Lannett (LCINQ) 10-Q 4 Nov 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
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, 2016
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		37,001,737
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 241,680	$ 224,769
Investment securities	11,381	14,094
Accounts receivable, net	190,526	211,722
Inventories	127,751	114,904
Prepaid income taxes	22,933
Deferred tax assets	44,001	40,892
Other current assets	7,681	6,434
Total current assets	645,953	612,815
Property, plant and equipment, net	221,343	216,638
Intangible assets, net	501,167	575,503
Goodwill	339,566	333,611
Deferred tax assets	11,879	11,556
Other assets	14,148	13,895
TOTAL ASSETS	1,734,056	1,764,018
Current liabilities:
Accounts payable	43,987	34,720
Accrued expenses	8,289	9,247
Accrued payroll and payroll-related expenses	8,947	10,572
Rebates payable	20,103	21,894
Royalties payable	4,158	5,127
Restructuring liability	4,767	4,130
Settlement liability	9,000	7,000
Income taxes payable		743
Acquisition-related contingent consideration	35,000	35,000
Short-term borrowings and current portion of long-term debt	178,238	178,236
Total current liabilities	312,489	306,669
Long-term debt, net	875,450	883,612
Settlement liability	10,860	12,526
Other liabilities	7,534	6,754
TOTAL LIABILITIES	1,206,333	1,209,561
Commitments and contingencies (Note 13 and 14)
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 37,406,625 and 37,150,165 shares issued; 36,801,759 and 36,604,202 shares outstanding at September 30, 2016 and June 30, 2016, respectively)	37	37
Additional paid-in capital	287,756	283,301
Retained earnings	248,947	278,355
Accumulated other comprehensive loss	(298)	(295)
Treasury stock (604,866 and 545,963 shares at September 30, 2016 and June 30, 2016, respectively)	(9,147)	(7,349)
Total Lannett Company, Inc. stockholders' equity	527,295	554,049
Noncontrolling interest	428	408
Total stockholders' equity	527,723	554,457
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,734,056	$ 1,764,018

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2016	Jun. 30, 2016
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	37,406,625	37,150,165
Common stock, outstanding shares	36,801,759	36,604,202
Treasury stock, shares	604,866	545,963

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 161,559	$ 106,433
Cost of sales	70,820	28,819
Amortization of intangibles	8,887	187
Gross profit	81,852	77,427
Operating expenses:
Research and development expenses	12,371	6,528
Selling, general and administrative expenses	21,260	15,536
Acquisition and integration-related expenses	1,391	3,942
Restructuring expenses	2,052
Intangible asset impairment charge	65,084	0
Total operating expenses	102,158	26,006
Operating income	(20,306)	51,421
Other income (loss):
Investment income (loss)	1,027	(1,110)
Interest expense	(22,994)	(60)
Other	3
Total other income (loss)	(21,964)	(1,170)
Income (loss) before income tax	(42,270)	50,251
Income tax expense (benefit)	(12,882)	17,055
Net income (loss)	(29,388)	33,196
Less: Net income attributable to noncontrolling interest	20	15
Net income (loss) attributable to Lannett Company, Inc.	$ (29,408)	$ 33,181
Earnings (loss) per common share attributable to Lannett Company, Inc.:
Basic (in dollars per share)	$ (0.80)	$ 0.91
Diluted (in dollars per share)	$ (0.80)	$ 0.89
Weighted average common shares outstanding:
Basic (in shares)	36,699,267	36,310,653
Diluted (in shares)	36,699,267	37,414,724

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)	$ (29,388)	$ 33,196
Other comprehensive income (loss), before tax :
Foreign currency translation gain (loss)	(3)	(16)
Total other comprehensive income (loss), before tax	(3)	(16)
Total other comprehensive income (loss), net of tax	(3)	(16)
Comprehensive income (loss)	(29,391)	33,180
Less: Total comprehensive income attributable to noncontrolling interest	20	15
Comprehensive income (loss) attributable to Lannett Company, Inc.	$ (29,411)	$ 33,165

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 3 months ended Sep. 30, 2016 - 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, 2016	$ 554,049	$ 37	$ 283,301	$ 278,355	$ (295)	$ (7,349)	$ 408	$ 554,457
Balance (in shares) at Jun. 30, 2016		37,150
Increase (Decrease) in Shareholders' Equity
Shares issued in connection with share-based compensation plans	1,355		1,355					1,355
Shares issued in connection with share-based compensation plans (in shares)		257
Share-based compensation	2,456		2,456					2,456
Excess tax benefits on share-based compensation awards	644		644					644
Purchase of treasury stock	(1,798)					(1,798)		(1,798)
Other comprehensive loss, net of tax	(3)				(3)			(3)
Net income (loss)	(29,408)			(29,408)			20	(29,388)
Balance at Sep. 30, 2016	$ 527,295	$ 37	$ 287,756	$ 248,947	$ (298)	$ (9,147)	$ 428	$ 527,723
Balance (in shares) at Sep. 30, 2016		37,407

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
OPERATING ACTIVITIES:
Net income (loss)	$ (29,388)	$ 33,196
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	14,317	1,909
Deferred income tax expense (benefit)	(3,432)	440
Share-based compensation	2,456	4,374
Excess tax benefits on share-based compensation awards	(644)	(608)
Intangible asset impairment charge	65,084	0
Loss on sale of assets	2
(Gain) loss on investment securities	(808)	1,196
Amortization of debt discount and other debt issuance costs	5,288
Other noncash expenses	474	50
Changes in assets and liabilities which provided (used) cash:
Accounts receivable, net	15,241	(16,113)
Inventories	(12,847)	960
Prepaid income taxes/Income taxes payable	(22,252)	(6,263)
Other assets	(1,640)	(1,325)
Rebates payable	(1,791)	3,905
Royalties payable	(969)
Restructuring liability	637
Accounts payable	9,267	(1,936)
Accrued expenses	(958)	1,747
Accrued payroll and payroll-related expenses	(1,625)	(5,649)
Net cash provided by operating activities	36,412	15,883
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(9,945)	(6,352)
Proceeds from sale of property, plant and equipment	33
Proceeds from sale of investment securities	15,703	11,387
Purchase of investment securities	(12,182)	(14,006)
Net cash used in investing activities	(6,391)	(8,971)
FINANCING ACTIVITIES:
Repayments of long-term debt	(13,308)	(33)
Proceeds from issuance of stock	1,355	865
Excess tax benefits on share-based compensation awards	644	608
Purchase of treasury stock	(1,798)	(908)
Net cash provided by (used in) financing activities	(13,107)	532
Effect on cash and cash equivalents of changes in foreign exchange rates	(3)	(16)
NET INCREASE IN CASH AND CASH EQUIVALENTS	16,911	7,428
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	224,769	200,340
CASH AND CASH EQUIVALENTS, END OF PERIOD	241,680	207,768
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid (net of amounts capitalized)	17,373	11
Income taxes paid	$ 12,802	$ 22,879

Interim Financial Information

Interim Financial Information	3 Months Ended
	Sep. 30, 2016
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, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2017. 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, 2016.

The Business And Nature of Oper

The Business And Nature of Operations	3 Months Ended
	Sep. 30, 2016
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 and extended release (tablets and capsules), topical, nasal 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, most notably under the Jerome Stevens Distribution Agreement. The Company also manufactures active pharmaceutical ingredients through its Cody Laboratories, Inc. (“Cody Labs”) subsidiary, providing a vertical integration benefit. On November 25, 2015, the Company completed the acquisition of Kremers Urban Pharmaceuticals, Inc. (“KUPI”), the former U.S. specialty generic pharmaceuticals subsidiary of global biopharmaceuticals company UCB S.A. KUPI is a specialty pharmaceuticals manufacturer focused on the development of products that are difficult to formulate or utilize specialized delivery technologies. Strategic benefits of the acquisition include expanded manufacturing capacity, a diversified product portfolio and pipeline and complementary research and development expertise. The Company operates pharmaceutical manufacturing plants in Philadelphia, Pennsylvania; Cody, Wyoming; Carmel, New York and Seymour, Indiana. 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, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 3. Summary of Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements have been prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). 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, including goodwill and intangible assets, income taxes, contingencies, share-based compensation and contingent consideration. 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 other 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, 2016 and 2015 was $5.1 million and $1.7 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, which in most cases is calculated using a discounted cash flow model. Discounted cash flow models are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows. 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 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. Definite-lived intangible assets are amortized over the expected life of the asset. The judgments made in determining the estimated fair value of in-process research and development, as well as asset lives, can materially impact our results of operations. The Company’s fair value assessments are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows. 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 on the first day of 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, the Company determines the fair value of our reporting unit (generic pharmaceuticals). If the net book value of our reporting unit exceeds its fair value, the second step of the impairment test which requires the hypothetical 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 would then be performed. Any residual fair value is allocated to goodwill. An impairment charge is recognized to the extent that the estimated fair value of our reporting unit’s goodwill is less than its carrying amount. The judgments made in determining the estimated fair value of goodwill can materially impact our results of operations. The Company’s fair value assessments are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows. 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, 2016 and 2015: (In thousands) Three Months Ended Medical Indication 2016 2015 Antibiotic $ $ Anti Psychosis Cardiovascular Central Nervous System — Gallstone Gastrointestinal Glaucoma Migraine Muscle Relaxant Obesity Pain Management Respiratory — Thyroid Deficiency Urinary Other Contract manufacturing revenue — Total $ $ Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the three months ended September 30, 2016 and 2015, 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: 2016 2015 Product 1 % % Product 2 % % The following table presents the percentage of total net sales, for the three months ended September 30, 2016 and 2015, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: 2016 2015 Customer A % % Customer B % % 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 37% and 65% of the Company’s inventory purchases during the three months ended September 30, 2016 and 2015, respectively. See Note 22 “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 $166.2 million and $176.1 million at September 30, 2016 and June 30, 2016, respectively. Rebates payable at September 30, 2016 and June 30, 2016 included $20.1 million and $21.9 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. 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-related matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative line item. Contingent Consideration Contingent consideration resulting from the KUPI acquisition was recorded at its estimated fair value on the acquisition date. The Company has agreed to a 50/50 split of the additional tax liabilities UCB will incur associated with the IRS Section 338(H)(10) tax election, up to $35.0 million. This election is expected to result in additional tax benefits to the Company of approximately $100.0 million. Future decreases, if any, in the estimated fair value of the contingent consideration will be recorded as gains in the Consolidated Statements of Operations. Decreases in the estimated fair value of the contingent consideration obligation can result from lower tax liabilities incurred by UCB associated with the IRS Section 338(H)(10) tax election. These fair value measurements represent Level 3 measurements, as they are based on significant inputs not observable in the market. Restructuring Costs The Company records charges associated with approved restructuring plans to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations, site closure and consolidation plans. The Company accrues severance and other employee separation costs under these actions when it is probable that a liability exists and the amount is reasonably estimable. 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 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. 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. Earnings (Loss) 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, unvested restricted stock and an outstanding warrant. Anti-dilutive securities are excluded from the calculation. Dilutive shares are also excluded in the calculation in periods of net loss because the effect of including such securities would be anti-dilutive. 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 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 was originally effective for annual reporting periods beginning after 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 is applied retrospectively to each prior period presented. The Company elected to early adopt ASU 2015-03 as of December 31, 2015. 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 elected to early adopt ASU 2015-16 as of March 31, 2016. In November 2015, the FASB issued ASU 2015-17, Income Taxes — Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. The guidance may be applied either prospectively or retrospectively. ASU 2015-17 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires an entity to recognize right-of-use assets and liabilities on its balance sheet for all leases with terms longer than 12 months. Lessees and lessors are required to disclose quantitative and qualitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and requires a modified retrospective application, with early adoption permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 clarifies several aspects of accounting for share-based compensation including the accounting for excess tax benefits and deficiencies, accounting for forfeitures and the classification of excess tax benefits on the cash flow statement. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and in interim periods within those fiscal years, with early adoption permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements.

Acquisitions

Acquisitions	3 Months Ended
	Sep. 30, 2016
Acquisitions
Acquisitions	Note 4. Acquisitions Kremers Urban Pharmaceuticals Inc. On November 25, 2015, the Company completed the acquisition of KUPI, the former U.S. specialty generic pharmaceuticals subsidiary of global biopharmaceuticals company UCB S.A., pursuant to the terms and conditions of a Stock Purchase Agreement. KUPI is a specialty pharmaceuticals manufacturer focused on the development of products that are difficult to formulate or utilize specialized delivery technologies. Strategic benefits of the acquisition include expanded manufacturing capacity, a diversified product portfolio and pipeline and complementary research and development expertise. Pursuant to the terms of the Stock Purchase Agreement, Lannett purchased 100% of the outstanding equity interests of KUPI for total estimated consideration of approximately $1.2 billion. The following table summarizes the fair value of total consideration transferred to KUPI shareholders at the acquisition date of November 25, 2015: (In thousands) Cash purchase price paid to KUPI shareholders $ Working capital adjustment ) Certain amounts reimbursed by UCB ) Total cash consideration transferred to KUPI shareholders 12.0% Senior Notes issued to UCB Acquisition-related contingent consideration Warrant issued to UCB Total consideration to KUPI shareholders $ The Company funded the acquisition and transaction expenses with proceeds from the issuance of the $910.0 million of term loans, $22.8 million borrowings from a revolving credit facility, the issuance of $250.0 million Senior Notes (see Note 12 “Long-term Debt”) and cash on hand of $94.6 million. Lannett also issued a warrant with an estimated fair value of $29.9 million. As part of the acquisition, the Company and UCB have 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. The Company has agreed to reimburse UCB for 50% of the incremental tax cost of making such election, subject to a reimbursement cap of $35.0 million. This liability has been recorded as acquisition-related contingent consideration on the Consolidated Balance Sheet. This election is expected to result in additional tax benefits to the Company of approximately $100.0 million. The Company also agreed to contingent payments related to Methylphenidate Hydrochloride Extended Release tablets (“Methylphenidate ER”) provided the FDA reinstates the AB-rating for such product and certain sales thresholds are met. On October 18, 2016, the Company received notice from the FDA that it will seek to withdraw approval of the Company’s ANDA for Methylphenidate ER. See Note 23 “Subsequent Events” for more information. 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. The purchase price has been allocated to the assets acquired and liabilities assumed for the KUPI business as follows: (In thousands) Preliminary Purchase Measurement Period Purchase Cash and cash equivalents $ $ — $ Accounts receivable, net of revenue-related reserves ) Inventories Other current assets ) Property, plant and equipment Product rights Trade name — Other intangible assets ) In-process research and development ) Goodwill Deferred tax assets ) Other assets Total assets acquired Accounts payable ) — ) Accrued expenses ) ) ) Accrued payroll and payroll-related expenses ) ) ) Rebates payable ) — ) Royalties payable ) ) Other liabilities ) — ) Total net assets acquired $ $ $ (a) As originally reported in the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2015. (b) The measurement period adjustments relate to 1) finalizing working capital adjustments totaling $4.6 million 2) finalized valuations for inventories and property, plant and equipment, 3) receipt of additional information related to product development timelines and 4) revenue-related reserve estimates, all of which reflect facts and circumstances that existed as of the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements. In the first quarter of Fiscal 2017, the Company recorded a $6.0 million adjustment to the Returns reserve. Included in the purchase price allocation above are indemnification assets totaling approximately $20.7 million, of which $10.4 million relates to compensation-related payments, $4.9 million relates to unrecognized tax benefits and $5.4 million for chargeback and rebate-related items. The inventory balance above includes $19.1 million to reflect fair value step-up adjustments. KUPI’s intangible assets primarily consist of product rights and in-process research and development. See Note 11 “Goodwill and Intangible Assets.” Amounts allocated to acquired in-process research and development represent 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 at the appropriate discount rate for the inherent risk in each project and will be tested for impairment in accordance with the Company’s policy for testing indefinite-lived intangible assets. Goodwill of $339.4 million arising from the acquisition consists primarily 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 reporting unit. Goodwill recognized is expected to be fully deductible for income tax purposes. Unaudited Pro Forma Financial Results The following supplemental unaudited pro forma information presents the financial results as if the acquisition of KUPI had occurred on July 1, 2014 for the three months ended September 30, 2015. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on July 1, 2014, nor are they indicative of any future results: For the three months ended (In thousands, except per share data) 2015 Net sales $ Net income attributable to Lannett Company, Inc. Earnings per common share attributable to Lannett Company, Inc.: Basic $ Diluted $ The supplemental pro forma earnings for the three months ended September 30, 2015 was adjusted to exclude $5.6 million of acquisition-related costs, of which $3.9 million was incurred by Lannett and $1.7 million was incurred by KUPI.

Restructuring Charges

Restructuring Charges	3 Months Ended
	Sep. 30, 2016
Restructuring Charges.
Restructuring Charges	Note 5. Restructuring Charges 2016 Restructuring Program On February 1, 2016, in connection with the acquisition of KUPI, the Company announced a plan related to the future integration of KUPI and the Company’s operations. The plan focuses on the closure of KUPI’s corporate functions and the consolidation of manufacturing, sales, research and development and distribution functions. The Company estimates that it will incur an aggregate of up to approximately $22.0 million in restructuring charges for actions that have been announced or communicated since the 2016 Restructuring Program began. Of this amount, approximately $13.0 million relates to employee separation costs, approximately $1.0 million relates to contract termination costs and approximately $8.0 million relates to facility closure costs and other actions. The 2016 Restructuring Program is expected to be completed by the end of Fiscal 2019. The expenses associated with the restructuring program included in restructuring expenses during the three months ended September 30, 2016 were as follows: (In thousands) Three Months Ended Employee separation costs $ Facility closure costs Total $ A reconciliation of the changes in restructuring liabilities associated with the 2016 Restructuring Program from June 30, 2016 through September 30, 2016 is set forth in the following table: (In thousands) Employee Contract Facility Closure Total Balance at June 30, 2016 $ $ $ — $ Restructuring Charges — Payments ) ) ) ) Balance at September 30, 2016 $ $ $ — $

Accounts Receivable

Accounts Receivable	3 Months Ended
	Sep. 30, 2016
Accounts Receivable
Accounts Receivable	Note 6. Accounts Receivable Accounts receivable consisted of the following components at September 30, 2016 and June 30, 2016: (In thousands) September 30, June 30, 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, 2016, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $198.5 million, $69.5 million, $6.8 million and $15.5 million, respectively. 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.

Inventories

Inventories	3 Months Ended
	Sep. 30, 2016
Inventories
Inventories	Note 7. Inventories Inventories at September 30, 2016 and June 30, 2016 consisted of the following: (In thousands) September 30, June 30, Raw Materials $ $ Work-in-process Finished Goods Total $ $ The reserve for excess and obsolete inventory was $6.4 million and $6.9 million at September 30, 2016 and June 30, 2016, respectively.

Property, Plant and Equipment

Property, Plant and Equipment	3 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment
Property, Plant and Equipment	Note 8. Property, Plant and Equipment Property, plant and equipment at September 30, 2016 and June 30, 2016 consisted of the following: (In thousands) Useful Lives September 30, June 30, Land — $ $ Building and improvements 10 - 39 years Machinery and equipment 5 - 10 years Furniture and fixtures 5 - 7 years Less accumulated depreciation ) ) Construction in progress Property, plant and equipment, net $ $ During the three months ended September 30, 2016 and 2015, the Company had no impairment charges related to property, plant and equipment. Property, plant and equipment, net included amounts held in foreign countries in the amount of $990 thousand and $1.0 million at September 30, 2016 and June 30, 2016, respectively.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Fair Value Measurements	Note 9. 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, 2016 and June 30, 2016, were as follows: September 30, 2016 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Intangible Assets (KUPI product rights) — — Total Assets $ $ — $ $ Liabilities Acquisition-related contingent consideration $ — $ — $ $ Total Liabilities $ — $ — $ $ June 30, 2016 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Assets $ $ — $ — $ Liabilities Acquisition-related contingent consideration $ — $ — $ $ Total Liabilities $ — $ — $ $

Investment Securities

Investment Securities	3 Months Ended
	Sep. 30, 2016
Investment Securities
Investment Securities	Note 10. 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 gain on investment securities of $808 thousand during the three months ended September 30, 2016, which was primarily due to an unrealized gain related to securities still held at September 30, 2016 of $557 thousand. 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.

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Sep. 30, 2016
Goodwill and Intangible Assets
Goodwill and Intangible Assets	Note 11. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the three months ended September 30, 2016 are as follows: (In thousands) Generic Balance at June 30, 2016 $ Measurement-period adjustments Goodwill acquired — Impairments — Balance at September 30, 2016 $ In the first quarter of Fiscal 2017, the Company recorded a $6.0 million adjustment to the Returns reserve acquired in the KUPI acquisition. Intangible assets, net as of September 30, 2016 and June 30, 2016, consisted of the following: Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net (In thousands) Avg. Life September 30, June 30, September 30, June 30, September 30, June 30, Definite-lived: Cody Labs import license 15 $ $ $ ) $ ) $ $ KUPI product rights 15 ) ) KUPI trade name 2 ) ) KUPI other intangible assets 15 ) ) Silarx product rights 15 ) ) Other product rights 14 ) ) Total definite-lived $ $ $ ) $ ) $ $ Indefinite-lived: KUPI in-process research and development — $ $ $ — $ — $ $ Silarx in-process research and development — — — Other product rights — — — Total indefinite-lived — — Total intangible assets, net $ $ $ ) $ ) $ $ For the three months ended September 30, 2016 and 2015, the Company recorded amortization expense of approximately $9.3 million and $187 thousand, respectively. On October 18, 2016, the Company received a notice from the FDA indicating that the FDA will seek to withdraw approval of the Company’s Methylphenidate ER ANDA. As a result of the notice, the Company performed an impairment analysis including a review of revised net sales projections for Methylphenidate ER. This analysis resulted in the Company recording a $65.1 million impairment charge in the first quarter of Fiscal 2017. Future annual amortization expense consisted of the following as of September 30, 2016: (In thousands) Annual Amortization Expense 2017 $ 2018 2019 2020 2021 Thereafter $

Long-Term Debt

Long-Term Debt	3 Months Ended
	Sep. 30, 2016
Long-Term Debt
Long-Term Debt	Note 12. Long-Term Debt Amended Senior Secured Credit Facility On November 25, 2015, in connection with its acquisition of KUPI, Lannett entered into a credit and guaranty agreement (the “Credit and Guaranty Agreement”) among certain of its wholly-owned domestic subsidiaries, as guarantors, Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent and other lenders providing for a senior secured credit facility (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility consisted of a Term Loan A facility in an aggregate principal amount of $275.0 million, a Term Loan B facility in an aggregate principal amount of $635.0 million and a revolving credit facility providing for revolving loans in an aggregate principal amount of up to $125.0 million. On April 8, 2016, the Company drew down the full $125.0 million Revolving Credit Facility for working capital and other general purposes. The entire balance of the Revolving Credit Facility loan is outstanding as of September 30, 2016. On June 17, 2016, Lannett amended the Senior Secured Credit Facility and the Credit and Guaranty Agreement to raise an incremental term loan in the principal amount of $150.0 million (the “Incremental Term Loan”) and amended certain sections of the agreement (the “Amended Senior Secured Credit Facility”). The terms of this Incremental Term Loan are substantially the same as those applicable to the Term Loan B facility. The Company used the proceeds of the Incremental Term Loan and cash on hand to repurchase the outstanding $250.0 million aggregate principal amount of Lannett’s 12.0% Senior Notes due 2023 (the “Senior Notes”) issued in connection with the KUPI acquisition. The Term Loan A Facility will mature on November 25, 2020. The Term Loan A Facility amortizes in quarterly installments (a) through December 31, 2017 in amounts equal to 1.25% of the original principal amount of the Term Loan A Facility and (b) from January 1, 2018 through September 30, 2020 in amounts equal to 2.50% of the original principal amount of the Term Loan A Facility, with the balance payable on November 25, 2020. The Term Loan B Facility will mature on November 25, 2022. The Term Loan B Facility amortizes in equal quarterly installments in amounts equal to 1.25% of the original principal amount of the Term Loan B Facility with the balance payable on November 25, 2022. Any outstanding Revolving Loans will mature on November 25, 2020. The Amended Senior Secured Credit Facility is guaranteed by all of Lannett’s significant wholly-owned domestic subsidiaries (the “Subsidiary Guarantors”) and is collateralized by substantially all present and future assets of Lannett and the Subsidiary Guarantors. The interest rates applicable to the Amended Term Loan Facility are based on a fluctuating rate of interest of the greater of an adjusted LIBOR and 1.00%, plus a borrowing margin of 4.75% (for Term Loan A Facility) or 5.375% (for Term Loan B Facility). The interest rate applicable to the Revolving Credit Facility is based on a fluctuating rate of interest of an adjusted LIBOR plus a borrowing margin of 4.75%. The interest rate applicable to the unused commitment for the Revolving Credit Facility was initially 0.50%. Beginning March 2016, the interest margins and unused commitment fee on the Revolving Credit Facility are subject to a leveraged based pricing grid. The Amended Senior Secured Credit Facility contains a number of covenants that, among other things, limit the ability of Lannett and its restricted subsidiaries to: incur more indebtedness; pay dividends; redeem stock or make other distributions of equity; make investments; create restrictions on the ability of Lannett’s restricted subsidiaries that are not Subsidiary Guarantors to pay dividends to Lannett or make intercompany transfers; create negative pledges; create liens; transfer or sell assets; merge or consolidate; enter into sale leasebacks; enter into certain transactions with Lannett’s affiliates; and prepay or amend the terms of certain indebtedness. The Amended Senior Secured Credit Facility contains a financial performance covenant that is triggered when the aggregate principal amount of outstanding Revolving Credit Facility and outstanding letters of credit as of the last day of the most recent fiscal quarter is greater than 30% of the aggregate commitments under the Revolving Credit Facility. The covenant provides that Lannett shall not permit its first lien net senior secured leverage ratio as of the last day of any four consecutive fiscal quarters (i) from and after December 31, 2015, to be greater than 4.25:1.00 (ii) from and after December 31, 2017 to be greater than 3.75:1.00 and (iii) from and after December 31, 2019 to be greater than 3.25:1.00. The Amended Senior Secured Credit Facility also contains a financial performance covenant for the benefit of the Term Loan A Facility lenders which provides that Lannett shall not permit its net senior secured leverage ratio as of the last day of any four consecutive fiscal quarters (i) prior to December 31, 2017, to be greater than 4.25:1.00, (ii) as of December 31, 2017 and prior to December 31, 2019 to be greater than 3.75:1.00 and (iii) as of December 31, 2019 and thereafter to be greater than 3.25:1.00. The Amended Senior Secured Credit Facility also contains certain affirmative covenants, including financial and other reporting requirements. In connection with the Senior Secured Credit Facility and the Senior Notes, the Company incurred an initial purchaser’s discount of $72.1 million and debt issuance costs of $32.7 million. These costs are recorded as a reduction of long-term debt in the Consolidated Balance Sheet. In connection with the amendment to the Senior Secured Credit Facility and raising the Incremental Term Loan, the Company capitalized $14.0 million of initial purchaser’s discount and other fees and expensed $2.2 million of legal and other expenses. Long-term debt, net consisted of the following: September 30, June 30, (In thousands) 2016 2016 Term Loan A due 2020 $ $ Unamortized discount and other debt issuance costs ) ) Term Loan A, net Term Loan B due 2022 Unamortized discount and other debt issuance costs ) ) Term Loan B, net Revolving Credit Facility due 2020 Other Total debt, net Less short-term borrowings and current portion of long-term debt ) ) Total long-term debt, net $ $ Long-term debt amounts due, for the twelve month periods ending September 30 are as follows: Amounts Payable (In thousands) to Institutions 2017 $ 2018 2019 2020 2021 Thereafter Total $

Legal and Regulatory Matters

Legal and Regulatory Matters	3 Months Ended
	Sep. 30, 2016
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 was in violation of certain zoning laws and that Cody Labs was required to increase the level of its property insurance and to secure performance bonds for work being performed at Cody Labs. Mr. Asherman claimed Cody Labs was in breach of his employment agreement and was required to pay him severance under his employment agreement, including 18 months of base salary, vesting of unvested stock options and continuation of benefits. Mr. Asherman also asserted that the Company was in breach of the Realty Operating Agreement and, among other requested remedies, he sought 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. In October 2016, the Company and Mr. Asherman reached a tentative agreement in principle to resolve their disputes. The parties are in the process of finalizing a written settlement agreement. 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. In June 2016, the Connecticut Attorney General issued interrogatories and a subpoena to an employee of the Company in order to gain access to documents and responses previously supplied to the Department of Justice. 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 and 2016, 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 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. The USPTO has issued a decision denying initiation of the Inter Partes Review. A trial was conducted in September 2016. Post trial briefing is underway, after which the court is expected to issue its decision. Thalomid® The Company filed with the Food and Drug Administration an 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 filed an answer and affirmative defenses to the complaint. 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 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. (“Purdue”) 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 and Purdue have reached a settlement and the case was dismissed with prejudice in October 2016. Although the Company cannot currently predict the length or outcome of paragraph 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. Texas Medicare Investigation In August 2015, KUPI received a letter from the Texas Office of the Attorney General alleging that they had inaccurately reported certain price information in violation of the Texas Medicaid Fraud Prevention Act. UCB, KUPI’s previous parent company is handling the defense and is evaluating the allegations and cooperating with the Texas Attorney General’s Office. Per the terms of the Stock Purchase Agreement the Company is fully indemnified for any losses associated with this matter. In conjunction with information received from UCB’s legal counsel, the Company is currently unable to estimate the timing or the outcome of this matter. AWP Litigation The Company and some of our competitors have been named as defendants in lawsuits filed in 2016 alleging that the Company and a number of other generic pharmaceutical manufacturers caused the Average Wholesale Prices (AWPs) of our and their products to be inflated, thereby injuring government programs, entities and persons who reimbursed prescription drugs based on AWPs. The Company stopped using AWP as a basis for establishing prices in or around 2002 and the bulk of prescription drugs manufactured by the Company was sold under private label and dispute the allegations set forth in these lawsuits. The Company does not believe that the ultimate resolution of these lawsuits will have a significant impact on our financial position, results of operations or cash flows. Private Antitrust and Consumer Protection Litigation The Company and certain competitors have been named as defendants in 19 lawsuits filed in 2016 alleging that the Company and certain generic pharmaceutical manufacturers have conspired to fix prices of generic digoxin and doxycycline. There is a proceeding before the United States Judicial Panel on Multidistrict Litigation, regarding centralization of all of these related cases. Oral argument was held on July 28, 2016. The Panel has not yet made a decision. The Company believes that it acted in compliance with all applicable laws and regulations. Accordingly, the Company disputes the allegations set forth in these class actions. The Company does not believe that the ultimate resolution of these lawsuits will have a significant impact on our financial position, results of operations or cash flows. 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 could 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, 2016
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. These leases are typically renewed annually. Rental and lease expense was not material for all periods presented. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) for the remainder of Fiscal 2017 and the twelve month periods ending June 30 thereafter are as follows: (In thousands) Amounts Due Remainder of 2017 $ 2018 2019 2020 2021 Thereafter Total $

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	3 Months Ended
	Sep. 30, 2016
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, 2016 and 2015: (In thousands) September 30, September 30, Foreign Currency Translation Beginning Balance, June 30 $ ) $ ) 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 (Loss) Per Common Shar

Earnings (Loss) Per Common Share	3 Months Ended
	Sep. 30, 2016
Earnings (Loss) Per Common Share
Earnings (Loss) Per Common Share	Note 16. Earnings (Loss) 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 (loss) 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 a warrant 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 including 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 (In thousands, except share and per share data) 2016 2015 Net income (loss) 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 (loss) 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, 2016 and 2015 was 4.3 million and 139 thousand, respectively.

Warrant

Warrant	3 Months Ended
	Sep. 30, 2016
Warrant
Warrant	Note 17. Warrant In connection with the KUPI acquisition, Lannett issued to UCB Manufacturing a warrant to purchase up to a total of 2.5 million shares of Lannett’s common stock (the “Warrant”). The Warrant has a term of three years (expiring November 25, 2018) and an exercise price of $48.90 per share, subject to customary adjustments, including for stock splits, dividends and combinations. The Warrant also has a “weighted average” anti-dilution adjustment provision. The fair value included as part of the total consideration transferred to UCB at the acquisition date was $29.9 million. The fair value assigned to the Warrant was determined using the Black-Scholes valuation model. The Company concluded that the warrant was indexed to its own stock and therefore the Warrant has been classified as an equity instrument.

Share-based Compensation

Share-based Compensation	3 Months Ended
	Sep. 30, 2016
Share-based Compensation
Share-based Compensation	Note 18. Share-based Compensation At September 30, 2016, the Company had two share-based employee compensation plans (the 2011 Long-Term Incentive Plan “LTIP” and the 2014 “LTIP”). Together these plans authorized an aggregate total of 4.5 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, 2016, there was $8.9 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 1.9 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, 2016 and 2015, the estimated annual forfeiture rates used to recognize the associated compensation expense and the weighted average fair value of the options granted: September 30, September 30, Risk-free interest rate % % Expected volatility % % Expected dividend yield % % Forfeiture rate % % Expected term (in years) 5.2 years 5.2 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, 2016 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 June 30, 2016 $ $ Granted $ Exercised ) $ $ Forfeited, expired or repurchased ) $ Outstanding at September 30, 2016 $ $ Vested and expected to vest at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $ 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, 2016 and 2015. A summary of restricted stock awards as of September 30, 2016 and changes during the three months then ended, is presented below: (In thousands, except for weighted average price data) Awards Weighted Aggregate Non-vested at June 30, 2016 Granted Vested ) $ Forfeited ) Non-vested at September 30, 2016 $ 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, 2016 and 2015, 13 thousand shares and 5 thousand shares were issued under the ESPP, respectively. As of September 30, 2016, 498 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 (In thousands) 2016 2015 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, 2016
Employee Benefit Plan
Employee Benefit Plan	Note 19. 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, 2016 and 2015 were approximately $579 thousand and $250 thousand, respectively.

Income Taxes

Income Taxes	3 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	Note 20. 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 benefit for the three months ended September 30, 2016 was $12.9 million compared to income tax expense of $17.1 million for the three months ended September 30, 2015. The effective tax rates for the three months ended September 30, 2016 and 2015 were 30.5% and 33.9%, respectively. The effective tax rate for the three months ended September 30, 2016 was lower compared to the three months ended September 30, 2015 primarily due to higher domestic manufacturing deductions and research and experimentation credits relative to expected pre-tax income, partially offset by the effect of changes in the Company’s state tax profile as result of the KUPI acquisition. 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, 2016 and June 30, 2016, the Company has total unrecognized benefits of $7.0 million and $6.2 million, respectively. 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, 2016 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, 2016 and June 30, 2016. 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 and various states. The Company’s tax returns for Fiscal Year 2012 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, 2016
Related Party Transactions
Related Party Transactions	Note 21. Related Party Transactions The Company had sales of $856 thousand and $337 thousand during the three months ended September 30, 2016 and 2015, 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 $764 thousand and $682 thousand at September 30, 2016 and June 30, 2016, respectively.

Material Contracts with Supplie

Material Contracts with Suppliers	3 Months Ended
	Sep. 30, 2016
Material Contracts with Suppliers
Material Contracts with Suppliers	Note 22. 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 37% and 65% of the Company’s inventory purchases in the three months ended September 30, 2016 and 2015, 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 JSP Distribution Agreement, the Company is required to use commercially reasonable efforts to purchase minimum dollar quantities of JSP products. There is no guarantee that the Company will be able to meet the minimum purchase requirement for Fiscal 2017 and in the future. If the Company does not meet the minimum purchase requirements, JSP’s sole remedy is to terminate the JSP Distribution Agreement.

Subsequent Events

Subsequent Events	3 Months Ended
	Sep. 30, 2016
Subsequent Events
Subsequent Events	Note 23. Subsequent Events On October 18, 2016, the Company received notice from the FDA that it will seek to withdraw approval of the Company’s ANDA for Methylphenidate ER. The FDA’s notice includes an opportunity for the Company to request a hearing on this matter. The Company has until November 17, 2016 to request the hearing and until December 19, 2016 to submit all data, information and analyses upon which the request for a hearing relies. As a result of the notice, the Company performed an impairment analysis including a review of revised net sales projections for Methylphenidate ER. This analysis resulted in the Company recording a $65.1 million impairment charge in the first quarter of Fiscal 2017. See Note 11 “Goodwill and Intangible Assets” for more information.

Summary of Significant Accoun31

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The Consolidated Financial Statements have been prepared in conformity with United States generally accepted accounting principles (U.S. GAAP).
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, including goodwill and intangible assets, income taxes, contingencies, share-based compensation and contingent consideration. 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 other 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, 2016 and 2015 was $5.1 million and $1.7 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, which in most cases is calculated using a discounted cash flow model. Discounted cash flow models are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows.
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 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. Definite-lived intangible assets are amortized over the expected life of the asset. The judgments made in determining the estimated fair value of in-process research and development, as well as asset lives, can materially impact our results of operations. The Company’s fair value assessments are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows.
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 on the first day of 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, the Company determines the fair value of our reporting unit (generic pharmaceuticals). If the net book value of our reporting unit exceeds its fair value, the second step of the impairment test which requires the hypothetical 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 would then be performed. Any residual fair value is allocated to goodwill. An impairment charge is recognized to the extent that the estimated fair value of our reporting unit’s goodwill is less than its carrying amount. The judgments made in determining the estimated fair value of goodwill can materially impact our results of operations. The Company’s fair value assessments are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows.
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, 2016 and 2015: (In thousands) Three Months Ended Medical Indication 2016 2015 Antibiotic $ $ Anti Psychosis Cardiovascular Central Nervous System — Gallstone Gastrointestinal Glaucoma Migraine Muscle Relaxant Obesity Pain Management Respiratory — Thyroid Deficiency Urinary Other Contract manufacturing revenue — 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, 2016 and 2015, 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: 2016 2015 Product 1 % % Product 2 % % The following table presents the percentage of total net sales, for the three months ended September 30, 2016 and 2015, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: 2016 2015 Customer A % % Customer B % % 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 37% and 65% of the Company’s inventory purchases during the three months ended September 30, 2016 and 2015, respectively. See Note 22 “Material Contracts with Suppliers” for more information.
Revenue Recognition and Net Sales Adjustments	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 $166.2 million and $176.1 million at September 30, 2016 and June 30, 2016, respectively. Rebates payable at September 30, 2016 and June 30, 2016 included $20.1 million and $21.9 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.
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-related matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative line item.
Contingent Consideration	Contingent Consideration Contingent consideration resulting from the KUPI acquisition was recorded at its estimated fair value on the acquisition date. The Company has agreed to a 50/50 split of the additional tax liabilities UCB will incur associated with the IRS Section 338(H)(10) tax election, up to $35.0 million. This election is expected to result in additional tax benefits to the Company of approximately $100.0 million. Future decreases, if any, in the estimated fair value of the contingent consideration will be recorded as gains in the Consolidated Statements of Operations. Decreases in the estimated fair value of the contingent consideration obligation can result from lower tax liabilities incurred by UCB associated with the IRS Section 338(H)(10) tax election. These fair value measurements represent Level 3 measurements, as they are based on significant inputs not observable in the market.
Restructuring Costs	Restructuring Costs The Company records charges associated with approved restructuring plans to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations, site closure and consolidation plans. The Company accrues severance and other employee separation costs under these actions when it is probable that a liability exists and the amount is reasonably estimable.
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 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. 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.
Earnings (Loss) Per Common Share	Earnings (Loss) 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, unvested restricted stock and an outstanding warrant. Anti-dilutive securities are excluded from the calculation. Dilutive shares are also excluded in the calculation in periods of net loss because the effect of including such securities would be anti-dilutive.
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 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 was originally effective for annual reporting periods beginning after 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 is applied retrospectively to each prior period presented. The Company elected to early adopt ASU 2015-03 as of December 31, 2015. 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 elected to early adopt ASU 2015-16 as of March 31, 2016. In November 2015, the FASB issued ASU 2015-17, Income Taxes — Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. The guidance may be applied either prospectively or retrospectively. ASU 2015-17 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires an entity to recognize right-of-use assets and liabilities on its balance sheet for all leases with terms longer than 12 months. Lessees and lessors are required to disclose quantitative and qualitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and requires a modified retrospective application, with early adoption permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 clarifies several aspects of accounting for share-based compensation including the accounting for excess tax benefits and deficiencies, accounting for forfeitures and the classification of excess tax benefits on the cash flow statement. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and in interim periods within those fiscal years, with early adoption permitted. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company is currently in the process of assessing the impact this guidance will have on the consolidated financial statements.

Summary of Significant Accoun32

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Schedule of the Company's net sales by medical indication	(In thousands) Three Months Ended Medical Indication 2016 2015 Antibiotic $ $ Anti Psychosis Cardiovascular Central Nervous System — Gallstone Gastrointestinal Glaucoma Migraine Muscle Relaxant Obesity Pain Management Respiratory — Thyroid Deficiency Urinary Other Contract manufacturing revenue — Total $ $
Summary of products which accounted for at least 10% of net sales	2016 2015 Product 1 % % Product 2 % %
Summary of customers which accounted for at least 10% of net sales	2016 2015 Customer A % % Customer B % %

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Sep. 30, 2016
Acquisitions
Summary of fair value of total consideration transferred	(In thousands) Cash purchase price paid to KUPI shareholders $ Working capital adjustment ) Certain amounts reimbursed by UCB ) Total cash consideration transferred to KUPI shareholders 12.0% Senior Notes issued to UCB Acquisition-related contingent consideration Warrant issued to UCB Total consideration to KUPI shareholders $
Schedule of purchase price allocated to assets acquired and liabilities assumed	(In thousands) Preliminary Purchase Measurement Period Purchase Cash and cash equivalents $ $ — $ Accounts receivable, net of revenue-related reserves ) Inventories Other current assets ) Property, plant and equipment Product rights Trade name — Other intangible assets ) In-process research and development ) Goodwill Deferred tax assets ) Other assets Total assets acquired Accounts payable ) — ) Accrued expenses ) ) ) Accrued payroll and payroll-related expenses ) ) ) Rebates payable ) — ) Royalties payable ) ) Other liabilities ) — ) Total net assets acquired $ $ $ (a) As originally reported in the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2015. (b) The measurement period adjustments relate to 1) finalizing working capital adjustments totaling $4.6 million 2) finalized valuations for inventories and property, plant and equipment, 3) receipt of additional information related to product development timelines and 4) revenue-related reserve estimates, all of which reflect facts and circumstances that existed as of the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements. In the first quarter of Fiscal 2017, the Company recorded a $6.0 million adjustment to the Returns reserve.
Schedule of unaudited pro forma information	For the three months ended (In thousands, except per share data) 2015 Net sales $ Net income attributable to Lannett Company, Inc. Earnings per common share attributable to Lannett Company, Inc.: Basic $ Diluted $

Restructuring Charges (Tables)

Restructuring Charges (Tables)	3 Months Ended
	Sep. 30, 2016
Restructuring Charges.
Schedule of restructuring charges associated with restructuring program	(In thousands) Three Months Ended Employee separation costs $ Facility closure costs Total $
Schedule of reconciliation of changes in restructuring liabilities associated with restructuring program	(In thousands) Employee Contract Facility Closure Total Balance at June 30, 2016 $ $ $ — $ Restructuring Charges — Payments ) ) ) ) Balance at September 30, 2016 $ $ $ — $

Accounts Receivable (Tables)

Accounts Receivable (Tables)	3 Months Ended
	Sep. 30, 2016
Accounts Receivable
Schedule of accounts receivable	(In thousands) September 30, June 30, 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, 2016
Inventories
Schedule of Inventories	(In thousands) September 30, June 30, Raw Materials $ $ Work-in-process Finished Goods Total $ $

Property, Plant and Equipment (

Property, Plant and Equipment (Tables)	3 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment
Schedule of property, plant and equipment	(In thousands) Useful Lives September 30, June 30, Land — $ $ Building and improvements 10 - 39 years Machinery and equipment 5 - 10 years Furniture and fixtures 5 - 7 years Less accumulated depreciation ) ) Construction in progress Property, plant and equipment, net $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Schedule of financial assets and liabilities measured at fair value on a recurring basis	September 30, 2016 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Intangible Assets (KUPI product rights) — — Total Assets $ $ — $ $ Liabilities Acquisition-related contingent consideration $ — $ — $ $ Total Liabilities $ — $ — $ $ June 30, 2016 (In thousands) Level 1 Level 2 Level 3 Total Assets Equity securities $ $ — $ — $ Total Assets $ $ — $ — $ Liabilities Acquisition-related contingent consideration $ — $ — $ $ Total Liabilities $ — $ — $ $

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Sep. 30, 2016
Goodwill and Intangible Assets
Schedule of changes in the carrying amount of goodwill	(In thousands) Generic Balance at June 30, 2016 $ Measurement-period adjustments Goodwill acquired — Impairments — Balance at September 30, 2016 $
Summary of intangible assets, net	Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net (In thousands) Avg. Life September 30, June 30, September 30, June 30, September 30, June 30, Definite-lived: Cody Labs import license 15 $ $ $ ) $ ) $ $ KUPI product rights 15 ) ) KUPI trade name 2 ) ) KUPI other intangible assets 15 ) ) Silarx product rights 15 ) ) Other product rights 14 ) ) Total definite-lived $ $ $ ) $ ) $ $ Indefinite-lived: KUPI in-process research and development — $ $ $ — $ — $ $ Silarx in-process research and development — — — Other product rights — — — Total indefinite-lived — — Total intangible assets, net $ $ $ ) $ ) $ $
Summary of future annual amortization expense	(In thousands) Annual Amortization Expense 2017 $ 2018 2019 2020 2021 Thereafter $

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Sep. 30, 2016
Long-Term Debt
Summary of long-term debt, net	September 30, June 30, (In thousands) 2016 2016 Term Loan A due 2020 $ $ Unamortized discount and other debt issuance costs ) ) Term Loan A, net Term Loan B due 2022 Unamortized discount and other debt issuance costs ) ) Term Loan B, net Revolving Credit Facility due 2020 Other Total debt, net Less short-term borrowings and current portion of long-term debt ) ) Total long-term debt, net $ $
Summary of long-term debt amounts due	Amounts Payable (In thousands) to Institutions 2017 $ 2018 2019 2020 2021 Thereafter Total $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Schedule of future minimum lease payments under noncancelable operating leases	(In thousands) Amounts Due Remainder of 2017 $ 2018 2019 2020 2021 Thereafter Total $

Accumulated Other Comprehensi42

Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Sep. 30, 2016
Accumulated Other Comprehensive Loss.
Schedule of Accumulated Other Comprehensive Income (Loss)	(In thousands) September 30, September 30, Foreign Currency Translation Beginning Balance, June 30 $ ) $ ) 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 (Loss) Per Common Sh43

Earnings (Loss) Per Common Share (Tables)	3 Months Ended
	Sep. 30, 2016
Earnings (Loss) Per Common Share
Summary of reconciliation of the Company's basic and diluted earnings per common share	Three Months Ended (In thousands, except share and per share data) 2016 2015 Net income (loss) 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 (loss) per common share attributable to Lannett Company, Inc.: Basic $ ) $ Diluted $ ) $

Share-based Compensation (Table

Share-based Compensation (Tables)	3 Months Ended
	Sep. 30, 2016
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, September 30, Risk-free interest rate % % Expected volatility % % Expected dividend yield % % Forfeiture rate % % Expected term (in years) 5.2 years 5.2 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 June 30, 2016 $ $ Granted $ Exercised ) $ $ Forfeited, expired or repurchased ) $ Outstanding at September 30, 2016 $ $ Vested and expected to vest at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $
Summary of nonvested restricted stock awards	(In thousands, except for weighted average price data) Awards Weighted Aggregate Non-vested at June 30, 2016 Granted Vested ) $ Forfeited ) Non-vested at September 30, 2016 $
Schedule of allocation of share-based compensation costs recognized in the Consolidated Statements of Operations by financial statement line item	Three Months Ended (In thousands) 2016 2015 Selling, general and administrative $ $ Research and development Cost of sales Total $ $ Tax benefit at statutory rate $ $

Summary of Significant Accoun45

Summary of Significant Accounting Policies - Consolidation and PP&E (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment
Depreciation expense	$ 5.1	$ 1.7
Cody LCI Realty LLC ("Realty")
Principles of consolidation
Ownership percentage in VIE	50.00%

Summary of Significant Accoun46

Summary of Significant Accounting Policies - Intangible Assets (Details)	3 Months Ended
	Sep. 30, 2016
Minimum
Intangible assets
Estimated useful lives	10 years
Maximum
Intangible assets
Estimated useful lives	15 years

Summary of Significant Accoun47

Summary of Significant Accounting Policies - Segment Information (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2016USD ($)segment	Sep. 30, 2015USD ($)
Medical Indication Information
Contract manufacturing revenue	$ 5,063
Total	$ 161,559	$ 106,433
Segment information
Number of reportable segments | segment	1
Antibiotic
Medical Indication Information
Net sales	$ 3,780	2,727
Anti Psychosis
Medical Indication Information
Net sales	17,320	2,742
Cardiovascular
Medical Indication Information
Net sales	12,694	8,303
Central Nervous System
Medical Indication Information
Net sales	10,350
Gallstone
Medical Indication Information
Net sales	12,883	19,972
Gastrointestinal
Medical Indication Information
Net sales	18,052	76
Glaucoma
Medical Indication Information
Net sales	5,783	6,822
Migraine
Medical Indication Information
Net sales	7,160	5,542
Muscle Relaxant
Medical Indication Information
Net sales	3,532	1,661
Obesity
Medical Indication Information
Net sales	835	979
Pain Management
Medical Indication Information
Net sales	6,608	8,133
Respiratory
Medical Indication Information
Net sales	2,213
Thyroid Deficiency
Medical Indication Information
Net sales	39,838	41,102
Urinary
Medical Indication Information
Net sales	5,101	215
Other
Medical Indication Information
Net sales	$ 10,347	$ 8,159

Summary of Significant Accoun48

Summary of Significant Accounting Policies - Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Revenue recognition
Reserves, net of accounts receivable	$ 166,200		$ 176,100
Rebates payable	$ 20,103		$ 21,894
Contingent Consideration
Split of additional tax liabilities (in percent)	50.00%
Acquisition related contingent consideration	$ 35,000
Additional tax benefits	$ 100,000
Total net sales | Products | Product 1
Concentration risk
Concentration risk (as a percent)	25.00%	39.00%
Total net sales | Products | Product 2
Concentration risk
Concentration risk (as a percent)	8.00%	19.00%
Total net sales | Customers | Customer A
Concentration risk
Concentration risk (as a percent)	28.00%	28.00%
Total net sales | Customers | Customer B
Concentration risk
Concentration risk (as a percent)	20.00%	12.00%
Inventory purchases | Suppliers | JSP
Concentration risk
Concentration risk (as a percent)	37.00%	65.00%

Acquisitions (Details)

Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 25, 2015	Nov. 25, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Jun. 30, 2016
Fair value of total consideration transferred:
Acquisition-related contingent consideration			$ 35,000
Additional tax benefits			100,000
Purchase price allocation of the assets acquired and liabilities assumed
Goodwill			339,566		$ 339,566	$ 333,611
KUPI
Acquisitions
Percentage of outstanding equity interest	100.00%	100.00%
Fair value of total consideration transferred:
Cash purchase price paid to KUPI shareholders		$ 1,030,000
Working capital adjustment		(41,605)
Certain amounts reimbursed by UCB		(37,340)
Total cash consideration transferred to KUPI shareholders		951,055
12% Senior Notes Issued to UCB		200,000
Acquisition-related contingent consideration		35,000
Warrant issued to UCB		29,920
Total consideration to KUPI shareholders		$ 1,215,975
Incremental tax cost will be reimbursed (as a percent)	50.00%	50.00%
Business combination recognized identifiable assets acquired and liabilities assumed cash on hand	$ 94,600	$ 94,600
Additional tax benefits	100,000
Purchase price allocation of the assets acquired and liabilities assumed
Cash and cash equivalents			16,877		16,877
Accounts receivable, net of revenue-related reserves			129,408		129,408
Inventories			84,009		84,009
Other current assets			11,238		11,238
Property, plant and equipment			111,849		111,849
In-process research and development			125,000		125,000
Goodwill			339,425		339,425
Deferred tax assets			4,186		4,186
Other assets			10,218		10,218
Total assets acquired			1,281,130		1,281,130
Accounts payable			(19,249)		(19,249)
Accrued expenses			(6,079)		(6,079)
Accrued payroll and payroll-related expenses			(21,040)		(21,040)
Rebates payable			(9,816)		(9,816)
Royalties payable			(3,602)		(3,602)
Other liabilities			(5,369)		(5,369)
Total net assets acquired			1,215,975		1,215,975
Indemnification assets acquired	20,700	20,700
Compensation related payments	10,400	10,400
Unrecognized tax benefits	4,900	4,900
Chargeback and rebate-related items	5,400	5,400
Measurement Period Adjustments
Accounts receivable, net of revenue-related reserves					(19,801)
Inventories					194
Other current assets					(1,635)
Property, plant and equipment					14,431
In-process research and development					(107,000)
Goodwill					98,850
Deferred tax assets					(770)
Other assets					5,359
Total assets acquired					6,628
Accrued expenses					(1,918)
Accrued payroll and payroll-related expenses					(309)
Royalties payable					(196)
Total net assets acquired					(4,597)
Working capital adjustments			4,600
Measurement-period adjustment to returns reserve			6,000
Unaudited Pro Forma Financial Results
Net sales				$ 183,966
Net income attributable to Lannett Company, Inc.				$ 26,136
Earnings per common share attributable to Lannett Company, Inc.:
Basic				$ 0.72
Diluted				$ 0.70
Proforma earnings				$ 26,136
KUPI | Scenario, Previously Reported
Purchase price allocation of the assets acquired and liabilities assumed
Cash and cash equivalents	16,877	16,877
Accounts receivable, net of revenue-related reserves	149,209	149,209
Inventories	83,815	83,815
Other current assets	12,873	12,873
Property, plant and equipment	97,418	97,418
In-process research and development	232,000	232,000
Goodwill	240,575	240,575
Deferred tax assets	4,956	4,956
Other assets	4,859	4,859
Total assets acquired	1,274,502	1,274,502
Accounts payable	(19,249)	(19,249)
Accrued expenses	(4,161)	(4,161)
Accrued payroll and payroll-related expenses	(20,731)	(20,731)
Rebates payable	(9,816)	(9,816)
Royalties payable	(3,798)	(3,798)
Other liabilities	(5,369)	(5,369)
Total net assets acquired	$ 1,211,378	1,211,378
KUPI | Acquisition-related Costs
Unaudited Pro Forma Financial Results
Net income attributable to Lannett Company, Inc.				5,600
Earnings per common share attributable to Lannett Company, Inc.:
Proforma earnings				5,600
KUPI | Acquisition costs incurred by acquirer
Earnings per common share attributable to Lannett Company, Inc.:
Acquisition-related expenses				3,900
KUPI | Acquisition costs incurred by acquiree
Earnings per common share attributable to Lannett Company, Inc.:
Acquisition-related expenses				$ 1,700
KUPI | Fair value set-up adjustment
Purchase price allocation of the assets acquired and liabilities assumed
Inventory fair value step-up adjustments		$ 19,100
Senior Notes due 2023
Fair value of total consideration transferred:
Debt instrument, stated percentage	12.00%	12.00%
Aggregate principal amount	$ 250,000	$ 250,000
Revolving Credit Facility
Fair value of total consideration transferred:
Aggregate principal amount	22,800	22,800
Term loans
Fair value of total consideration transferred:
Aggregate principal amount	910,000	910,000
Product rights | KUPI
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets			427,000		427,000
Measurement Period Adjustments
Intangible assets					18,000
Product rights | KUPI | Scenario, Previously Reported
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets	409,000	409,000
Trade name | KUPI
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets			2,920		2,920
Trade name | KUPI | Scenario, Previously Reported
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets	2,920	2,920
Other Intangible Assets | KUPI
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets			$ 19,000		19,000
Measurement Period Adjustments
Intangible assets					$ (1,000)
Other Intangible Assets | KUPI | Scenario, Previously Reported
Purchase price allocation of the assets acquired and liabilities assumed
Intangible assets	$ 20,000	$ 20,000

Restructuring Charges (Details)

Restructuring Charges (Details) - USD ($) $ in Thousands	Feb. 01, 2016	Sep. 30, 2016
Restructuring Charges
Restructuring Charges		$ 2,052
Reconciliation of the changes in restructuring liabilities
Restructuring Charges		2,052
2016 Restructuring Program
Restructuring Charges
Restructuring Charges		2,052
Aggregate total estimated restructuring charges	$ 22,000
Reconciliation of the changes in restructuring liabilities
Beginning balance for the period		4,130
Restructuring Charges		2,052
Payments		(1,415)
Ending balance for the period		4,767
2016 Restructuring Program | Employee separation costs
Restructuring Charges
Restructuring Charges		1,157
Aggregate total estimated restructuring charges	13,000
Reconciliation of the changes in restructuring liabilities
Beginning balance for the period		3,833
Restructuring Charges		1,157
Payments		(465)
Ending balance for the period		4,525
2016 Restructuring Program | Contract termination costs
Restructuring Charges
Aggregate total estimated restructuring charges	1,000
Reconciliation of the changes in restructuring liabilities
Beginning balance for the period		297
Payments		(55)
Ending balance for the period		242
2016 Restructuring Program | Facility closure costs
Restructuring Charges
Restructuring Charges		895
Reconciliation of the changes in restructuring liabilities
Restructuring Charges		895
Payments		$ (895)
2016 Restructuring Program | Facility closures costs and other actions
Restructuring Charges
Aggregate total estimated restructuring charges	$ 8,000

Accounts Receivable (Details)

Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Accounts receivable
Gross accounts receivable	$ 357,739		$ 388,460
Less: reserve	(166,200)		(176,100)
Less: Allowance for doubtful accounts	(1,032)		(610)
Accounts receivable, net	190,526		211,722
Chargebacks
Accounts receivable
Less: reserve	(72,346)		(86,495)
Provision for rebates, chargebacks, returns and other deductions	198,500	$ 88,600
Rebates
Accounts receivable
Less: reserve	(34,439)		(32,189)
Provision for rebates, chargebacks, returns and other deductions	69,500	27,800
Returns
Accounts receivable
Less: reserve	(47,864)		(40,593)
Provision for rebates, chargebacks, returns and other deductions	6,800	3,700
Other
Accounts receivable
Less: reserve	(11,532)		$ (16,851)
Provision for rebates, chargebacks, returns and other deductions	$ 15,500	$ 6,400

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Inventories, net of reserves
Raw materials	$ 50,936	$ 47,881
Work-in-process	21,070	20,207
Finished goods	55,745	46,816
Net inventory	127,751	114,904
Inventory reserves	$ 6,400	$ 6,900

Property, Plant and Equipment53

Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Property, Plant and Equipment
Less accumulated depreciation	$ (58,779)		$ (53,598)
Property, plant and equipment, net before construction in progress	178,681		179,265
Property, plant and equipment, net	221,343		216,638
Asset Impairment Charges	65,084	$ 0
Property, plant and equipment, net, held in foreign countries	990		1,000
Land
Property, Plant and Equipment
Property, plant and equipment, gross	6,191		6,191
Building and improvements
Property, Plant and Equipment
Property, plant and equipment, gross	$ 103,880		103,496
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	$ 123,917		120,272
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	$ 3,472		2,904
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, net	$ 42,662		$ 37,373

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Assets
Intangible Assets (KUPI product rights)	$ 412,414
Total Assets	423,795	$ 14,094
Liabilities
Acquisition-related contingent consideration	35,000	35,000
Total Liabilities	35,000	35,000
Equity securities
Assets
Total Assets	11,381	14,094
Level 1
Assets
Total Assets	11,381	14,094
Level 1 | Equity securities
Assets
Total Assets	11,381	14,094
Level 3
Assets
Intangible Assets (KUPI product rights)	412,414
Total Assets	412,414
Liabilities
Acquisition-related contingent consideration	35,000	35,000
Total Liabilities	$ 35,000	$ 35,000

Investment Securities (Details)

Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Gain (loss) on investments
Gain (loss) on investment securities	$ 808	$ (1,196)
Unrealized gain (loss) related to securities still held	$ 557	$ (1,200)

Goodwill and Intangible Asset56

Goodwill and Intangible Assets - Generic (Details) - USD ($) $ in Thousands	3 Months Ended	11 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Schedule of changes in the carrying amount of goodwill
Goodwill, Balance	$ 333,611
Goodwill, Balance	339,566	$ 339,566
Generic Pharmaceuticals
Schedule of changes in the carrying amount of goodwill
Goodwill, Balance	333,611
Measurement-period adjustments	5,955
Goodwill, Balance	339,566	339,566
KUPI
Schedule of changes in the carrying amount of goodwill
Measurement-period adjustments		98,850
Goodwill, Balance	339,425	$ 339,425
Measurement-period adjustment to returns reserve	$ 6,000

Goodwill and Intangible Asset57

Goodwill and Intangible Assets - Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 467,155		$ 460,155
Gross Carrying Amount, intangible assets	526,604		595,604
Accumulated Amortization	(25,437)		(20,101)
Definite-lived Intangible Assets, Net	441,718		440,054
Indefinite-Lived Intangible Assets, Net	59,449		135,449
Intangible Assets, Net	501,167		575,503
Amortization of Intangible Assets	9,300	$ 187
Impairment charges	65,100
In-process Research and Development | KUPI
Intangible Assets
Indefinite-Lived Intangible Assets, Net	41,000		117,000
In-process Research and Development | Silarx
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	(318)		(309)
Definite-lived Intangible Assets, Net	$ 264		273
Weighted Avg. Life (Yrs.)	15 years
Other Intangible Assets
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 19,000		19,000
Accumulated Amortization	(1,078)		(762)
Definite-lived Intangible Assets, Net	$ 17,922		18,238
Weighted Avg. Life (Yrs.)	15 years
Product rights | KUPI
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 434,000		427,000
Accumulated Amortization	(21,586)		(17,119)
Definite-lived Intangible Assets, Net	$ 412,414		409,881
Weighted Avg. Life (Yrs.)	15 years
Product rights | Other Product Right | Silarx
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 10,000		10,000
Accumulated Amortization	(889)		(722)
Definite-lived Intangible Assets, Net	$ 9,111		9,278
Weighted Avg. Life (Yrs.)	15 years
Trade name | KUPI
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 2,920		2,920
Accumulated Amortization	(1,243)		(878)
Definite-lived Intangible Assets, Net	$ 1,677		2,042
Weighted Avg. Life (Yrs.)	2 years
Other Product Right
Intangible Assets
Gross Carrying Amount, Definite-lived Intangible Assets	$ 653		653
Accumulated Amortization	(323)		(311)
Definite-lived Intangible Assets, Net	$ 330		342
Weighted Avg. Life (Yrs.)	14 years
Other Product Right | Other Product Right
Intangible Assets
Indefinite-Lived Intangible Assets, Net	$ 449		$ 449

Goodwill and Intangible Asset58

Goodwill and Intangible Assets - Future Annual Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Annual Amortization Expense
2,017	$ 24,306
2,018	31,530
2,019	30,946
2,020	30,938
2,021	30,938
Thereafter	293,060
Intangible assets, net	$ 441,718	$ 440,054

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 17, 2016	Apr. 08, 2016	Nov. 25, 2015	Sep. 30, 2016	Jun. 30, 2016
Long-term debt, net
Total debt, gross				$ 1,147,917
Other				839	$ 874
Total debt, net				1,053,688	1,061,848
Less short-term borrowings and current portion of long-term debt				(178,238)	(178,236)
Total long-term debt, net				875,450	883,612
Long-term debt maturities
2,017				178,238
2,018				63,557
2,019				67,001
2,020				67,008
2,021				211,391
Thereafter				560,722
Total debt, gross				1,147,917
Senior Secured Credit Facility and Senior Notes
Debt Additional Information
Initial purchaser's discount			$ 72,100
Debt issuance costs			32,700
Revolving Credit Facility
Long-term debt, net
Total debt, gross				125,000	125,000
Debt Additional Information
Aggregate principal amount			$ 22,800
Drew down of revolving credit facility		$ 125,000
Effective interest rate (as a percent)			4.75%
Unused commitment, fee rate (as a percent)			0.50%
Minimum percentage of commitments under secured credit facility (as a percent)			30.00%
Senior secured leverage ratio from and after 2015			4.25%
Senior secured leverage ratio from and after 2017			3.75%
Senior secured leverage ratio from and after 2019			3.25%
Long-term debt maturities
Total debt, gross				125,000	125,000
Revolving Credit Facility | Maximum
Debt Additional Information
Aggregate principal amount			$ 125,000
Term Loan A Facility due 2020
Long-term debt, net
Total debt, gross				264,688	268,125
Unamortized discount and other debt issuance costs				(20,597)	(22,104)
Total debt, net				244,091	246,021
Debt Additional Information
Aggregate principal amount			$ 275,000
Contribution percentage of term loan on secured credit facility through 2017 (as a percent)			1.25%
Contribution percentage of term loan on secured credit facility from 2018 to 2020 (as a percent)			2.50%
Effective interest rate (as a percent)			4.75%
Senior secured leverage ratio from and after 2015			4.25%
Senior secured leverage ratio from and after 2017			3.75%
Senior secured leverage ratio from and after 2019			3.25%
Long-term debt maturities
Total debt, gross				264,688	268,125
Term Loan B Facility due 2022
Long-term debt, net
Total debt, gross				757,390	767,226
Unamortized discount and other debt issuance costs				(73,632)	(77,273)
Total debt, net				683,758	689,953
Debt Additional Information
Aggregate principal amount			$ 635,000
Contribution percentage of term loan on secured credit facility on maturity (as a percent)			1.25%
Effective interest rate (as a percent)			5.375%
Long-term debt maturities
Total debt, gross				$ 757,390	$ 767,226
Incremental Term Loan
Debt Additional Information
Aggregate principal amount	$ 150,000
Initial purchaser's discount	14,000
Debt issuance costs	$ 2,200
Term Loan A and Term Loan B
Debt Additional Information
Spread rate (as a percent)			1.00%
Senior Notes due 2023
Debt Additional Information
Aggregate principal amount			$ 250,000
Debt instrument, stated percentage			12.00%

Legal and Regulatory Matters (D

Legal and Regulatory Matters (Details)	Apr. 16, 2013a	Jun. 30, 2016lawsuit
Breach of agreements
Contingencies
Severance compensation, period	18 months
Amount as a percentage of value of land that Mr. Asherman sought to have in the matter	50.00%
Area of land | a	1.66
Private Antitrust and Consumer Protection Litigation
Contingencies
Number of lawsuits filed | lawsuit		19

Commitments and Contingencies61

Commitments and Contingencies (Details) $ in Thousands	Sep. 30, 2016USD ($)
Future minimum lease payments
Remainder of 2017	$ 1,200
2,018	1,142
2,019	1,080
2,020	1,080
2,021	1,080
Thereafter	6,345
Total	$ 11,927

Accumulated Other Comprehensi62

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Foreign Currency Translation
Beginning Balance	$ (295)	$ (295)
Net gain (loss) on foreign currency translation (net of tax of $0 and $0)	(3)	(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	(3)	(16)
Ending Balance	(298)	(311)
Total Accumulated Other Comprehensive Loss	$ (298)	$ (311)	$ (295)

Earnings (Loss) Per Common Sh63

Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Earnings (Loss) Per Common Share
Net income (loss) attributable to Lannett Company, Inc.	$ (29,408)	$ 33,181
Basic weighted average common shares outstanding	36,699,267	36,310,653
Effect of potentially dilutive stock options and restricted stock awards		1,104,071
Diluted weighted average common shares outstanding	36,699,267	37,414,724
Earnings (loss) per common share attributable to Lannett Company, Inc.:
Basic (in dollars per share)	$ (0.80)	$ 0.91
Diluted (in dollars per share)	$ (0.80)	$ 0.89
Anti-dilutive shares excluded in the computation of diluted earnings per share	4,300,000	139,000

Warrant (Details)

Warrant (Details) - KUPI - Warrant issued to UCB shares in Millions	3 Months Ended
	Sep. 30, 2016$ / sharesshares
Class of Warrant or Right
Number of common stock to be purchased under the warrant | shares	2.5
Warrants expiration period	3 years
warrants exercise price | $ / shares	$ 48.90

Share-based Compensation (Detai

Share-based Compensation (Details) shares in Millions, $ in Millions	3 Months Ended
	Sep. 30, 2016USD ($)itemshares
Stock-based Compensation
Number of share-based employee compensation plans | item	2
Aggregate number of shares authorized for issuance	4.5
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 | $	$ 8.9
Weighted average period during which the cost is expected to be recognized	1 year 10 months 24 days

Share-based Compensation - Assu

Share-based Compensation - Assumptions used and Rollforward (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
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)	1.10%	1.70%
Expected volatility (as a percent)	55.60%	48.30%
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 2 months 12 days
Weighted average fair value (in dollars per share)	$ 15.33	$ 26.24
Awards
Outstanding at the beginning of the period (in shares)	1,730
Granted (in shares)	11
Exercised (in shares)	(169)
Forfeited, expired or repurchased (in shares)	(11)
Outstanding at the end of the period (in shares)	1,561		1,730
Vested and expected to vest, Awards (in shares)	1,551
Exercisable at end of year (in shares)	1,403
Stock options, Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 16.77
Granted (in dollars per share)	31.30
Exercised (in dollars per share)	6.42
Forfeited, expired or repurchased (in dollars per share)	28.18
Outstanding at the end of the period (in dollars per share)	17.91		$ 16.77
Vested and expected to vest, Weighted-Average Exercise Price (in dollars per share)	17.77
Exercisable at the end of the period (in dollars per share)	$ 15.55
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 19,524
Exercised (in dollars)	4,017
Outstanding at the end of the period (in dollars)	19,548		$ 19,524
Vested and expected to vest, Aggregate Intrinsic Value	19,548
Exercisable at the end of the period (in dollars)	$ 19,548
Weighted Average Remaining Contractual Life (yrs.)
Outstanding at the end of the period (in years)	6 years 4 months 24 days		6 years 3 months 18 days
Vested and expected to vest, Weighted Average Remaining Contractual Life	6 years 4 months 24 days
Exercisable at the end of the period (in years)	6 years 2 months 12 days

Share-based Compensation - Roll

Share-based Compensation - Rollforward (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Purchase Plan
Aggregate number of shares authorized for issuance	4,500
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)	167
Granted (in shares)	121
Vested (in shares)	(75)
Forfeited (in shares)	(9)
Nonvested at the end of the period (in shares)	204
Weighted Average Grant-date Fair Value
Nonvested at the beginning of the period (in dollars per share)	$ 48.22
Granted (in dollars per share)	30.66
Vested (in dollars per share)	43.80
Forfeited (in dollars per share)	40.66
Nonvested at the end of the period (in dollars per share)	$ 39.72
Aggregate Intrinsic Value
Vested	$ 2,302
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)	13	5
Cumulative shares issued under the ESPP (in shares)	498

Share-based Compensation - Allo

Share-based Compensation - Allocation Of Share-based Compensation Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	$ 2,456	$ 4,374
Tax benefit at statutory rate	897	1,545
Selling, general and administrative
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	1,972	3,886
Research and development
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	173	188
Cost of sales
Share-based compensation costs recognized in the entity's Consolidated Statements of Operations
Share based compensation	$ 311	$ 300

Employee Benefit Plan (Details)

Employee Benefit Plan (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
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	$ 579	$ 250

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Deferred tax assets:
Effective income tax rate (as a percent)	30.50%	33.90%
Income tax benefit	$ (12,882)	$ 17,055
Unrecognized tax benefits	7,000		$ 6,200
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, 2016	Sep. 30, 2015	Jun. 30, 2016
Related Party Transactions
Sales to a generic distributor	$ 856	$ 337
Amounts due from the related party	$ 764		$ 682

Material Contracts with Suppl72

Material Contracts with Suppliers (Details) - JSP shares in Millions, $ in Millions	Aug. 19, 2013USD ($)itemshares	Sep. 30, 2016	Sep. 30, 2015
Material Contracts with Suppliers
Number of shares of common stock issued in exchange for exclusive distribution rights	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	1.5
Period from notice within which if breach is not cured, non-breaching party has right to terminate contract		30 days
Inventory purchases | Suppliers
Material Contracts with Suppliers
Purchases of finished goods inventory from JSP as a percentage of the company's inventory purchases		37.00%	65.00%

Subsequent Events (Details)

Subsequent Events (Details) $ in Millions	3 Months Ended
	Sep. 30, 2016USD ($)
Subsequent Events
Impairment charges	$ 65.1