Lannett Company Reports Fiscal 2006 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 full fiscal year and the fourth quarter ended June June: see month. 30, 2006. For fiscal year 2006, 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 $64.1 million, an increase of $19.2 million compared with net sales of $44.9 million in fiscal 2005. Net income was $5.0 million, or $0.21 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 included equity-based compensation expense of $1.1 million, net of tax benefit, or $0.05 per basic and diluted share. This compares with a net loss in fiscal 2005 of $32.8 million, or $1.36 loss per basic and diluted share, which included 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 assets 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. and no equity-based compensation expense. Equity-based compensation expense was adopted at the beginning of fiscal year 2006 in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Statement of Financial Accounting Standards No. 123R. For the fourth quarter of fiscal 2006, net sales were $19.5 million, an increase of $10.1 million compared with $9.4 million in fiscal 2005 fourth quarter. Net income was $0.8 million, or $0.04 per basic and diluted share, which included equity-based compensation expense of $0.3 million, net of tax benefit, or $0.01 per basic and diluted share. This compares with a net loss of $5.7 million, or $0.24 loss per basic and diluted share, for the same period in fiscal 2005. "In fiscal 2006, we launched a number of new products, established strategic alliances and invested in research and development," 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, Lannett's president and chief executive officer. "These efforts combined to fuel the significant top line and bottom line improvement we made this past year over the prior year and position Lannett for continued growth. Looking ahead, we currently anticipate fiscal 2007 net sales to grow in the mid-teen percent range over fiscal 2006." For fiscal year 2006, gross profit was $30.2 million, or 47% of net sales, compared with $13.5 million, or 30% of net sales, for fiscal 2005. Research and development expenses were $8.1 million, compared with $6.3 million for the fiscal 2005 full year. Selling, general and administration (SG&A) expenses were $11.8 million, including $1.4 million of equity-based compensation expense, compared with $9.2 million for fiscal 2005. Amortization expense was $1.8 million, compared with $5.5 million for the prior year. For the fourth quarter of fiscal 2006, gross profit was $9.9 million, or 51% of net sales, compared with negative $3.1 million in the fourth quarter of fiscal 2005. The negative gross profit in the prior year 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. For the fourth quarter of fiscal 2006, research and development expenses increased to $3.3 million from $2.7 million in the same period in 2005. SG&A expenses were $4.5 million, including $0.4 million of equity-based compensation expense, compared with $2.4 million in the fourth quarter of fiscal 2005. Amortization expense was $0.4 million for both periods. About Lannett Company: Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic Generic Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue. pharmaceutical products for a wide range of indications. For more information, visit Lannett Company's website at www.lannett.com. This news release contains certain statements of a forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. , 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 FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. or other regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Net sales $19,452,896 $9,368,438 $64,060,375 $44,901,645
Cost of sales 9,569,130 12,443,756 33,900,045 31,416,908
------------ ------------ ------------ -------------
Gross profit 9,883,766 (3,075,318) 30,160,330 13,484,737
Research and
development
expenses 3,288,279 2,744,015 8,102,465 6,265,522
Selling, general
and
administrative
expenses 4,452,548 2,376,890 11,799,994 9,194,377
Amortization
expense 446,166 446,166 1,784,665 5,516,417
Impairment loss
on intangible &
other assets 19,288 53,377 19,288 46,148,079
------------ ------------ ------------ -------------
Operating income
(loss) 1,677,485 (8,695,766) 8,453,918 (53,639,658)
------------ ------------ ------------ -------------
Other (expense)
income (19,432) (40,145) 76,179 (185,840)
------------ ------------ ------------ -------------
Income (loss)
before taxes 1,658,053 (8,735,911) 8,530,097 (53,825,498)
Income tax
expense
(benefit) 808,840 (3,010,067) 3,561,175 (21,045,902)
------------ ------------ ------------ -------------
Net income (loss) $849,213 $(5,725,844) $4,968,922 $(32,779,596)
============ ============ ============ =============
Earnings (loss)
per share:
Basic $0.04 $(0.24) $0.21 $(1.36)
============ ============ ============ =============
Diluted $0.04 $(0.24) $0.21 $(1.36)
============ ============ ============ =============
Shares used to
calculate
earnings (loss)
per share:
Basic 24,141,170 24,111,140 24,130,224 24,097,472
============ ============ ============ =============
Diluted 24,180,209 24,111,140 24,154,409 24,097,472
============ ============ ============ =============
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, June 30,
2006 2005
------------- ------------
Assets:
Current Assets:
Cash $468,359 $4,165,601
Trade accounts receivable, net 24,921,671 10,735,529
Inventories 11,476,503 9,988,769
Prepaid taxes 3,212,511 3,957,993
Other current assets 1,946,631 1,966,270
Deferred tax asset 1,461,172 3,123,953
------------- ------------
Total current assets 43,486,847 33,938,115
Property and equipment, net 19,645,549 16,624,848
Investment securities-available-for-sale 5,621,609 7,888,708
Note Receivable 3,182,498 -
Deferred tax asset 18,070,674 18,610,159
Intangible asset, net 13,831,168 15,615,835
Construction in progress 1,955,508 2,079,650
Other assets 198,211 159,745
------------- ------------
Total Assets $105,992,064 $94,917,060
============= ============
Liabilities and Shareholders' Equity:
Current liabilities $20,624,428 $16,395,562
Long-term debt, less current portion 7,065,986 7,262,672
Deferred income taxes and other
liabilities 2,545,734 2,009,582
Shareholders' equity 75,755,916 69,249,244
------------- ------------
Total Liabilities and Shareholders'
Equity $105,992,064 $94,917,060
============= ============
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