Related Party Transactions
Related Party Transactions	Note 20. Related Party Transactions The Company had sales of $337 thousand and $351 thousand during the three months ended September 30, 2015 and 2014, respectively, to a generic distributor, Auburn Pharmaceutical Company (“Auburn”). Jeffrey Farber, Chairman of the Board, is the owner of Auburn. Accounts receivable includes amounts due from Auburn of $312 thousand and $727 thousand at September 30, 2015 and June 30, 2015, respectively. In the Company’s opinion, the terms of these transactions were not more favorable to Auburn than would have been to a non-related party.

Material Contracts with Supplie

Material Contracts with Suppliers	3 Months Ended
	Sep. 30, 2015
Material Contracts with Suppliers
Material Contracts with Suppliers	Note 21. Material Contracts with Suppliers Jerome Stevens Pharmaceuticals Distribution Agreement: The Company’s primary finished goods inventory supplier is JSP, in Bohemia, New York. Purchases of finished goods inventory from JSP accounted for approximately 65% and 67% of the Company’s inventory purchases in the three months ended September 30, 2015 and 2014, respectively. On August 19, 2013, the Company entered into an agreement with JSP to extend its initial contract to continue as the exclusive distributor in the United States of three JSP products: Butalbital, Aspirin, Caffeine with Codeine Phosphate Capsules USP; Digoxin Tablets USP; and Levothyroxine Sodium Tablets USP. The amendment to the original agreement extends the initial contract, which was due to expire on March 22, 2014, for five years through March 2019. In connection with the amendment, the Company issued a total of 1.5 million shares of the Company’s common stock to JSP and JSP’s designees. In accordance with its policy related to renewal and extension costs for recognized intangible assets, the Company recorded a $20.1 million expense in cost of sales, which represents the fair value of the shares on August 19, 2013. If the parties agree to a second five year extension from March 23, 2019 to March 23, 2024, the Company is required to issue to JSP or its designees an additional 1.5 million shares of the Company’s common stock. Both Lannett and JSP have the right to terminate the contract if one of the parties does not cure a material breach of the contract within thirty (30) days of notice from the non-breaching party. During the renewal term of the agreement, the Company is required to use commercially reasonable efforts to purchase, in the aggregate, $31 million of products from JSP each year. There is no guarantee that the Company will be able to meet the minimum purchase requirement for Fiscal 2016 and in the future. If the Company does not meet the minimum purchase requirements, JSP’s sole remedy is to terminate the agreement.

Cody Expansion Project

Cody Expansion Project	3 Months Ended
	Sep. 30, 2015
Cody Expansion Project
Cody Expansion Project	Note 22. Cody Expansion Project On December 20, 2012, the Company, through its subsidiaries Realty and Cody, entered into an agreement (the “Agreement”) with the City of Cody, Wyoming (“City of Cody”) and Forward Cody Wyoming, Inc. (“Forward Cody”), an unrelated non-profit corporation, which involves the construction of a building of approximately 24,000 square feet (the “Project”). As part of the Agreement, Cody was obligated to make an additional capital investment in its existing facilities in the amount of $5.2 million and create an additional 45 full time positions within three years starting June 30, 2011; Realty was required to contribute 1.66 acres of land to Forward Cody and enter into a 25 year lease agreement with Forward Cody for the Project. Realty will make annual rent payments totaling $108 thousand beginning on the date a Certificate of Occupancy permit is issued by the City of Cody and the Project is legally available for occupancy. Cody will sublease the property from Realty. Upon the fifth anniversary of occupancy, Realty may, at its discretion, purchase the Project from Forward Cody. The purchase option continues until Realty purchases the Project. Nothing in the Agreement should be deemed to create any relationship between Forward Cody and Realty other than the relationship of landlord and tenant. In June 2014, the Company amended the Agreement including changing the size of the building, eliminating the requirements to contribute any land, and removing Realty as a party to the agreement. Additionally, Cody Labs is required to provide a capital contribution to the project in the amount of $565 thousand. None of the revisions are expected to be material to the Company’s results of operations or financial position. The Company’s 25 year lease with Forward Cody commenced in April 2015.

Pending Acquisition of Kremers

Pending Acquisition of Kremers Urban Pharmaceuticals Inc.	3 Months Ended
	Sep. 30, 2015
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.	Note 23. Pending Acquisition of Kremers Urban Pharmaceuticals Inc. Stock Purchase Agreement On September 2, 2015, Lannett Company, Inc., a Delaware corporation (“Lannett”), entered into an Agreement to acquire Kremers Urban Pharmaceuticals Inc., an Indiana corporation (“Kremers”), pursuant to the terms and conditions of a Stock Purchase Agreement (“Purchase Agreement”) among UCB S.A., a limited liability company organized under the laws of Belgium (“UCB”), UCB Manufacturing, Inc., a Delaware corporation (“UMI” and, together with UCB, the “Seller Parties”), and Lannett. Pursuant to the terms of the Purchase Agreement, Lannett will purchase all of the outstanding capital stock of Kremers for a purchase price of $1.23 billion in cash plus a contingent value payment as described below. Lannett intends to fund the transaction through cash on hand as well as term loan borrowings. The purchase price will be subject to a customary working capital adjustment and will be reduced by any indebtedness and unpaid transaction expenses of Kremers existing at closing. Lannett will also make post-closing contingent value payments to UCB for each year from 2016 through and including 2020, contingent upon Kremers obtaining an AB rating for its methylphenidate hydrochloride extended release product from the United States Food and Drug Administration (“FDA”). Such payments, if any, would be based on the profits realized on sales of the methylphenidate hydrochloride extended release product in excess of an annual net sales threshold. Lannett and Seller Parties have also agreed to jointly make an election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, and under the corresponding provisions of state law, to treat the acquisition as a deemed purchase and sale of assets for income tax purposes. Lannett’s obligation to close the acquisition is conditioned upon Seller Parties’ furnishing executed federal election forms, and Lannett has agreed to reimburse Seller Parties for 50% of the incremental tax cost of making such election, subject to a reimbursement cap of $35 million. The closing of the acquisition is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the absence of any law or order that prohibits, enjoins or restrains the consummation of the acquisition, the accuracy of representations and warranties of the parties (subject to customary materiality and material adverse effect qualifiers), compliance with covenants in all material respects, and the absence of any material adverse effect on the business of Kremers. Following completion of the acquisition, Kremers will be a wholly-owned subsidiary of Lannett. The Company expects to close the transaction during the fourth quarter of calendar 2015. Commitment Letter On September 2, 2015, Lannett signed a commitment letter (the “Commitment Letter”) with Morgan Stanley Senior Funding, Inc. (“MSSF”) and Royal Bank of Canada (“Royal Bank” and, together with MSSF, the “Initial Lenders”), pursuant to which the Initial Lenders have committed to make loans to Lannett in an aggregate amount of up to $1.285 billion in connection with the acquisition of Kremers (the “Credit Facility”). MSSF and RBC Capital Markets will act as the joint lead arrangers and joint bookrunners for the Credit Facility. The Credit Facility consists of up to $1.285 billion of available borrowings under new senior secured credit facilities, which include a $125 million revolving credit facility and a $1.16 billion term loan facility. The Commitment Letter contemplates that the Credit Facility will be reduced in an amount equal to the proceeds of any debt or equity of the Company issued in accordance with the terms of the Commitment Letter. The Credit Facility will be guaranteed by various subsidiaries of Lannett and used, among other things, to pay the purchase price for Kremers under the Purchase Agreement and to fund expenses incurred in connection with the acquisition. The Credit Facility is subject to the negotiation of mutually acceptable definitive documentation, which will include customary representations and warranties, affirmative and negative covenants and events of default, in each case, consistent with the applicable terms of the term sheet. Additionally, the lenders’ obligation to provide the Credit Facility is subject to the satisfaction of specified conditions, including the consummation of the acquisition of Kremers in accordance with the terms of the Purchase Agreement, the execution and delivery by the Company of definitive documentation consistent with the Commitment Letter, the accuracy of specified representations, the absence of specified defaults, the delivery of a certificate on behalf of Lannett with respect to the solvency (on a consolidated basis) of Lannett and its subsidiaries, taken as a whole, immediately after the consummation of the transactions contemplated by the Purchase Agreement, and other customary conditions. On September 24, 2015, the Commitment Letter was amended and restated in its entirety to, among other things, add Citigroup Global Markets Inc. as an Initial Lender, and, together with MSSF and RBC Capital Markets, as a joint lead arranger and joint bookrunner, and to add Citizens Bank, National Association and PNC Bank, National Association as additional financial institutions providing the commitment thereunder.

Summary of Significant Accoun31

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Principles of consolidation	Principles of consolidation The Consolidated Financial Statements include the accounts of Lannett Company, Inc., and its wholly owned subsidiaries, as well as Cody LCI Realty, LLC (“Realty”), a variable interest entity (“VIE”) in which the Company has a 50% ownership interest. Noncontrolling interest in Realty is recorded net of tax as net income attributable to the noncontrolling interest. Additionally, all intercompany accounts and transactions have been eliminated.
Business Combinations	Business Combinations Acquired businesses are accounted for using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective estimated fair values. The fair values and useful lives assigned to each class of assets acquired and liabilities assumed are based on, among other factors, the expected future period of benefit of the asset, the various characteristics of the asset and projected future cash flows. Significant judgment is employed in determining the assumptions utilized as of the acquisition date and for each subsequent measurement period. Accordingly, changes in assumptions described above, could have a material impact on our consolidated results of operations.
Reclassifications	Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.
Use of estimates	Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition and sales deductions for estimated chargebacks, rebates, returns and other adjustments including a provision for the Company’s liability under the Medicare Part D program. Additionally, significant estimates and assumptions are required when determining the fair value of long-lived assets, income taxes, contingencies, and share-based compensation. Because of the inherent subjectivity and complexity involved in these estimates and assumptions, actual results could differ from those estimates.
Foreign currency translation	Foreign currency translation The Consolidated Financial Statements are presented in U.S. Dollars, the reporting currency of the Company. The financial statements of the Company’s foreign subsidiary are maintained in local currency and translated into U.S. dollars at the end of each reporting period. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The adjustments resulting from the use of differing exchange rates are recorded as part of stockholders’ equity in accumulated comprehensive income (loss). Gains and losses resulting from transactions denominated in foreign currencies are recognized in the Consolidated Statements of Operations under Other income (loss). Amounts recorded due to foreign currency fluctuations are immaterial to the Consolidated Financial Statements.
Cash and cash equivalents	Cash and cash equivalents The Company considers all highly liquid investments with original maturities less than or equal to three months at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value, and consist of bank deposits and certificates of deposit that are readily convertible into cash. The Company maintains its cash deposits and cash equivalents at well-known, stable financial institutions. Such amounts frequently exceed insured limits.
Investment securities	Investment securities The Company’s investment securities consist of publicly traded equity securities which are classified as trading investments. Investment securities are recorded at fair value based on quoted market prices from broker or dealer quotations or transparent pricing sources at each reporting date. Gains and losses are included in the Consolidated Statements of Operations under Other income (loss).
Allowance for doubtful accounts	Allowance for doubtful accounts The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time balances are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are determined to be uncollectible.
Inventories	Inventories Inventories are stated at the lower of cost or market determined by the first-in, first-out method. Inventories are regularly reviewed and provisions for excess and obsolete inventory are recorded based primarily on current inventory levels and estimated sales forecasts.
Property, Plant and Equipment	Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the assets’ estimated useful lives. Depreciation expense for the three months ended September 30, 2015 and 2014 was $1.7 million and $1.3 million, respectively.
Intangible Assets	Intangible Assets Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization of definite-lived intangible assets is computed on a straight-line basis over the assets’ estimated useful lives, generally for periods ranging from 10 to 15 years. The Company continually evaluates the reasonableness of the useful lives of these assets. Indefinite-lived intangible assets are not amortized, but instead are tested at least annually for impairment. Costs to renew or extend the term of a recognized intangible asset are expensed as incurred.
Valuation of Long-Lived Assets, including Intangible Assets	Valuation of Long-Lived Assets, including Intangible Assets The Company’s long-lived assets primarily consist of property, plant and equipment and definite and indefinite-lived intangible assets. Property, plant and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances (“triggering events”) indicate that the carrying amount of the asset may not be recoverable. If a triggering event is determined to have occurred, the asset’s carrying value is compared to the future undiscounted cash flows expected to be generated by the asset. If the carrying value exceeds the undiscounted cash flow of the asset, then impairment exists. Indefinite-lived intangible assets are tested for impairment at least annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. An impairment loss is measured as the excess of the asset’s carrying value over its fair value. The judgments made in determining estimated fair values can materially impact our results of operations.
In-Process Research and Development	In-Process Research and Development Amounts allocated to in-process research and development (“IPR&D”) in connection with a business combination are recorded at fair value and are considered indefinite-lived intangible assets subject to the impairment testing in accordance with the Company’s impairment testing policy for indefinite-lived intangible assets. As products in development are approved for sale, amounts will be allocated to product rights and will be amortized over their estimated useful lives. These valuations reflect, among other things, the impact of changes to the development programs, the projected development and regulatory time frames and the current competitive environment. Changes in any of the Company’s assumptions may result in a reduction to the estimated fair value of the IPR&D asset and could result in future impairment charges.
Goodwill	Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is tested for impairment on an annual basis during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company first performs a qualitative assessment to determine if the quantitative impairment test is required. If changes in circumstances indicate an asset may be impaired, the Company performs the quantitative impairment test. In accordance with accounting standards, a two-step quantitative method is used for determining goodwill impairment. In the first step, we determine the fair value of our reporting unit (generic pharmaceuticals). If the net book value of our reporting unit exceeds its fair value, we would then perform the second step of the impairment test which requires allocation of our reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations. Any residual fair value is allocated to goodwill. An impairment charge is recognized only if the implied fair value of our reporting unit’s goodwill is less than its carrying amount.
Segment Information	Segment Information The Company operates in one reportable segment, generic pharmaceuticals. As such, the Company aggregates its financial information for all products. The following table identifies the Company’s net sales by medical indication for the three months ended September 30, 2015 and 2014: (In thousands) Three Months Ended September 30, Medical Indication 2015 2014 Antibiotic $ $ Cardiovascular Gallstone Glaucoma Gout Migraine Muscle Relaxant Obesity Pain Management Thyroid Deficiency Other Total $ $
Customer, Supplier and Product Concentration	Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the three months ended September 30, 2015 and 2014, for certain of the Company’s products, defined as products containing the same active ingredient or combination of ingredients, which accounted for at least 10% of net sales in any of those periods: 2015 2014 Product 1 % % Product 2 % % Product 3 % % The following table presents the percentage of total net sales, for the three months ended September 30, 2015 and 2014, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: 2015 2014 Customer A % % Customer B % % Customer C % % At September 30, 2015 and June 30, 2015, four customers accounted for 82% and 84% of the Company’s net accounts receivable balance, respectively. Credit terms are offered to customers based on evaluations of the customers’ financial condition, and collateral is generally not required. The Company’s primary finished goods inventory supplier is Jerome Stevens Pharmaceuticals, Inc. (“JSP”), in Bohemia, New York. Purchases of finished goods inventory from JSP accounted for approximately 65% and 67% of the Company’s inventory purchases during the three months ended September 30, 2015 and 2014, respectively. See Note 21 “Material Contracts with Suppliers” for more information.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when title and risk of loss have transferred to the customer and provisions for rebates, promotional adjustments, price adjustments, returns, chargebacks, and other potential adjustments are reasonably determinable. The Company also considers all other relevant criteria specified in Securities and Exchange Commission Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition”, in determining when to recognize revenue. Net Sales Adjustments When revenue is recognized a simultaneous adjustment to gross sales is made for chargebacks, rebates, returns, promotional adjustments, and other potential adjustments. These provisions are primarily estimated based on historical experience, future expectations, contractual arrangements with wholesalers and indirect customers, and other factors known to management at the time of accrual. Accruals for provisions are presented in the Consolidated Financial Statements as a reduction to gross sales with the corresponding reserve presented as a reduction of accounts receivable or included as rebates payable, depending on the nature of the reserve. The reserves, presented as a reduction of accounts receivable, totaled $70.0 million and $69.4 million at September 30, 2015 and June 30, 2015, respectively. Rebates payable at September 30, 2015 and June 30, 2015 included $11.5 million and $7.6 million, respectively, for certain rebate programs, primarily related to Medicare Part D and Medicaid, and certain sales allowances and other adjustments paid to indirect customers.
Cost of Sales, including amortization of intangibles	Cost of Sales, including amortization of intangibles Cost of sales includes all costs related to bringing products to their final selling destination, which includes direct and indirect costs, such as direct material, labor, and overhead expenses. Additionally, cost of sales includes product royalties, depreciation, amortization and costs to renew or extend recognized intangible assets, freight charges and other shipping and handling expenses. Product royalties included in cost of sales for the three months ended September 30, 2015 and 2014 were $1.3 million and $42 thousand, respectively.
Research and Development	Research and Development Research and development costs are expensed as incurred, including all production costs until a drug candidate is approved by the Food and Drug Administration (“FDA”). Research and development expenses include costs associated with internal projects as well as costs associated with third-party research and development contracts.
Contingencies	Contingencies Loss contingencies, including litigation-related contingencies, are included in the Consolidated Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees related to litigation matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative line item.
Share-based Compensation	Share-based Compensation Share-based compensation costs are recognized over the vesting period, using a straight-line method, based on the fair value of the instrument on the date of grant less an estimate for expected forfeitures. The Company uses the Black-Scholes valuation model to determine the fair value of stock options and the stock price on the grant date to value restricted stock. The Black-Scholes valuation model includes various assumptions, including the expected volatility, the expected life of the award, dividend yield, and the risk-free interest rate. These assumptions involve inherent uncertainties based on market conditions which are generally outside the Company’s control. Changes in these assumptions could have a material impact on share-based compensation costs recognized in the financial statements.
Income Taxes	Income Taxes The Company uses the asset and liability method to account for income taxes as prescribed by Accounting Standards Codification (“ASC”) 740, Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense (benefit) is the result of changes in deferred tax assets and liabilities. Deferred income tax assets and liabilities are adjusted to recognize the effects of changes in tax laws or enacted tax rates in the period during which they are signed into law. The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative standards issued by the Financial Accounting Standards Board (“FASB”) also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The factors used to assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Under ASC 740, Income Taxes, a valuation allowance is required when it is more likely than not that all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings.
Earnings Per Common Share	Earnings Per Common Share Basic earnings per common share attributable to Lannett Company, Inc. is computed by dividing net income attributable to Lannett Company, Inc. common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings per common share attributable to Lannett Company, Inc. is computed by dividing net income attributable to Lannett Company, Inc. common stockholders by the weighted average number of shares outstanding during the period including additional shares that would have been outstanding related to potentially dilutive securities. These potentially dilutive securities primarily consist of stock options and unvested restricted stock. Anti-dilutive securities are excluded from the calculation.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss), but excluded from net income as these amounts are recorded directly as an adjustment to stockholders’ equity.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The authoritative guidance is effective for annual reporting periods beginning after December 15, 2016. In July 2015, the FASB extended the effective date of the guidance by one year to December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory — Simplifying the Measurement of Inventory . ASU 2015-11 requires inventory to be subsequently measured using the lower of cost and net realizable value, thereby eliminating the market value approach. Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 and is applied prospectively. Early adoption is permitted. The Company is evaluating the impact, if any, of adopting this new accounting guidance on its financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations — Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 also requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for reporting periods beginning after December 15, 2015 and is applied prospectively. Early adoption is permitted. The Company is evaluating the impact, if any, of adopting this new accounting guidance on its financial statements.

Summary of Significant Accoun32

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Schedule of the Company's net sales by medical indication	(In thousands) Three Months Ended September 30, Medical Indication 2015 2014 Antibiotic $ $ Cardiovascular Gallstone Glaucoma Gout Migraine Muscle Relaxant Obesity Pain Management Thyroid Deficiency Other Total $ $
Summary of products which accounted for at least 10% of net sales	2015 2014 Product 1 % % Product 2 % % Product 3 % %
Summary of customers which accounted for at least 10% of net sales	2015 2014 Customer A % % Customer B % % Customer C % %

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Sep. 30, 2015
Acquisitions
Schedule of preliminary purchase price allocated to assets acquired and liabilities assumed	(In thousands) Silarx Pharmaceuticals, Inc. Cash $ Accounts receivable, net of revenue-related reserves Inventories Property, plant and equipment Silarx product rights Silarx in-process research and development Goodwill Other current assets Other assets Total assets acquired Accounts payable ) Income taxes payable ) Total fair value of acquisition $

Accounts Receivable (Tables)

Accounts Receivable (Tables)	3 Months Ended
	Sep. 30, 2015
Accounts Receivable
Schedule of accounts receivable	(In thousands) September 30, 2015 June 30, 2015 Gross accounts receivable $ $ Less Chargebacks reserve ) ) Less Rebates reserve ) ) Less Returns reserve ) ) Less Other deductions ) ) Less Allowance for doubtful accounts ) ) Accounts receivable, net $ $

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Sep. 30, 2015
Inventories
Schedule of Inventories	(In thousands) September 30, 2015 June 30, 2015 Raw Materials $ $ Work-in-process Finished Goods Packaging Supplies Total $ $

Property, Plant and Equipment (

Property, Plant and Equipment (Tables)	3 Months Ended
	Sep. 30, 2015
Property, Plant and Equipment
Schedule of property, plant and equipment	(In thousands) Useful Lives September 30, 2015 June 30, 2015 Land — $ $ Building and improvements 10 - 39 years Machinery and equipment 5 - 10 years Furniture and fixtures 5 - 7 years Construction in progress — Property, plant and equipment, gross Less accumulated depreciation ) ) Property, plant and equipment, net $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Sep. 30, 2015
Fair Value Measurements
Schedule of financial assets and liabilities measured at fair value on a recurring basis	September 30, 2015 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Investment Securities $ $ — $ — $ June 30, 2015 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Investment Securities $ $ — $ — $

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Sep. 30, 2015
Goodwill and Intangible Assets
Schedule of changes in the carrying amount of goodwill	(In thousands) Generic Pharmaceuticals Balance at June 30, 2015 $ Goodwill acquired — Impairments — Balance at September 30, 2015 $
Summary of intangible assets, net	Gross Carrying Amount Accumulated Amortization Intangible Assets, Net (In thousands) Weighted Avg. Life (Yrs.) September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 Definite-lived: Cody Labs import license 15 ) ) Silarx product rights 15 ) ) Other product rights 14 ) ) Total definite-lived ) ) Indefinite-lived: Other product rights — — — Silarx in-process research and development — — — Total indefinite-lived — — Total intangible assets, net $ $ $ ) $ ) $ $
Summary of future annual amortization expense	(In thousands) Fiscal Year Ending June 30, Annual Amortization Expense 2016 $ 2017 2018 2019 2020 Thereafter $

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Sep. 30, 2015
Long-Term Debt
Summary of long-term debt	September 30, June 30, (In thousands) 2015 2015 First National Bank of Cody mortgage $ $ Less current portion Long-term debt $ $
Summary of long-term debt amounts due	Amounts Payable (In thousands) to Institutions 2016 $ 2017 2018 2019 2020 Thereafter Total $

Accumulated Other Comprehensi40

Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Sep. 30, 2015
Accumulated Other Comprehensive Loss.
Schedule of Accumulated Other Comprehensive Income (Loss)	(In thousands) September 30, 2015 September 30, 2014 Foreign Currency Translation Beginning Balance, July 1 $ ) $ ) Net gain (loss) on foreign currency translation (net of tax of $0 and $0) ) — Reclassifications to net income (net of tax of $0 and $0) — — Other comprehensive income (loss), net of tax ) — Ending Balance, September 30 ) ) Total Accumulated Other Comprehensive Loss $ ) $ )

Earnings Per Common Share (Tabl

Earnings Per Common Share (Tables)	3 Months Ended
	Sep. 30, 2015
Earnings Per Common Share
Summary of reconciliation of the Company's basic and diluted earnings per common share	Three Months Ended September 30, (In thousands, except share and per share data) 2015 2014 Net Income Attributable to Lannett Company, Inc. $ $ Basic weighted average common shares outstanding Effect of potentially dilutive options and restricted stock awards Diluted weighted average common shares outstanding Earnings per common share attributable to Lannett Company, Inc.: Basic $ $ Diluted $ $

Share-based Compensation (Table

Share-based Compensation (Tables)	3 Months Ended
	Sep. 30, 2015
Share-based Compensation
Schedule of weighted average assumptions used to estimate fair values of the stock options granted and the estimated annual forfeiture rates used to recognize the associated compensation expense and the weighted average fair value of the options granted	September 30, 2015 September 30, 2014 Risk-free interest rate % % Expected volatility % % Expected dividend yield % % Forfeiture rate % % Expected term (in years) 5.2 years 5.5 years Weighted average fair value $ $
Summary of stock option award activity	Weighted Weighted- Average Average Aggregate Remaining Exercise Intrinsic Contractual (In thousands, except for weighted average price and life data) Awards Price Value Life (yrs.) Outstanding at July 1, 2015 $ Granted $ Exercised ) $ $ Forfeited, expired or repurchased ) $ Outstanding at September 30, 2015 $ $ Vested and expected to vest at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $
Summary of nonvested restricted stock awards	(In thousands, except for weighted average price data) Awards Weighted Average Grant - date Fair Value Aggregate Intrinsic Value Non-vested at July 1, 2015 Granted Vested ) $ Forfeited ) Non-vested at September 30, 2015 $
Schedule of allocation of share-based compensation costs recognized in the Consolidated Statements of Operations by financial statement line item	Three Months Ended September 30, (In thousands) 2015 2014 Selling, general and administrative $ $ Research and development Cost of sales Total $ $ Tax benefit at statutory rate $ $

Summary of Significant Accoun43

Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Property, Plant and Equipment
Depreciation expense	$ 1.7	$ 1.3
Cody LCI Realty LLC ("Realty")
Principles of consolidation
Ownership percentage in VIE	50.00%

Summary of Significant Accoun44

Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Jun. 30, 2015
Intangible assets
Indefinite-lived intangible asset	$ 18,449	$ 18,449
Minimum
Intangible assets
Estimated useful lives	10 years
Maximum
Intangible assets
Estimated useful lives	15 years

Summary of Significant Accoun45

Summary of Significant Accounting Policies (Details 3) $ in Thousands	3 Months Ended
	Sep. 30, 2015USD ($)item	Sep. 30, 2014USD ($)
Segment information
Number of reportable segments | item	1
Medical Indication Information
Total	$ 106,433	$ 93,387
Antibiotic
Medical Indication Information
Total	2,727	3,003
Cardiovascular
Medical Indication Information
Total	8,303	18,939
Gallstone
Medical Indication Information
Total	19,972	11,761
Glaucoma
Medical Indication Information
Total	6,822	4,691
Gout
Medical Indication Information
Total	64	2,299
Migraine
Medical Indication Information
Total	5,542	5,795
Muscle Relaxant
Medical Indication Information
Total	1,661	340
Obesity
Medical Indication Information
Total	979	915
Pain Management
Medical Indication Information
Total	8,133	6,655
Thyroid Deficiency
Medical Indication Information
Total	41,102	33,346
Other
Medical Indication Information
Total	$ 11,128	$ 5,643

Summary of Significant Accoun46

Summary of Significant Accounting Policies (Details 4) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2015USD ($)item	Sep. 30, 2014USD ($)	Jun. 30, 2015USD ($)item
Concentration risk
Concentration risk customers | item	4		4
Revenue recognition
Reserves, net of accounts receivable	$ 70,000		$ 69,400
Rebates payable	11,458		$ 7,553
Cost of Sales
Product royalties	$ 1,300	$ 42
Net sales | Products | Product 1
Concentration risk
Concentration risk (as a percent)	39.00%	36.00%
Net sales | Products | Product 2
Concentration risk
Concentration risk (as a percent)	19.00%	13.00%
Net sales | Products | Product 3
Concentration risk
Concentration risk (as a percent)	6.00%	19.00%
Net sales | Customers | Customer A
Concentration risk
Concentration risk (as a percent)	28.00%	31.00%
Net sales | Customers | Customer B
Concentration risk
Concentration risk (as a percent)	12.00%	8.00%
Net sales | Customers | Customer C
Concentration risk
Concentration risk (as a percent)	8.00%	9.00%
Net accounts receivable | Customers | Four customers
Concentration risk
Concentration risk (as a percent)	82.00%		84.00%
Inventory purchases | Suppliers | JSP
Concentration risk
Concentration risk (as a percent)	65.00%	67.00%

Acquisitions (Details)

Acquisitions (Details) - USD ($) $ in Thousands	Jun. 01, 2015	Sep. 30, 2015	Jun. 30, 2015
Purchase price allocation of the assets acquired and liabilities assumed
Goodwill		$ 141	$ 141
Silarx
Acquisition
Percentage of outstanding equity interest	100.00%
Total cash consideration	$ 42,500
Purchase price allocation of the assets acquired and liabilities assumed
Cash	664
Accounts receivable, net of revenue-related reserves	4,396
Inventories	2,705
Property, plant and equipment	7,247
Silarx Product rights	10,000
Silarx In-process research and development	18,000
Goodwill	141
Other current assets	9
Other assets	348
Total assets acquired	43,510
Accounts payable	(711)
Income taxes payable	(273)
Total fair value of acquisition	$ 42,526
Estimated useful lives	15 years

Accounts Receivable (Details)

Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Accounts receivable
Gross accounts receivable	$ 177,598		$ 160,960
Less: reserve	(70,000)		(69,400)
Less: Allowance for doubtful accounts	(394)		(374)
Accounts receivable, net	107,216		91,103
Chargebacks
Accounts receivable
Less: reserve	(34,962)		(35,801)
Provision for rebates, chargebacks, returns and other deductions	88,600	$ 77,900
Rebates
Accounts receivable
Less: reserve	(14,083)		(12,945)
Provision for rebates, chargebacks, returns and other deductions	27,800	18,600
Returns
Accounts receivable
Less: reserve	(19,417)		(19,209)
Provision for rebates, chargebacks, returns and other deductions	3,700	4,100
Other
Accounts receivable
Less: reserve	(1,526)		$ (1,528)
Provision for rebates, chargebacks, returns and other deductions	$ 6,400	$ 9,000

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Inventories, net of reserves
Raw Materials	$ 17,749	$ 19,501
Work-in-process	6,636	5,246
Finished Goods	18,212	18,560
Packaging Supplies	2,634	2,884
Net inventory	45,231	46,191
Inventory reserves	$ 4,500	$ 5,000

Property, Plant and Equipment50

Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Property, Plant and Equipment
Property, plant and equipment, gross	$ 140,781		$ 134,994
Less accumulated depreciation	(42,160)		(40,438)
Property, plant and equipment, net	98,621		94,556
Impairment charges	0	$ 0
Property, plant and equipment, net, held in foreign countries	1,100		1,200
Land
Property, Plant and Equipment
Property, plant and equipment, gross	5,891		5,891
Building and improvements
Property, Plant and Equipment
Property, plant and equipment, gross	$ 51,591		51,446
Building and improvements | Minimum
Property, Plant and Equipment
Useful Lives	10 years
Building and improvements | Maximum
Property, Plant and Equipment
Useful Lives	39 years
Machinery and equipment
Property, Plant and Equipment
Property, plant and equipment, gross	$ 52,614		47,681
Machinery and equipment | Minimum
Property, Plant and Equipment
Useful Lives	5 years
Machinery and equipment | Maximum
Property, Plant and Equipment
Useful Lives	10 years
Furniture and fixtures
Property, Plant and Equipment
Property, plant and equipment, gross	$ 1,304		1,748
Furniture and fixtures | Minimum
Property, Plant and Equipment
Useful Lives	5 years
Furniture and fixtures | Maximum
Property, Plant and Equipment
Useful Lives	7 years
Construction in progress
Property, Plant and Equipment
Property, plant and equipment, gross	$ 29,381		$ 28,228

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015
Fair Value Measurements
Total Investment Securities	$ 14,890	$ 13,467
Equity securities
Fair Value Measurements
Total Investment Securities	14,890	13,467
Level 1
Fair Value Measurements
Total Investment Securities	14,890	13,467
Level 1 | Equity securities
Fair Value Measurements
Total Investment Securities	$ 14,890	$ 13,467

Investment Securities (Details)

Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Gain (loss) on investments
Gain (loss) on investment securities	$ (1,196)	$ 15
Unrealized gain (loss) related to securities still held	$ (1,200)	$ (81)

Goodwill and Intangible Asset53

Goodwill and Intangible Assets (Details) $ in Thousands	Sep. 30, 2015USD ($)
Schedule of changes in the carrying amount of goodwill
Goodwill, Balance	$ 141
Goodwill, Balance	141
Generic Pharmaceuticals
Schedule of changes in the carrying amount of goodwill
Goodwill, Balance	141
Goodwill, Balance	$ 141

Goodwill and Intangible Asset54

Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Jun. 30, 2015
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 11,235	$ 11,235
Gross Carrying Amount, intangible assets	29,684	29,684
Accumulated Amortization	(781)	(594)
Definite-lived Intangible Assets, Net	10,454	10,641
Indefinite-Lived Intangible Assets, Net	18,449	18,449
Intangible Assets, Net	28,903	29,090
Other Product Right
Intangible Assets
Indefinite-Lived Intangible Assets, Net	449	449
Silarx In-process Research and Development
Intangible Assets
Indefinite-Lived Intangible Assets, Net	18,000	18,000
Cody Labs Import License
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	582	582
Accumulated Amortization	(279)	(269)
Definite-lived Intangible Assets, Net	$ 303	313
Weighted Avg. Life (Yrs.)	15 years
Silarx Product Rights
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 10,000	10,000
Accumulated Amortization	(222)	(56)
Definite-lived Intangible Assets, Net	$ 9,778	9,944
Weighted Avg. Life (Yrs.)	15 years
Other Product Right
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 653	653
Accumulated Amortization	(280)	(269)
Definite-lived Intangible Assets, Net	$ 373	$ 384
Weighted Avg. Life (Yrs.)	14 years

Goodwill and Intangible Asset55

Goodwill and Intangible Assets (Details 3) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended
	Sep. 30, 2014	Aug. 31, 2009	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Intangible Assets
Amortization of intangible assets			$ 187	$ 20
Impairments			0	0
Purchases of intangible assets				$ 300
Annual Amortization Expense
2,016			561
2,017			748
2,018			748
2,019			746
2,020			739
Thereafter			6,912
Intangible assets, net			$ 10,454		$ 10,641
Other ANDA Product Rights
Intangible Assets
Purchases of intangible assets	$ 300	$ 149

Bank Line of Credit (Details)

Bank Line of Credit (Details) - USD ($) $ in Millions	1 Months Ended
	Dec. 31, 2013	Sep. 30, 2015	Apr. 21, 2015	Dec. 18, 2013
Line of credit
Bank Line of Credit
Availability under line of credit		$ 120
Line of credit | Minimum
Bank Line of Credit
Commitment fee on the unused balance of the line of credit (as a percent)	0.20%
Line of credit | Maximum
Bank Line of Credit
Commitment fee on the unused balance of the line of credit (as a percent)	0.30%
Amendment To Line Of Credit
Bank Line of Credit
Line of credit from Citibank, N.A.			$ 120	$ 50
Aggregate increase in permitted acquisitions			600
Increase in borrowing capacity due to accordion feature			30
Amendment To Line Of Credit | Revolving loans and swingline loans
Bank Line of Credit
Line of credit from Citibank, N.A.			5
Amendment To Line Of Credit | Letter of Credit
Bank Line of Credit
Line of credit from Citibank, N.A.			5
Amendment To Line Of Credit | Minimum
Bank Line of Credit
Aggregate increase in permitted acquisitions			100
Amendment To Line Of Credit | Maximum
Bank Line of Credit
Aggregate increase in permitted acquisitions			$ 200

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Jun. 30, 2015
Long-Term Debt.
Total debt	$ 976
Less current portion	137	$ 135
Long term debt	839	874
Debt Additional Information
Net book value of land and building collateralized	1,500
Long-term debt maturities
2,016	137
2,017	143
2,018	149
2,019	156
2,020	164
Thereafter	227
Total debt	976
First National Bank of Cody mortgage
Long-Term Debt.
Total debt	976	1,009
Less current portion	137	135
Long-term debt maturities
Total debt	976	$ 1,009
Cody LCI Realty LLC ("Realty") | First National Bank of Cody mortgage
Debt Additional Information
Monthly principal and interest payments	$ 15
Effective interest rate (as a percent)	4.50%	4.50%

Legal and Regulatory Matters (D

Legal and Regulatory Matters (Details) - Breach of agreements $ in Thousands	Apr. 16, 2013USD ($)a
Contingencies
Severance compensation, period	18 months
Estimated aggregate value of claimed severance benefits, minimum	$ 350
Estimated aggregate value of claimed severance benefits, maximum	$ 400
Amount as a percentage of value of land that Mr. Asherman seeks to have in the matter	50.00%
Stock options exercise period after termination	3 months
Area of land | a	1.66

Commitments and Contingencies (

Commitments and Contingencies (Details)	3 Months Ended
	Sep. 30, 2015
Minimum
Leases
Initial lease terms	12 months

Accumulated Other Comprehensi60

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Foreign Currency Translation
Beginning Balance	$ (295)	$ (54)
Net gain (loss) on foreign currency translation (net of tax of $0 and $0)	(16)
Net gain (loss) on foreign currency translation, tax	0	0
Reclassifications to net income, tax	0	0
Other comprehensive income (loss), net of tax	(16)
Ending Balance	(311)	(54)
Total Accumulated Other Comprehensive Loss	$ (311)	$ (54)	$ (295)

Earnings Per Common Share (Deta

Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Common Share
Net Income Attributable to Lannett Company, Inc	$ 33,181	$ 34,932
Basic weighted average common shares outstanding	36,310,653	35,597,931
Effect of potentially dilutive options and restricted stock awards	1,104,071	1,374,715
Diluted weighted average common shares outstanding	37,414,724	36,972,646
Earnings per common share attributable to Lannett Company, Inc.:
Basic (in dollars per share)	$ 0.91	$ 0.98
Diluted (in dollars per share)	$ 0.89	$ 0.94
Anti-dilutive shares excluded in the computation of diluted earnings per share	139,000	436,000

Share-based Compensation (Detai

Share-based Compensation (Details) shares in Millions, $ in Millions	3 Months Ended
	Sep. 30, 2015USD ($)itemshares
Stock-based Compensation
Number of share-based employee compensation plans | item	4
Aggregate number of shares authorized for issuance	8.1
Shares for future issuances	2.3
Maximum
Other disclosures
Share-based compensation awards vesting period	3 years
Share-based compensation awards maximum contractual term	10 years
Restricted stock
Other disclosures
Total unrecognized compensation cost related to non-vested share-based compensation awards granted under the Plans | $	$ 14.1
Weighted average period during which the cost is expected to be recognized	2 years 2 months 12 days

Share-based Compensation (Det63

Share-based Compensation (Details 2) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Weighted average assumptions used to estimate fair values of the stock options granted and the estimated annual forfeiture rates used to recognize the associated compensation expense and the weighted average fair value of the options granted
Risk-free interest rate (as a percent)	1.70%	1.70%
Expected volatility (as a percent)	48.30%	52.10%
Expected dividend yield (as a percent)	0.00%	0.00%
Forfeiture rate (as a percent)	6.50%	6.50%
Expected term (in years)	5 years 2 months 12 days	5 years 6 months
Weighted average fair value (in dollars per share)	$ 26.24	$ 16.82
Awards
Outstanding at the beginning of the period (in shares)	1,975
Granted (in shares)	58
Exercised (in shares)	(52)
Forfeited, expired or repurchased (in shares)	(21)
Outstanding at the end of the period (in shares)	1,960
Vested and expected to vest, Awards (in shares)	1,911
Exercisable at end of year (in shares)	1,228
Stock options, Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 15.39
Granted (in dollars per share)	59.20
Exercised (in dollars per share)	13.51
Forfeited, expired or repurchased (in dollars per share)	17.76
Outstanding at the end of the period (in dollars per share)	16.71
Vested and expected to vest, Weighted-Average Exercise Price (in dollars per share)	16.31
Exercisable at the end of the period (in dollars per share)	$ 11.26
Aggregate Intrinsic Value
Exercised (in dollars)	$ 2,121
Outstanding at the end of the period (in dollars)	50,090
Vested and expected to vest, Aggregate Intrinsic Value	49,504
Exercisable at the end of the period (in dollars)	$ 37,340
Weighted Average Remaining Contractual Life (yrs.)
Outstanding at the end of the period (in years)	7 years
Vested and expected to vest, Weighted Average Remaining Contractual Life	7 years
Exercisable at the end of the period (in years)	6 years 2 months 12 days

Share-based Compensation (Det64

Share-based Compensation (Details 3) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Employee Stock Purchase Plan
Aggregate number of shares authorized for issuance	8,100
Restricted stock
Stock Options and Restricted Stock
Annual forfeiture rate used to calculate compensation expense (as a percent)	6.50%	6.50%
Awards
Nonvested at the beginning of the period (in shares)	98
Granted (in shares)	125
Vested (in shares)	(57)
Forfeited (in shares)	(1)
Nonvested at the end of the period (in shares)	165
Weighted Average Grant-date Fair Value
Nonvested at the beginning of the period (in dollars per share)	$ 37.83
Granted (in dollars per share)	58.97
Vested (in dollars per share)	46.87
Forfeited (in dollars per share)	42.39
Nonvested at the end of the period (in dollars per share)	$ 50.69
Aggregate Intrinsic Value
Vested	$ 3,302
Employee stock purchase plan
Employee Stock Purchase Plan
Purchase price lower of the fair market value of the common stock on the first day of the calendar quarter or the last day of the calendar quarter (as a percent)	85.00%
Percentage of the compensation authorized by the employee to be withheld	10.00%
Aggregate number of shares authorized for issuance	1,100
Shares issued under the ESPP (in shares)	5	3
Cumulative shares issued under the ESPP (in shares)	442

Share-based Compensation (Det65

Share-based Compensation (Details 4) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	$ 4,374	$ 1,647
Tax benefit at statutory rate	1,545	570
Selling, general and administrative
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	3,886	1,359
Research and development
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	188	120
Cost of sales
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	$ 300	$ 168

Employee Benefit Plan (Details)

Employee Benefit Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Employee Benefit Plan
Company matching contributions equal to each employee's contribution (as a percent)	50.00%
Maximum contribution by the company as a percentage of employee's compensation for the Plan year	4.00%
Contributions to the Plan	$ 250	$ 214

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Income Taxes
Income tax expense	$ 17,055	$ 19,800
Effective income tax rate (as a percent)	33.90%	36.20%
Unrecognized tax benefits	$ 578		$ 578
Unrecognized tax benefits cumulative interest and penalties recorded	$ 0		$ 0

Related Party Transactions (Det

Related Party Transactions (Details) - Auburn - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015
Related Party Transactions
Sales to a generic distributor	$ 337	$ 351
Amounts due from the related party	$ 312		$ 727

Material Contracts with Suppl69

Material Contracts with Suppliers (Details) - JSP shares in Millions, $ in Millions	Aug. 19, 2013USD ($)itemshares	Sep. 30, 2015USD ($)	Sep. 30, 2014
Material Contracts with Suppliers
Number of shares of common stock issued in exchange for exclusive distribution rights | shares	1.5
Number of products under the exclusive distribution agreement | item	3
Extension term of the agreement	5 years
Expense recorded in accordance with policy related to renewal and extension costs for recognized intangible assets	$ 20.1
Second extension term of the agreement	5 years
Number of shares of common stock issued in exchange for extension of exclusive distribution rights agreement | shares	1.5
Period from notice within which if breach is not cured, non-breaching party has right to terminate contract		30 days
Minimum purchase quantity required in each year		$ 31
Inventory purchases | Suppliers
Material Contracts with Suppliers
Purchases of finished goods inventory from JSP as a percentage of the company's inventory purchases		65.00%	67.00%

Cody Expansion Project (Details

Cody Expansion Project (Details) $ in Thousands	Dec. 20, 2012ft²a	Jun. 30, 2011USD ($)item	Jun. 30, 2014USD ($)	Sep. 30, 2015USD ($)
Cody Expansion Project
Area of facility | ft²	24,000
Cody LCI Realty LLC ("Realty") | Forward Cody
Cody Expansion Project
Area of land | a	1.66
Term of leases entered into for property contributed under expansion project	25 years
Cody LCI Realty LLC ("Realty") | City of Cody
Cody Expansion Project
Annual rent payments				$ 108
Cody Laboratories, Inc.
Cody Expansion Project
Capital expenditure obligation		$ 5,200
Number of additional full-time positions required to be hired under the agreement | item		45
Maximum period to meet certain obligations under the agreement		3 years
Requirement to provide capital contribution to the project			$ 565

Pending Acquisition of Kremer71

Pending Acquisition of Kremers Urban Pharmaceuticals Inc (Details) - Kremers	Sep. 02, 2015USD ($)
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Purchase price	$ 1,230,000,000
Percentage of incremental tax cost reimbursement	50.00%
Maximum
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Reimbursement cap amount	$ 35,000,000
MSSF and Royal Bank | Line of credit
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Maximum borrowing capacity	1,285,000,000
MSSF and Royal Bank | Term Facility
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Maximum borrowing capacity	1,160,000,000
MSSF and Royal Bank | Revolving Facility
Pending Acquisition of Kremers Urban Pharmaceuticals Inc.
Maximum borrowing capacity	$ 125,000,000