EXHIBIT 99.1
LANNETT COMPANY REPORTS SALES AND EARNINGS RESULTS FOR
ITS 3RD QUARTER AND FIRST NINE MONTHS OF FISCAL 2004
PHILADELPHIA, PA -- April 27, 2004 -- LANNETT COMPANY, INC. (AMEX:
LCI), a manufacturer of generic pharmaceuticals, announced its results of
operations for the quarter ended and nine months ended March 31, 2004.
The following table presents Lannett's unaudited results of operations
for the quarters ended March 31, 2004 and March 31, 2003 and the nine-month
periods ended March 31, 2004 and March 31, 2003:
3/31/04 3/31/03 3/31/04 3/31/03
Unaudited Unaudited Unaudited Unaudited
(In thousands, except (In thousands, except
for Diluted Income per Share) for Diluted Income per Share)
Net Sales $16,001 $11,020 $45,796 $30,330
Cost of Sales 6,948 3,977 18,405 11,778
------- ------- ------- -------
Gross Profit 9,053 7,043 27,391 18,552
Research & Development Expenses 1,362 683 3,501 1,669
Selling, General & Admin.
Expenses 2,276 1,067 6,180 3,224
------- ------- ------- -------
Operating Profit 5,415 5,293 17,710 13,659
Other Income/(Expense) 2 (123) 4 (161)
------- ------- ------- -------
Income Before Taxes 5,417 5,170 17,714 13,498
Income Tax Expense 2,218 1,914 7,258 4,928
------- ------- ------- -------
Net Income 3,199 3,256 10,456 8,570
======= ======= ======= =======
Diluted Income per Share $ 0.16 $ 0.16 $ 0.52 $ 0.43
======= ======= ======= =======
Arthur Bedrosian, Lannett's President, commenting on the results for
the quarter, stated, "Lannett is pleased with its results of operations for the
third quarter of this Fiscal 2004 year. Sales for the quarter ended March 31,
2004 increased by 45% from sales for the quarter ended March 31, 2003. For the
nine months ended March 31, 2004, sales increased by 51% from sales for the nine
months ended March 31, 2003. Sales increased due to the introduction of new
products, including Levothyroxine Sodium tablets and Unithroid tablets, and the
increase in sales of a portion of the Company's other products. Our net sales
revenue remained consistent with the prior quarter (Second Quarter Fiscal 2004)
because the Company has not introduced a new product on the market since August
of 2003, when the Company launched its sales and distribution campaign for
Unithroid tablets.
The Company has embarked on a mission to improve its long-term value,
and competitive position in the generic marketplace. This involves a strategy to
invest heavily in research and development (R&D) projects, and to continually
improve our operating infrastructure. We have invested in several R&D projects,
and expect those investments to be paid back as we submit Abbreviated New Drug
Applications (ANDAs) to the Food and Drug Administration (FDA), and gain
marketing approval for such drugs. The Company is also working on other R&D
projects, including drug products which do not require FDA approval, and
agreements with third parties for various new product initiatives. The cost of
such programs are part of our expenses for
the current period. Spending on R&D increased to $3.5 million for the nine
months ended March 31, 2004 compared to $1.7 million for the same period of the
prior year.
In addition to the R&D program, the Company has taken steps to ensure
that its operating infrastructure is strong. This includes instituting internal
controls, consistent with the Sarbanes-Oxley Act of 2002, implementing an
integrated Enterprise Resource Planning (ERP) system and related Electronic Data
Interchange (EDI) capabilities, continuing to expand the knowledge and education
of our employees through various training and educational programs, recruiting
and hiring experienced managers and supervisors with specialized knowledge in
diverse functions and establishing compensation programs to provide for
additional incentive awards. In addition to these efforts, the Company has
increased its sales and marketing endeavors by hiring an additional sales
representative, and expanding the advertising campaigns for its new products.
These actions have increased the Company's selling, general and administrative
(SG&A) expenses in the current periods noted. Total SG&A expenses increased to
$6.2 million for the nine months ended March 31, 2004 compared to $3.2 million
for the same period of the prior year." In addition to higher SG&A expenses, the
Company's effective income tax rate increased in the current periods due to
higher federal, state and local tax liabilities.
Lannett continues to have a strong balance sheet with an excellent
working capital ratio. As of March 31, 2004, the Company had a cash position of
$7.9 million,
net accounts receivable of $12.3 million, inventory of $10.3 million, current
liabilities of $5.9 million and stockholders equity of $32.4 million.
The Company's common stock trades on the American Stock Exchange under
the symbol "LCI". For more information please call Investor Relations at
215/333-9000.
THIS PRESS RELEASE CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING
NATURE RELATING TO FUTURE EVENTS OR FUTURE BUSINESS PERFORMANCE. ANY SUCH
STATEMENTS THAT REFER TO LANNETT'S ESTIMATED OR ANTICIPATED FUTURE FINANCIAL
RESULTS, FUTURE INVENTORY LEVELS, FUTURE COMPETITION OR PRICING, FUTURE LEVELS
OF OPERATING EXPENSES, PRODUCT DEVELOPMENT EFFORTS OR PERFORMANCE, OR OTHER
NON-HISTORICAL FACTS ARE FORWARD-LOOKING AND REFLECT LANNETT'S CURRENT
PERSPECTIVE OF EXISTING TRENDS AND INFORMATION. THESE STATEMENTS INVOLVE RISKS
AND UNCERTAINTIES THAT CANNOT BE PREDICTED OR QUANTIFIED AND, CONSEQUENTLY,
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS,
THE UNCERTAINTY THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE PRELIMINARY
RESULTS DESCRIBED IN THIS PRESS RELEASE, RATES OF SALE OF CUSTOMER INVENTORIES,
THE SUCCESS OF LANNETT'S PRODUCT DEVELOPMENT ACTIVITIES AND THE TIMELINESS WITH
WHICH REGULATORY AUTHORIZATIONS AND PRODUCT ROLL-OUT MAY BE ACHIEVED, MARKET
ACCEPTANCE OF LANNETT'S PRODUCTS AND THE IMPACT OF COMPETITIVE PRODUCTS AND
PRICING, THE AVAILABILITY ON COMMERCIALLY REASONABLE TERMS OF RAW MATERIALS AND
OTHER THIRD PARTY SOURCED PRODUCTS, SUCCESSFUL COMPLIANCE WITH EXTENSIVE,
COSTLY, COMPLEX AND EVOLVING GOVERNMENTAL REGULATIONS AND RESTRICTIONS, EXPOSURE
TO PRODUCT LIABILITY AND OTHER LAWSUITS AND CONTINGENCIES, AND OTHER RISKS AND
UNCERTAINTIES DETAILED IN LANNETT'S MOST RECENT FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING BUT NOT LIMITED TO: LANNETT'S ANNUAL REPORT AND
FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2003.
###