Attached files
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| 8-K - 8-K - LANNETT CO INC | a10-21277_18k.htm |
Exhibit 99.1
Contacts: Robert Jaffe
PondelWilkinson Inc.
(310) 279-5980
LANNETT REPORTS FISCAL 2011 FIRST QUARTER FINANCIAL RESULTS
Philadelphia, PA — November 11, 2010 — Lannett Company, Inc. (NYSE AMEX: LCI) today reported financial results for the fiscal 2011 first quarter ended September 30, 2010.
For the first quarter of fiscal 2011, net sales were $25.4 million, compared with $31.4 million for the first quarter of fiscal 2010. Gross profit declined to $5.9 million from $11.5 million for the same period in the prior year. Research and development expenses decreased to $2.0 million from $3.0 million in the fiscal 2010 first quarter. Selling, general and administrative expenses rose to $4.6 million from $3.8 million in the same quarter of the prior year, primarily due to increased legal costs related to litigation with the FDA regarding the company’s Morphine Sulfate Oral solution product. Operating loss was $726,000 versus operating income of $4.7 million in the fiscal 2010 first quarter. Net loss was $404,000, or $0.02 per share, compared to net income of $2.9 million, or $0.11 per diluted share, for the prior year’s first quarter.
“As expected, sales and gross profit in the quarter were impacted by approximately $2.8 million in lost revenues resulting from the FDA’s action to force all but one competitor to cease distributing Morphine Sulfate Oral Solution, as well as pricing pressure and reduced profitability on certain key products,” said Arthur Bedrosian, president and chief executive officer of Lannett. “We continue to expect to receive FDA approval in the near future of our 505(b)(2) New Drug Application for Morphine Sulfate Oral Solution, with an anticipated re-launch of the drug in early calendar 2011.
“Our performance continues to be impacted by the lack of ANDA approvals due to the FDA backlog, as well as the FDA’s enforcement action regarding Morphine Sulfate, which had the additional effect of forcing us to reduce our workforce at the company’s pain management division.”
Bedrosian also said that during the quarter, the company purchased approximately 20,000 shares of Lannett common stock in open market transactions, and the FDA completed inspections of the company’s facilities in Wyoming, with only two minor 483 observations, and no observations in Philadelphia.
Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for the 2010 fiscal first quarter ended September 30, 2010. The conference call will be available to interested parties by dialing 888-771-4371 from the U.S. or Canada, or 847-585-4405 from international locations, passcode 28342817. The conference call will also be available through a live audio Internet
broadcast at www.lannett.com. The call will be archived and accessible at this site for at least three months.
Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance and regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.
About Lannett Company, Inc.:
Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of indications. For more information, visit the company’s website at www.lannett.com.
This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, investing in R&D to add to the company’s growing product offering and further diversify its portfolio, 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, product development efforts or performance, and other risk factors discussed in the company’s Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements 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.
# # #
FINANCIAL TABLES FOLLOW
LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three months ended |
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September 30, |
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2010 |
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2009 |
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Net sales |
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$ |
25,395,927 |
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$ |
31,434,989 |
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Cost of sales |
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18,900,048 |
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19,012,318 |
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Amortization of intangible assets |
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448,667 |
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448,667 |
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Product royalties |
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143,271 |
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439,774 |
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Gross profit |
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5,903,941 |
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11,534,230 |
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Research and development expenses |
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2,042,369 |
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3,027,841 |
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Selling, general, and administrative expenses |
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4,600,681 |
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3,763,161 |
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Gain on sale of investments |
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(12,641 |
) |
— |
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Operating (loss) income |
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(726,468 |
) |
4,743,228 |
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Other income (expense): |
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Foreign currency gain |
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2,415 |
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— |
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Interest income |
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11,231 |
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23,099 |
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Interest expense |
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(70,844 |
) |
(70,413 |
) |
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(57,198 |
) |
(47,314 |
) |
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(Loss) income before income tax (benefit) expense |
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(783,666 |
) |
4,695,914 |
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Income tax (benefit) expense |
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(389,544 |
) |
1,827,650 |
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Net (loss) income |
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(394,122 |
) |
2,868,264 |
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Less net income attributable to noncontrolling interest |
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(9,439 |
) |
(10,894 |
) |
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Net (loss) income attributable to Lannett Company, Inc. |
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$ |
(403,561 |
) |
$ |
2,857,370 |
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(Loss) earnings per common share - Lannett Company, Inc.: |
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Basic |
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$ |
(0.02 |
) |
$ |
0.12 |
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Diluted |
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$ |
(0.02 |
) |
$ |
0.11 |
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Weighted average number of shares outstanding: |
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Basic |
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24,899,530 |
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24,533,562 |
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Diluted |
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24,899,530 |
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25,054,661 |
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LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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(Unaudited) |
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September 30, 2010 |
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June 30, 2010 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
17,624,554 |
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$ |
21,895,648 |
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Investment securities - available for sale |
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212,757 |
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604,464 |
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Trade accounts receivable (net of allowance of $123,192 and $123,192, respectively) |
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31,189,099 |
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38,324,258 |
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Inventories, net |
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21,036,591 |
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19,056,868 |
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Interest receivable |
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9,371 |
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9,631 |
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Prepaid taxes |
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498,215 |
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— |
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Deferred tax assets |
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5,133,873 |
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5,337,391 |
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Other current assets |
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2,162,319 |
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2,506,114 |
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Total Current Assets |
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77,866,779 |
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87,734,374 |
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Property, plant and equipment |
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51,882,758 |
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50,160,114 |
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Less accumulated depreciation |
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(22,293,000 |
) |
(21,531,845 |
) |
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29,589,758 |
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28,628,269 |
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Construction in progress |
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3,680,223 |
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2,939,898 |
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Investment securities - available for sale |
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183,771 |
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183,742 |
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Intangible assets (product rights) - net of accumulated amortization |
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7,326,945 |
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7,785,298 |
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Deferred tax assets |
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12,524,544 |
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12,544,330 |
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Other assets |
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138,858 |
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147,886 |
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Total Assets |
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$ |
131,310,878 |
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$ |
139,963,797 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES |
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Current Liabilities |
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Accounts payable |
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$ |
15,763,468 |
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$ |
16,280,675 |
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Accrued expenses |
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2,498,862 |
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3,464,181 |
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Accrued payroll and payroll related |
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2,486,810 |
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6,304,465 |
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Income taxes payable |
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— |
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1,479,658 |
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Current portion of long-term debt |
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4,826,601 |
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4,851,278 |
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Rebates, chargebacks and returns payable |
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13,359,608 |
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15,249,412 |
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Total Current Liabilities |
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38,935,349 |
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47,629,669 |
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Long-term debt, less current portion |
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2,834,973 |
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2,868,549 |
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Unearned grant funds |
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500,000 |
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500,000 |
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Other long-term liabilities |
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6,558 |
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7,864 |
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Total Liabilities |
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42,276,880 |
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51,006,082 |
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Commitment and Contingencies |
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— |
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— |
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SHAREHOLDERS’ EQUITY |
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Common stock - authorized 50,000,000 shares, par value $0.001; issued and outstanding, 24,929,131 and 24,882,123 shares, respectively |
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24,929 |
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24,882 |
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Additional paid in capital |
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80,410,648 |
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79,862,940 |
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Retained earnings |
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9,161,071 |
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9,564,632 |
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Noncontrolling interest |
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121,421 |
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111,982 |
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Accumulated other comprehensive income |
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52,588 |
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44,692 |
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89,770,657 |
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89,609,128 |
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Less: Treasury stock at cost - 130,118 and 110,108 shares, respectively |
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(736,659 |
) |
(651,413 |
) |
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TOTAL SHAREHOLDERS’ EQUITY |
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89,033,998 |
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88,957,715 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
131,310,878 |
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$ |
139,963,797 |
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