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): November 4, 2015

LANNETT COMPANY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Commission File No. 001-31298

State of Delaware	23-0787699
(State of Incorporation)	(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))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 4, 2015, the Company announced its results of operations for the Fiscal 2016 first quarter ended September 30, 2015, 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

(d)     Exhibits

99.1   November 4, 2015 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/ Arthur P. Bedrosian
	Chief Executive Officer
	Date: November 5, 2015

2

EXHIBIT INDEX

Exhibit:	Description:
99.1	November 4, 2015 Press Release

3

EX-99.1

Exhibit 99.1

	Contact:	Robert Jaffe
		Robert Jaffe Co., LLC
		(424) 288-4098

LANNETT REPORTS SOLID FISCAL 2016 FIRST QUARTER RESULTS

—Net Sales of $106 Million, GAAP EPS OF $0.89, Adjusted EPS of $0.99—

Philadelphia, PA — November 4, 2015 — Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2016 first quarter ended September 30, 2015.

For the fiscal 2016 first quarter, net sales increased to $106.4 million from $93.4 million in last year’s first quarter.  Gross profit was $77.4 million, or 73% of net sales, compared with $71.6 million, or 77% of net sales.  Research and development expenses increased to $6.5 million from $6.4 million for the fiscal 2015 first quarter.  Selling, general and administrative (SG&A) expenses were $15.5 million compared with $10.5 million.  Acquisition-related expenses increased to $3.9 million from $70 thousand in the comparable prior-year period.  Operating income was $51.4 million compared with $54.7 million.  Net income attributable to Lannett was $33.2 million, or $0.89 per diluted share, compared with $34.9 million, or $0.94 per diluted share, for the fiscal 2015 first quarter.

On a Non-GAAP adjusted basis, gross profit was $77.8 million, or 73% of net sales, compared with $71.6 million, or 77% of net sales, for the fiscal 2015 first quarter.  Adjusted SG&A expenses were $13.9 million compared with $10.5 million.  Adjusted operating income increased to $57.3 million from $54.7 million for the prior year first quarter.  Adjusted net income attributable to Lannett increased to $37.1 million, or $0.99 per diluted share, from $35.0 million, or $0.95 per diluted share, for the fiscal 2015 first quarter.

“A key driver of our strong first quarter performance was higher sales volumes across a number of therapeutic product categories,” said Arthur Bedrosian, chief executive officer of Lannett.  “We have now reported fifteen consecutive quarters in which net sales and adjusted EPS exceeded the comparable prior-year period.

“With respect to our acquisition initiatives, Silarx is proving to be a significant contributor to the company portfolio with two recent product approvals.  Additionally, the pending Kremers Urban acquisition is on track and we anticipate closing the deal shortly.”

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 fiscal 2016 first quarter ended September 30, 2015.  The conference call will be available to interested parties by dialing 888-895-5271 from the U.S. or Canada, or 847-619-6547 from international

locations, passcode 41121801.  The call will be broadcast via the Internet at www.lannett.com.  Listeners are encouraged to visit the website at least 10 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software.  A playback of the call will be archived and accessible on the same website 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, 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.

Use of Non-GAAP Financial Measures:

This news release contains references to Non-GAAP financial measures, including Adjusted net income attributable to the Company, and its components, as well as Adjusted earnings per diluted share, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP).  The Company’s management believes that the presentation of Non-GAAP financial measures provides useful supplementary information regarding operational performance, because it enhances an investor’s overall understanding of the financial results for the Company’s core business.  Additionally, it provides a basis for the comparison of the financial results for the Company’s core business between current, past and future periods.  Non-GAAP financial measures should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP.

About Lannett Company, Inc.:

Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical 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, the anticipated closing of the Kremers Urban Pharmaceuticals acquisition 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, including products acquired in the Silarx transaction, 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 SCHEDULES FOLLOW

LANNETT COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	(Unaudited)
	September 30, 2015			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	207,768		$	200,340
Investment securities	14,890			13,467
Accounts receivable, net	107,216			91,103
Inventories, net	45,231			46,191
Prepaid income taxes	4,953			—
Deferred tax assets	15,854			16,270
Other current assets	4,512			3,175
Total current assets	400,424			370,546
Property, plant and equipment, net	98,621			94,556
Intangible assets, net	28,903			29,090
Goodwill	141			141
Deferred tax assets	12,471			12,495
Other assets	2,441			1,938
TOTAL ASSETS	$	543,001		$	508,766
LIABILITIES
Current liabilities:
Accounts payable	$	17,259		$	19,195
Accrued expenses	6,675			4,928
Accrued payroll and payroll-related expenses	4,748			10,397
Rebates payable	11,458			7,553
Income taxes payable	—			1,918
Current portion of long-term debt	137			135
Total current liabilities	40,277			44,126
Long-term debt, less current portion	839			874
TOTAL LIABILITIES	41,116			45,000
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 36,896,482 and 36,783,381 shares issued; 36,362,052 and 36,264,585 shares outstanding at September 30, 2015 and June 30, 2015, respectively)	37			37
Additional paid-in capital	242,025			236,178
Retained earnings	266,754			233,573
Accumulated other comprehensive loss	(311		)	(295		)
Treasury stock (534,430 and 518,796 shares at September 30, 2015 and June 30, 2015, respectively)	(6,988		)	(6,080		)
Total Lannett Company, Inc. stockholders’ equity	501,517			463,413
Noncontrolling interest	368			353
Total stockholders’ equity	501,885			463,766
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	543,001		$	508,766

LANNETT COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)

	Three months ended
	September 30,
	2015			2014
Net sales	$	106,433		$	93,387
Cost of sales	28,819			21,800
Amortization of intangibles	187			20
Gross profit	77,427			71,567
Operating expenses:
Research and development expenses	6,528			6,363
Selling, general, and administrative expenses	15,536			10,483
Acquisition-related expenses	3,942			70
Total operating expenses	26,006			16,916
Operating income	51,421			54,651
Other income (loss):
Gain on sale of assets	—			20
Gain (loss) on investment securities	(1,196		)	15
Interest and dividend income	86			102
Interest expense	(60		)	(38		)
Total other income (loss)	(1,170		)	99
Income before income taxes	50,251			54,750
Income tax expense	17,055			19,800
Net income	33,196			34,950
Less: Net income attributable to noncontrolling interest	15			18
Net income attributable to Lannett Company, Inc.	$	33,181		$	34,932
Earnings per common share attributable to Lannett Company, Inc.
Basic	$	0.91		$	0.98
Diluted	$	0.89		$	0.94
Weighted average common shares outstanding:
Basic	36,310,653			35,597,931
Diluted	37,414,724			36,972,646

LANNETT COMPANY, INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

(In thousands, except share and per share data)

	Three months ended									Three months ended
	September 30,									September 30,
	GAAP						Non-GAAP			GAAP					Non-GAAP
	Reported			Adjustments			Adjusted			Reported		Adjustments			Adjusted
	2015			2015			2015			2014		2014			2014
Net sales	$	106,433		$	—		$	106,433		$	93,387	$	—		$	93,387
Cost of sales	28,819			(140		)(a)	28,679			21,800		—			21,800
Amortization of intangibles	187			(187		)(b)	—			20		(20		)(b)	—
Gross profit	77,427			327			77,754			71,567		20			71,587
Operating expenses:
Research and development expenses	6,528			—			6,528			6,363		—			6,363
Selling, general, and administrative expenses	15,536			(1,652		)(c)	13,884			10,483		—			10,483
Acquisition-related expenses	3,942			(3,942		)(d)	—			70		(70		)(d)	—
Total operating expenses	26,006			(5,594		)	20,412			16,916		(70		)	16,846
Operating income	51,421			5,921			57,342			54,651		90			54,741
Other income (loss)	(1,170		)	—			(1,170		)	99		—			99
Income before income tax	50,251			5,921			56,172			54,750		90			54,840
Income tax expense	17,055			2,034		(e)	19,089			19,800		33		(e)	19,833
Net income	33,196			3,887			37,083			34,950		57			35,007
Less: Net income attributable to noncontrolling interest	15			—			15			18		—			18
Net income attributable to Lannett Company, Inc.	$	33,181		$	3,887		$	37,068		$	34,932	$	57		$	34,989
Earnings per common share attributable to Lannett Company, Inc.
Basic	$	0.91					$	1.02		$	0.98				$	0.98
Diluted	$	0.89					$	0.99		$	0.94				$	0.95
Weighted average common shares outstanding:
Basic	36,310,653						36,310,653			35,597,931					35,597,931
Diluted	37,414,724						37,414,724			36,972,646					36,972,646

(a) To exclude amortization of a fair value step-up in inventory related to the acquisition of Silarx Pharmaceuticals, Inc.

(b) To exclude amortization of purchased intangible assets primarily related to the acquisition of Silarx Pharmaceuticals, Inc.

(c) To exclude separation payments associated with the retirement of an executive officer

(d) To exclude acquisition-related expenses primarily related to the pending acquisition of Kremers Urban Pharmaceuticals Inc. and the completed acquisition of Silarx Pharmaceuticals Inc.

(e) The tax effect of the pre-tax adjustments included above at applicable tax rates