Lannett Company Reports Fiscal 2005 Fourth Quarter and Full Year Financial Results.PHILADELPHIA Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. -- Lannett Company, Inc. (AMEX AMEX See: American Stock Exchange :LCI LCI Livable Centers Initiative LCI Life Cycle Inventory LCI Landing Craft, Infantry LCI La Chaine Info (French cable news channel) LCI Lean Construction Institute LCI Lions Club International ) today reported its financial results for the fiscal 2005 fourth quarter and full year ended June June: see month. 30, 2005. E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]For fiscal year 2005, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $44.9 million, compared with $63.8 million for fiscal 2004. Net loss was $32.8 million, or $1.36 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which includes a $46.1 million non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss on intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , compared with net income of $13.2 million, or $0.63 per basic and diluted share, for fiscal 2004. E[acute accent]For the fourth quarter of fiscal 2005, net sales were $9.4 million, compared with $18.0 million for fiscal 2004 fourth quarter. Net loss was $5.7 million, or $0.24 per basic and diluted share, compared with net income of $2.8 million, or $0.12 per basic and diluted share, for the same period in 2004. E[acute accent]"Despite a challenging fiscal 2005, in which we faced pricing pressure on a number products and recorded a loss on the impairment of an intangible asset, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about Lannett's future," said Arthur Arthur, king of Britain: see Arthurian legend. Arthur king and hero of Scotland, Wales, and England. [Arthurian Legend: Parrinder, 28] See : Heroism Bedrosian, president of Lannett. "We have invested significant resources in building and developing a solid pipeline of products that we believe will grow our top line and help mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the effects of the highly competitive nature
of the generic drug generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. industry. We have 11 product applications currently
pending at the FDA FDAabbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. . Lannett's R&D effort includes 23 potential candidates for ANDAs plus outsourced contracts for the development of 13 additional products. We expect our pipeline to begin to positively impact our financial results throughout the coming fiscal year. Accordingly, we currently anticipate net sales growth in the mid-teen percent range for fiscal 2006." E[acute accent]For the fiscal year 2005, gross profit was $13.5 million, or 30% of net sales, compared with $36.9 million, or 58% of net sales, for fiscal 2004. Research and development expenses were $6.3 million, compared with $5.9 million for the fiscal 2004 full year. Selling, general and administrative (SG&A) expenses were $9.2 million, compared with $8.9 million for fiscal 2004. Amortization expense was $5.5 million, compared with $1.3 million for the prior year. E[acute accent]For the fourth quarter of fiscal 2005, gross profit was negative $3.0 million, compared with $9.5 million, or 53% of net sales, in the fourth quarter of fiscal 2004. The negative gross profit was the result of increased reserves for short dated inventory, primarily Levothyroxine Sodium le·vo·thy·rox·ine sodium n. An isomer of thyroxine in a salt form, used to treat thyroxine deficiency. levothyroxine sodium (lē´vōthīrak´sēn), , and decreased prices for a majority of the product line, as is being experienced across the generic pharmaceutical industry. E[acute accent]Research and development expenses increased to $2.7 million from $2.4 million in the same period in 2004. SG&A expenses were $2.4 million, down slightly compared with $2.7 million in the fourth quarter of fiscal 2004. Amortization expense was $0.5 million, compared with $1.3 million for the prior-year period. E[acute accent]On January 27, 2005, Lannett's board of directors announced the authorization The right or permission to use a system resource; the process of granting access. See access control. of a stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. To date, Lannett repurchased approximately $395,000 of its shares as part of this program, which authorizes management to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $5 million of Lannett's outstanding common stock from time to time at management's discretion. E[acute accent]About Lannett Company: E[acute accent]Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of indications. For more information, visit Lannett Company's website at www.lannett.com. E[acute accent]This news release contains certain statements of a forward-looking nature relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future events or future business performance. Any such statements, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, Lannett's estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , product development efforts or performance, and other risk factors discussed in the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Year
Ended Ended
(UNAUDITED)
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------------ ------------ ------------- ------------
Net sales $9,368,438 $17,985,581 $44,901,645 $63,781,219
Cost of sales 12,443,756 8,451,582 31,416,908 26,856,875
------------ ------------ ------------- ------------
Gross profit (3,075,318) 9,533,999 13,484,737 36,924,344
Research and
development
expenses 2,744,015 2,394,337 6,265,522 5,895,096
Selling, general
and
administrative
expenses 2,376,890 2,683,986 9,194,377 8,863,966
Amortization
expense 446,166 1,314,510 5,516,417 1,314,510
Impairment loss
on intangible
asset 53,377 19,803 46,148,079 19,803
------------ ------------ ------------- ------------
Operating (loss)
income (8,695,766) 3,121,363 (53,639,658) 20,830,969
------------ ------------ ------------- ------------
Other income
(expense) (40,145) (25,119) (185,840) (21,199)
------------ ------------ ------------- ------------
(Loss) Income
before taxes (8,735,911) 3,096,244 (53,825,498) 20,809,770
Income tax
(benefit)
expense (3,010,067) 336,120 (21,045,902) 7,594,316
------------ ------------ ------------- ------------
Net (loss) income $(5,725,844) $2,760,124 $(32,779,596) $13,215,454
============ ============ ============= ============
(Loss) Earnings
per share:
Basic $(0.24) $0.12 $(1.36) $0.63
============ ============ ============= ============
Diluted $(0.24) $0.12 $(1.36) $0.63
============ ============ ============= ============
Shares used to calculate
(loss) earnings per share:
Basic 24,111,140 20,831,750 24,097,472 20,831,750
============ ============ ============= ============
Diluted 24,111,140 21,053,944 24,097,472 21,053,944
============ ============ ============= ============
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, June 30,
2005 2004
---------------- --------------
Assets:
Current Assets:
Cash $4,165,601 $8,966,954
Trade accounts receivable, net $10,735,529 24,240,887
Inventories $9,988,769 12,813,250
Prepaid taxes $3,957,993 882,613
Other current assets $1,966,270 1,016,050
Deferred tax asset $3,123,953 942,689
---------------- --------------
Total current assets 33,938,115 48,862,443
Property and equipment, net 16,624,848 9,592,895
Investment securities-available-for-
sale 7,888,708 -
Deferred tax asset 18,610,159 166,332
Intangible asset, net 15,615,835 65,725,490
Construction in progress 2,079,650 7,352,821
Other assets 159,745 204,103
---------------- --------------
Total Assets $94,917,060 $131,904,084
================ ==============
Liabilities and Shareholders' Equity:
Current liabilities $16,395,562 $19,938,629
Long-term debt, less current portion 7,262,672 8,104,141
Deferred income taxes and other
liabilities 2,009,582 1,614,323
Shareholders' equity 69,249,244 102,246,991
---------------- --------------
Total Liabilities and Shareholders'
Equity $94,917,060 $131,904,084
================ ==============
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