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Lannett Company Inc Reports Operating Results (10-Q)

May 13, 2010 | About:

Lannett Company Inc (NYSE:LCI) filed Quarterly Report for the period ended 2010-03-31.

Lannett Company Inc has a market cap of $126.5 million; its shares were traded at around $5.02 with a P/E ratio of 19.3 and P/S ratio of 1. LCI is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

The total reserve for chargebacks, rebates, returns and other adjustments increased from $13,734,540 at June 30, 2009 to $15,488,545 at March 31, 2010. As of March 31, 2010 approximately $10,129,000 of the original $10,545,000 return reserve recorded in Fiscal 2008 for Prenatal Multivitamin was applied to accounts receivable for customers who had returned the Prenatal Multivitamin product by that date, leaving a balance of

On April 10, 2007, the Company entered into a Stock Purchase Agreement to acquire Cody by purchasing all of the remaining shares of common stock of Cody. The consideration for the April 10, 2007 acquisition was approximately $4,438,000, which represented the fair value of the tangible net assets acquired. The agreement also required Lannett to issue to the sellers up to 120,000 shares of unregistered common stock of the Company contingent upon the receipt of a license from a regulatory agency. This license was subsequently received in July 2008 and triggered the payment of 105,000 shares (87.5% of the 120,000 shares as the Company already owned 12.5%) of Lannett stock to the former owners of Cody Labs, which was completed in October 2008. Therefore, the Company recorded an intangible asset related to the acquisition of a drug import license in the original amount of $581,175 and recorded a corresponding deferred tax liability of approximately $150,700 due to the non-deductibility of the amortization for tax purposes. The Company has assigned a 15 year life to this intangible asset based on average life cycles of Lannett products.

For the nine months ended March 31, 2010 and 2009, the Company incurred amortization expense of approximately $1,375,000 and $1,366,000, respectively. As of March 31, 2010 and June 30, 2009, accumulated amortization totaled approximately $8,999,000 and $7,624,000, respectively.

Advertising Costs - The Company charges advertising costs to operations as incurred. Advertising expense for the nine months ended March 31, 2010 and 2009 was approximately $20,000 and $41,000, respectively.

Read the The complete Report

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