Quarterly Financial Information (Unaudited)

12 Months Ended

Jun. 30, 2014

Quarterly Financial Information (Unaudited)

Quarterly Financial Information (Unaudited)

Note 22.  Quarterly Financial Information (Unaudited)

Lannett’s quarterly consolidated results of operations are shown below:

	Fourth		Third		Second		First
(In thousands, except per share data)	Quarter		Quarter		Quarter		Quarter
Fiscal 2014
Net sales	$	80,619	$	79,997	$	67,326	$	45,829
Cost of sales	24,691		23,865		26,284		44,523
Gross profit	55,928		56,132		41,042		1,306
Operating expenses	18,577		20,143		15,675		11,924
Operating income (loss)	37,351		35,989		25,367		(10,618		)
Other income	220		297		1,025		389
Income tax expense (benefit)	14,019		13,280		9,800		(4,242		)
Less: Net income (loss) attributable to noncontrolling interest	17		11		26		8
Net income (loss) attributable to Lannett Company, Inc.	$	23,535	$	22,995	$	16,566	$	(5,995	)
Earnings (loss) per common share attributable to Lannett Company Inc. (1)
Basic	$	0.66	$	0.66	$	0.48	$	(0.20	)
Diluted	$	0.64	$	0.63	$	0.46	$	(0.20	)

	Fourth			Third		Second			First
(In thousands, except per share data)	Quarter			Quarter		Quarter			Quarter
Fiscal 2013
Net sales	$	40,174		$	39,022	$	36,564		$	35,294
Cost of sales	24,971			23,852		23,143			21,668
Gross profit	15,203			15,170		13,421			13,626
Operating expenses	9,527			10,474		8,727			9,935
Operating income	5,676			4,696		4,694			3,691
Other income (expense)	(109		)	594		(86		)	1,529
Income tax expense	1,950			1,327		1,749			2,277
Less: Net income attributable to noncontrolling interest	54			16		(22		)	17
Net income attributable to Lannett Company, Inc.	$	3,563		$	3,947	$	2,881		$	206
Earnings per common share attributable to Lannett Company Inc. (1)
Basic	$	0.12		$	0.14	$	0.10		$	0.10
Diluted	$	0.12		$	0.14	$	0.10		$	0.10

	Fourth			Third		Second		First
(In thousands, except per share data)	Quarter			Quarter		Quarter		Quarter
Fiscal 2012
Net sales	$	35,690		$	30,688	$	27,734	$	28,878
Cost of sales	23,677			19,797		20,307		20,262
Gross profit	12,013			10,891		7,427		8,616
Operating expenses	9,407			8,527		6,932		7,171
Operating income	2,606			2,364		495		1,445
Other income (expense)	(362		)	427		654		(1,011		)
Income tax expense	812			1,057		519		212
Less: Net income attributable to noncontrolling interest	17			16		21		16
Net income attributable to Lannett Company, Inc.	$	1,415		$	1,718	$	609	$	206
Earnings per common share attributable to Lannett Company Inc. (1)
Basic	$	0.05		$	0.06	$	0.02	$	0.01
Diluted	$	0.05		$	0.06	$	0.02	$	0.01

(1) Due to differences in weighted average common shares outstanding, quarterly earnings per share may not add up to the totals reported for the full fiscal year.

Gross margin percentage improved during Fiscal 2014 as a result of favorable pricing trends, specifically on products within the thyroid and cardiovascular medical indications.

On August 19, 2013, the Company entered into an agreement with JSP to extend its initial contract to continue as the exclusive distributor in the United States of three JSP products: Butalbital, Aspirin, Caffeine with Codeine Phosphate Capsules USP; Digoxin Tablets USP; Levothyroxine Sodium Tablets USP.  The amendment to the original agreement extends the initial contract, which was due to expire on March 22, 2014, for five years.  In connection with the amendment, the Company issued 1.5 million shares of the Company’s common stock to JSP and its designees.  In accordance with its policy related to renewal and extension costs for recognized intangible assets, the Company recorded a $20.1 million expense in cost of sales, which represents the fair value of the shares on August 19, 2013.

During the first quarter of Fiscal 2013, the Company entered into a favorable settlement agreement related to litigation the Company had been involved in since January 2010.  As a result of the agreement the Company recorded a gain in the amount of $1.3 million.  As of June 30, 2013, the Company had recorded all amounts related to the agreement.