Lannett Company Reports Fiscal 2006 Second Quarter Financial Results

PHILADELPHIA--Feb. 8, 2006--Lannett Company, Inc. (AMEX: LCI) today reported its financial results for the fiscal 2006 second quarter ended December 31, 2005.  

For the second quarter of fiscal 2006, net sales were $15.2 million, compared with $12.9 million for fiscal 2005 second quarter. Net income was $1.3 million, or $0.05 per basic and diluted share, including equity-based compensation expense of $0.3 million, net of tax benefit, or $0.01 per basic and diluted share. This compares with net income of $0.8 million, or $0.03 per basic and diluted share, for the same period in the prior year, which included no equity-based compensation expense. The additional equity-based compensation expense is a result of Statement of Financial Accounting Standards No. 123R, which the Company adopted beginning with this fiscal year.  

For the six months ended December 31, 2005, net sales were $28.9 million, compared with $27.9 million for the same period in the prior year. Net income was $2.9 million, or $0.12 per basic and diluted share, including an equity-based compensation expense of $0.5 million, net of tax benefit, or $0.02 per basic and diluted share. This compares with net income of $2.1 million, or $0.09 per basic and diluted share for the same period in the prior year, which included no equity-based compensation expense.  

"Lannett continues to benefit from value-creating investments in research and development. The additional products approved by the FDA and launched in recent months allows Lannett to bring more value to our customers," said Arthur Bedrosian, president and chief executive officer of Lannett. "We continue to bring on talented new management and invest wisely in R&D to support our goal of creating sustainable, profitable growth for shareholders."  

For the second quarter of fiscal 2006, gross profit was $7.2 million, or 47% of net sales, compared with $5.8 million, or 45% of net sales, in the second quarter of fiscal 2005. Research and development expenses increased to $2.4 million from $1.0 million in the same period of fiscal 2005. SG&A expenses were $2.2 million, including $0.4 million of equity-based compensation expense, up from $1.8 million in last year's second quarter. Amortization expense was $0.4 million, compared with $1.7 million for the prior-year period.  

For the six months ended December 31, 2005, gross profit was $13.9 million, or 48% of net sales, compared to $13.2 million, or 47% of net sales, for the same period in the prior year. Research and development expenses increased to $3.6 million from $2.3 million in the same period of the prior year. SG&A expenses increased to $4.8 million, including $0.7 million of equity-based compensation expense, compared with $3.9 million from the same period last year. Amortization expense decreased to $0.9 million from $3.4 million reported for the six months ended December 31, 2004.  

About Lannett Company:  
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.   This news release contains certain statements of a forward-looking nature relating to 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, 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.


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