8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Date of Report (Date of earliest event reported): September 13, 2006

LANNETT COMPANY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Commission File No. 001-31298

State of Delaware
(State of Incorporation) 23-0787699
(I.R.S. Employer I.D. No.)

9000 State Road
Philadelphia, PA 19136
(215) 333-9000
(Address of principal executive offices and telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

PRESS RELEASE

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On September 13, 2006, the Company announced its results of operations for the fiscal 2006 fourth quarter and full year ended June 30, 2006, as set forth in the press release, a copy of which is included as Exhibit 99.1 hereto. This information shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c)         Exhibits

99.1       September 13, 2006 financial press release

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

LANNETT COMPANY, INC
By:	/s/ Brian Kearns
	Vice President of Finance, Treasurer, and Chief Financial Officer
	Date: September 13, 2006

EXHIBIT INDEX

Exhibit: Description:

99.1       September 13, 2006 Press Release

EX-99.1

Exhibit 99.1

Contacts:	Robert Jaffe
	PondelWilkinson Inc.
	(310) 279-5980

LANNETT COMPANY REPORTS FISCAL 2006 FOURTH QUARTER AND FULL-YEAR FINANCIAL RESULTS

Philadelphia, PA — September 13, 2006 — Lannett Company, Inc. (AMEX: LCI) today reported its financial results for the full fiscal year and the fourth quarter ended June 30, 2006.

For fiscal year 2006, net sales 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 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 loss on intangible assets and no equity-based compensation expense. Equity-based compensation expense was adopted at the beginning of fiscal year 2006 in accordance 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 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, 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 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.

# # #

FINANCIAL TABLES FOLLOW

LANNETT COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Year 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