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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-34263
 Impax Laboratories, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    65-0403311(State or other jurisdiction of incorporation
    
    (I.R.S. Employer Identification No.)or organization)30831 Huntwood Avenue, Hayward, CA
    
    94544(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(510) 476-2000
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registered:Common Stock, par value $0.01 per share
    
    The NASDAQ Stock Market LLCSeries A Junior
Participating Preferred Stock Purchase Rights
    
    The NASDAQ Stock Market LLC
 Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 o þ
 þ o
 o o
 Form 10-K. o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller 
reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 Forward-Looking Statements
    
    
    iiPART I
    
    
    1Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    17Item 1B. Unresolved Staff Comments
    
    
    36Item 2. Properties
    
    
    36Item 3. Legal Proceedings
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43PART II
    
    
    44Item 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    44Item 6. Selected Financial Data
    
    
    47Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    48Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    83Item 8. Financial Statements and Supplementary Data
    
    
    83Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
    
    
    83Item 9A. Controls and Procedures
    
    
    84Item 9B. Other Information
    
    
    87PART III
    
    
    88Item 10. Directors, Executive Officers and Corporate Governance
    
    
    88Item 11. Executive Compensation
    
    
    88Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    88Item 13. Certain Relationships and Related Transactions, and Director
Independence
    
    
    88Item 14. Principal Accounting Fees and Services
    
    
    88PART IV
    
    
    89Item 15. Exhibits and Financial Statement Schedules
    
    
    89SIGNATURESEXHIBIT INDEXExhibit 10.22Exhibit 10.24Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   i




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Forward-Looking Statements
   ii




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PART I
 
 Item 1. Business
 Our Business
       1




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
    
    57 ANDAs approved by the FDA, which include generic versions of brand name
pharmaceuticals such as Brethine®, Florinef®, Minocin®, Claritin-D® 12-hour, Claritin-D®
24-hour, Wellbutrin SR®, Wellbutrin XL®, Ditropan XL®, Depakote ER® and Prilosec®.
 
    
    32 applications pending at the FDA, including 5 tentatively approved ( i.e.,
satisfying substantive FDA requirements but remaining subject to statutory pre-approval
restrictions), that address approximately $20.4 billion in recent 12 month U.S. product
sales.
 
    
    52 products in various stages of development for which applications have not yet been
filed.
     2




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Controlled-Release Technology
    3




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Our Products
 Generic Pharmaceuticals
  Product
    
    Generic of2004 OR EARLIEROrphenadrine 100 mg Tablets
    
    Norflex®Omeprazole 10 and 20 mg Capsules (1c)
    
    Prilosec®Minocycline 50, 75 and 100 mg Capsules
    
    Minocin®Terbutaline 2.5 and 5 mg Tablets
    
    Brethine®Fludrocortisone 0.1 mg Tablets
    
    Florinef®Rimantadine 100 mg Tablets
    
    Flumadine®Pyridostigmine 60 mg Tablets
    
    Mestinon®Chloroquine 250 mg Tablets
    
    N/AChloroquine 500 mg Tablets
    
    Aralen®Flavoxate 100 mg Tablets
    
    Urispas®Fenofibrate 67, 134 and 200 mg Capsules
    
    Lofibra®Loratadine and Pseudoephedrine Sulfate 5/120 mg ER Tablets
    
    Claritin-D 12-hr®Bupropion Hydrochloride 100 and 150 mg ER Tablets (twice daily)
    
    Wellbutrin SR®Bupropion Hydrochloride 150 mg ER Tablets (twice daily)
    
    Zyban®Loratadine and Pseudoephedrine Sulfate 10/240 mg ER Tablets
    
    Claritin-D® 24-HourDemeclocycline Hydrochloride 150 and 300 mg Tablets
    
    Declomycin®Carbidopa/Levodopa 25/100 & 50/200 mg ER Tablets
    
    SinemetCR®Midodrine Hydrochloride 2.5, 5 and 10 mg Tablets
    
    ProAmatine®Bupropion Hydrochloride 200 mg ER Tablets (twice daily)
    
    Wellbutrin SR®2005Dantrolene Sodium 25, 50 and 100 mg Capsules
    
    Dantrium®Carprofen 25, 75 and 100 mg Caplets (a veterinary product)
    
    Rimadyl®2006Pilocarpine Hydrochloride 5 and 7.5 mg Tablets
    
    Salagen®Colestipol Hydrochloride 5 g Packet and 5 g Scoopful
    
    Colestid®Colestipol Hydrochloride 1 g Tablets
    
    Colestid®Bethanechol Chloride 5, 10, 25 and 50 mg Tablets (4 separate ANDAs)
    
    Urecholine®Oxybutynin Chloride 15 mg ER Tablets (1a)
    
    Ditropan XL®Bupropion Hydrochloride 300 mg ER Tablets (1b) (once daily)
    
    Wellbutrin XL®2007Nadolol /Bendroflumethiazide 40/5 and 80/5 mg Tablets
    
    Corzide®Oxybutynin Chloride 5 and 10 mg ER Tablets (1a)
    
    Ditropan XL®Dipyridamole 25, 50, 75 mg Tablets USP
    
    Persantine®2008Primidone 50 and 250 mg Tablets
    
    Mysoline®Promethazine 12.5, 25 and 50 mg Tablets (2 separate ANDAs)
    
    Phenergan®Fenofibrate 54 and 160 mg Tablets
    
    Lofibra®Bupropion Hydrochloride 150 mg ER Tablets (1b) (once daily)
    
    Wellbutrin XL®2009Omeprazole 40 mg Capsules (1c)
    
    Prilosec®Divalproex Sodium ER 250 and 500 mg Tablets
    
    Depakote® ERGalantamine 8 and 16 mg Capsules
    
    Razadyne® ER
 
 (1)
    
    Multiple products filed under same ANDA, including (i) 1a: Oxybutynin Chloride products, (ii)
1b: Bupropion Hydrochloride products, and (iii) 1c: Omeprazole products.  4




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Product
    
    Generic ofCyclobenzaprine CD 15 and 30 mg Capsules
    
    Amrix®Doxycycline Hyclate DR 75, and 100 mg Tablets
    
    Doryx®Doxycycline Hyclate DR 150 mg Tablets
    
    Doryx®Doxycycline USP 40mg Capsules
    
    Oracea®Ropinirole ER 2, 3, 4, 6, 8, 12mg Tablets
    
    Requip XL®Fexofenadine Hydrochloride and Pseudoephedrine Hydrochloride
60/120 mg ER Tablets
    
    Allegra-D®Methylphenidate HCI 18, 27, 36 and 54 mg ER Tablets
    
    Concerta®Oxymorphone HCI 5, 7.5, 10, 15, 20, 30 and 40 mg ER Tablets
    
    Opana ER®Single-Entity Amphetamine 5, 10, 15, 20, 25 and 30 mg ER Capsules
    
    Adderall XR®Fenofibrate 48 and 145mg Tablets
    
    Tricor®Tolterodine Tartrate 2 and 4 mg ER Capsules
    
    Detrol LA®Tramadol HCI 100, 200 and 300 mg ER Tablets
    
    Ultram ER®Venlafaxine HCl 37.5, 75 and 150 mg ER Capsules
    
    Effexor XR®Duloxetine HCI 20, 30 and 60 mg DR Capsules
    
    Cymbalta®Sevelamer HCI 400 and 800mg Tablets
    
    Renagel®Sevelamer Carbonate 800mg Tablets
    
    Renvela®Colesevelam 625 mg Tablets
    
    Welchol®Tamsulosin Hydrochloride 0.4 mg Capsules
    
    Flomax®
  5




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Brand-Name Pharmaceuticals
    6




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Competition
   
    
    the ability to introduce generic versions of products promptly after a patent
expires;
 
    
    price;
 
    
    product quality;
 
    
    customer service (including maintenance of inventories for timely delivery);
 
    
    the ability to identify and market niche products.
   7




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Sales and Marketing
  Rx Partner and OTC Partner Alliance Agreements
  Year Ended December 31,$s in 000s
    
    2009
    
    
    2008
    
    
    2007Gross Revenue and % Gross RevenueTeva Agreement
    
    $
    33,821
    
    
    
    6
    %
    
    $
    40,947
    
    
    
    14
    %
    
    $
    42,480
    
    
    
    13
    %Dava Agreement
    
    $
    
    
    
    
    
    %
    
    $
    40,831
    
    
    
    14
    %
    
    $
    118,634
    
    
    
    35
    %Putney Agreement
    
    $
    14
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %Sub-Total: Rx Partner
    
    $
    33,835
    
    
    
    6
    %
    
    $
    81,778
    
    
    
    28
    %
    
    $
    161,114
    
    
    
    48
    %OTC Partner
    
    $
    6,842
    
    
    
    1
    %
    
    $
    15,946
    
    
    
    5
    %
    
    $
    11,866
    
    
    
    4
    %
 Rx Partner Alliance Agreements
 Teva Agreement
  
    
    Prilosec® 10, 20 and 40 mg delayed released capsules
 
    
    Wellbutrin SR® 100 and 150 mg extended release tablets
 
    
    Zyban® 150 mg extended release tablets
 
    
    Claritin-D® 12-hour 120 mg 12-hour extended release tablets
 
    
    Claritin-D® 24-hour 240 mg 24-hour extended release tablets
  8




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
    
    Claritin Reditabs® 10 mg orally disintegrating tablets
 
    
    Ditropan XL® 5, 10 and 15 mg extended release tablets
 
    
    Glucophage XR® 500 mg extended release tablets
 
    
    Allegra-D® 60/120 mg extended release tablets
 
    
    Concerta® 18, 27, 36 and 54 mg extended release tablets
 
    
    Wellbutrin XL® 150 and 300 mg extended release tablets
 ® ® ® ® ® ®
   DAVA Agreement
 ® ® ®
  9




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Putney Agreement
 ®
 OTC
Partner Alliance Agreements
 ® ®
 ® ®
  Upfront andAggregate
    
    
    MilestoneUpfront
    
    
    Milestone
    
    
    PaymentsOTC Partner
    
    Initial Date
    
    
    Payment
    
    
    Payments
    
    
    Received(unaudited and $ in 000s)Schering-Plough
    
    June 2002
    
    $
    2,250
    
    
    $
    2,250
    
    
    $
    4,500Wyeth Consumer Healthcare
    
    June 2002
    
    $
    350
    
    
    $
    4,050
    
    
    $
    2,000
 Research Partner Alliance Agreement
 ® ®
  10




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Shire License and Distribution Agreement
  Shire Co-Promotion Agreement
  Wyeth Co-Promotion Agreement
   Manufacturing
      11




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Raw Materials
  ® ®
  Quality Control
    Research and Development
    12




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Regulation
   New Drug Application (NDA).
 Abbreviated New Drug Application (ANDA).
    13




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Environmental Laws
   14




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Available Information
  Employees
  Executive Officers
  Name
    
    Age
    
    Positions with ImpaxArthur A. Koch, Jr.
    
    
    56
    
    
    Senior Vice President, Finance, and Chief Financial OfficerCharles V. Hildenbrand
    
    
    58
    
    
    Senior Vice President, OperationsChristopher Mengler, R.Ph
    
    
    47
    
    
    President, Global Pharmaceuticals DivisionMichael J. Nestor
    
    
    57
    
    
    President, Impax Pharmaceuticals Division
 Arthur A. Koch, Jr.
 Charles V. Hildenbrand
  15




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Christopher Mengler, R.Ph.
 Michael J. Nestor
  16




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Item 1A. Risk Factors
  Risks Related to Our Business
 Unstable economic conditions may adversely affect our industry, business, financial position and
results of operations and could cause the market value of our common stock to decline.
      17




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If we fail to maintain an effective system of internal control over financial reporting, we may not
be able to accurately report our financial results, timely file our periodic reports, maintain our
reporting status or prevent fraud.
   Our revenues and operating income could fluctuate significantly.
  
    
    the timing of FDA approvals we receive;
 
    
    the timing of process validation for particular generic drug products;
 
    
    the timing of product launches;
 
    
    the introduction of new products by others that render our products obsolete or
noncompetitive;
 
    
    the ability to maintain selling prices and gross margins on our products;
 
    
    the outcome of our patent infringement litigation; and
 
    
    the addition or loss of customers.
   18




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A
substantial portion of our total revenues is derived from sales of a limited number of products to a limited number of customers.
   We face intense competition from both brand-name and generic manufacturers.
  
    
    proprietary processes or delivery systems;
 
    
    larger research and development and marketing staffs;
 
    
    larger production capabilities in a particular therapeutic area;
 
    
    more experience in preclinical testing and human clinical trials;
 
    
    more experience in obtaining required regulatory approvals, including FDA approval;
 
    
    more products; or
 
    
    more experience in developing new drugs and financial resources, particularly with
regard to brand manufacturers.
   19




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We have experienced operating losses and negative cash flow from operations in the past, and our
future profitability is uncertain.
  
    
    obtain FDA approval of our products;
 
    
    successfully launch new products;
 
    
    prevail in patent infringement litigation in which we are involved;
 
    
    continue to generate or obtain sufficient capital on acceptable terms to fund our
operations; and
 
    
    comply with the many complex governmental regulations that deal with virtually every
aspect of our business activities.
 Our limited capital may require us to modify our business operations and plans by spending less
money on research and development programs, developing fewer products, and filing fewer drug
applications with the FDA.
   20




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If Wachovia is unable to perform its obligations under our credit agreement or if we are unable to
obtain a new credit facility upon the expiration of our credit agreement with Wachovia, there can
be no assurance that we will be able to obtain a new credit agreement with another bank or group of
lenders on favorable terms or at all.
  Any delays or unanticipated expenses in connection with the operation of our Taiwan facility could
have a material adverse effect on our results of operations, liquidity and financial condition.
   Our business is subject to the economic, political and other risks of maintaining facilities and
conducting clinical trials in foreign countries.
   21




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Our continued growth is dependent on our ability to continue to successfully introduce new products
to the market.
  We are routinely subject to patent litigation that can delay or prevent our commercialization of
products, force us to incur substantial expense to defend, and expose us to substantial liability.
  ® ® ® ® ® ® ® ® ® ® ® ®
 Our ability to develop or license, or otherwise acquire, and introduce new products on a timely
basis in relation to our competitors product introductions involves inherent risks and
uncertainties.
   22




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Our approved products may not achieve expected levels of market acceptance.
  
    
    the availability of alternative products from our competitors;
 
    
    the prices of our products relative to those of our competitors;
 
    
    the timing of our market entry;
 
    
    the ability to market our products effectively at the retail level; and
 
    
    the acceptance of our products by government and private formularies.
  We expend a significant amount of resources on research and development efforts that may not lead
to successful product introductions.
    23




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The time necessary to develop generic drugs may adversely affect whether, and the extent to which,
we receive a return on our capital.
  Approvals for our new drug products may be delayed or become more difficult to obtain if the FDA
institutes changes to its approval requirements.
  Our inexperience in conducting clinical trials and submitting New Drug Applications could result in
delays or failure in development and commercialization of our own branded products, which could
have a material adverse effect on our results of operations, liquidity, and financial condition.
    24




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The risks and uncertainties inherent in conducting clinical trials could delay or prevent the
development and commercialization of our own branded products, which could have a material adverse
effect on our results of operations, liquidity, financial condition, and growth prospects.
   
    
    delays in patient enrollment, and variability in the number and types of patients
available for clinical trials;
 
    
    regulators or institutional review boards may not allow us to commence or continue a
clinical trial;
 
    
    our inability, or the inability of our partners, to manufacture or obtain from third
parties materials sufficient to complete our clinical trials;
 
    
    delays or failure in reaching agreement on acceptable clinical trial contracts or
clinical trial protocols with prospective clinical trial sites;
 
    
    risks associated with trial design, which may result in a failure of the trial to
show statistically significant results even if the product candidate is effective;
 
    
    difficulty in maintaining contact with patients after treatment commences, resulting
in incomplete data;
 
    
    poor effectiveness of product candidates during clinical trials;
 
    
    safety issues, including adverse events associated with product candidates;
 
    
    the failure of patients to complete clinical trials due to adverse side effects,
dissatisfaction with the product candidate, or other reasons;
 
    
    governmental or regulatory delays or changes in regulatory requirements, policy and
guidelines; and
 
    
    varying interpretation of data by the FDA or foreign regulatory agencies.
    25




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We rely on third parties to conduct clinical trials for our product candidates, and if they do not
properly and successfully perform their legal and regulatory obligations, as well as their
contractual obligations to us, we may not be able to obtain regulatory approvals for our product
candidates.
     26




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We are dependent on a small number of suppliers for our raw materials that we use to manufacture
our products.
  
    
    greater possibility for disruption due to transportation or communication problems;
 
    
    the relative instability of some foreign governments and economies;
 
    
    interim price volatility based on labor unrest, materials or equipment shortages,
export duties, restrictions on the transfer of funds, or fluctuations in currency
exchange rates; and
 
    
    uncertainty regarding recourse to a dependable legal system for the enforcement of
contracts and other rights.
     27




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We depend on qualified scientific and technical employees, and our limited resources may make it
more difficult to attract and retain these personnel.
   We may be adversely affected by alliance agreements or licensing arrangements we make with other
companies.
  We are subject to significant costs and uncertainties related to compliance with the extensive
regulations that govern the manufacturing, labeling, distribution, and promotion of pharmaceutical
products as well as environmental, safety and health regulations.
    28




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We may experience reductions in the levels of reimbursement for pharmaceutical products by
governmental authorities, HMOs or other third-party payers. Any such reductions could have a
material adverse effect on our business, financial position and results of operations.
  Reporting and payment obligations under the Medicaid rebate program and other government programs
are complex, and failure to comply could result in sanctions and penalties or we could be required
to reimburse the government for underpayments, which could have a material adverse affect on our
business.
  Legislative or regulatory programs that may influence prices of prescription drugs could have a
material adverse effect on our business.
   29




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Our failure to comply with the legal and regulatory requirements governing the healthcare industry
may result in substantial fines, sanctions and restrictions on our business activities.
     30




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Healthcare policy changes, including pending proposals to reform the U.S. healthcare system, may
harm our future business.
     We depend on our intellectual property, and our future success is dependent on our ability to
protect our intellectual property and not infringe on the rights of others.
  
    
    any of our future processes or products will be patentable;
 
    
    our processes or products will not infringe upon the patents of third parties; or
 
    
    we will have the resources to defend against charges of patent infringement by third
parties or to protect our own rights against infringement by third parties.
   31




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We are subject to potential product liability claims that can result in substantial litigation
costs and liability.
  We face risks relating to our goodwill and intangibles.
  If we are unable to manage our growth, our business will suffer.
   32




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There are inherent uncertainties involved in estimates, judgments and assumptions used in the
preparation of financial statements in accordance with GAAP. Any future changes in estimates,
judgments and assumptions used or necessary revisions to prior estimates; judgments or assumptions
could lead to a restatement of our results.
  Terrorist attacks and other acts of violence or war may adversely affect our business.
   Because of the location of our manufacturing and research and development facilities, our operations could be
interrupted by an earthquake or be susceptible to climate changes. Our corporate headquarters in California, manufacturing operations in California and Taiwan, and research and
development activities related to process technologies are located near major earthquake fault lines. Although we have
other facilities, we produce a substantial portion of our products at our California facility. A disruption at these
California facilities due to an earthquake, other natural disaster, or due to climate changes, even on a short-term
basis, could impair our ability to produce and ship products to the market on a timely basis. In addition, we could
experience a destruction of facilities which would be costly to rebuild, or loss of life, all of which could materially
adversely affect our business and results of operations. We presently carry $ 10.0 million of earthquake coverage which covers all of our facilities on a worldwide basis.
We carry an additional $ 30.0 million of earthquake coverage specifically for our California facilities. We believe the
aggregate amount of earthquake coverage we currently carry is appropriate in light of the risks; however, the amount of
our earthquake insurance coverage may not be sufficient to cover losses from earthquakes. We may discontinue some or
all of this insurance coverage in the future if the cost of premiums exceeds the value of the coverage discounted for
the risk of loss. If we experience a loss which is uninsured or which exceeds policy limits, we could lose the capital
invested in the damaged facilities, as well as the anticipated future net sales from those facilities.  33




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Risks Related to Our Stock
 There is currently a limited market for our common stock.
  Our stock price is volatile.
   
    
    our ability to maintain compliance with SEC reporting requirements;
 
    
    our ability to maintain the listing of our common stock on The NASDAQ Stock Market
LLC;
 
    
    investor perception of us;
 
    
    analyst recommendations;
 
    
    market conditions relating to specialty pharmaceutical companies;
 
    
    announcements of new products by us or our competitors;
 
    
    publicity regarding actual or potential developments relating to products under
development by us or our competitors;
 
    
    developments, disputes or litigation concerning patent or proprietary rights;
 
    
    delays in the development or approval of our product candidates;
 
    
    regulatory developments;
 
    
    period to period fluctuations in our financial results and those of our competitors;
 
    
    future sales of substantial amounts of common stock by stockholders; and
 
    
    economic and other external factors.
  34




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We have adopted certain provisions that may have the effect of hindering, delaying or preventing
third party takeovers, which may prevent our stockholders from receiving premium prices for shares
of their common stock in an unsolicited takeover.
     We do not pay dividends on our common stock and do not anticipate doing so in the foreseeable
future.
   35




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
     36




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Item 3. Legal Proceedings
 Patent Infringement Litigation
 AstraZeneca AD et al. v. Impax Laboratories, Inc. (Omeprazole)
 ® ®
 Aventis Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc. (Fexofenadine
/Pseudoephedrine)
 ® ® ®
 ® ® ®
  37




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Endo Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc. (Oxymorphone)
 ® Markman
 lmpax Laboratories, Inc. v. Medicis Pharmaceutical Corp. (Minocycline)
 ®
  38




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Pfizer Inc., et aI. v. Impax Laboratories, Inc. (Tolterodine)
 ® Pfizer Inc. et al. v. Teva
Pharmaceuticals USA, Inc. Pfizer
 Boehringer Ingelheim Pharmaceuticals, et al. v. Impax Laboratories, Inc. (Tamsulosin)
 ®
 Purdue Pharma Products L.P., et al. v. Impax Laboratories, Inc. (Tramadol)
 ® ® Purdue Pharma Products L.P. et al, v. Par Pharmaceutical, Inc. et al Par
  39




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##### Table of Contents



Warner Chilcott, Ltd. et.al. v. Impax Laboratories, Inc. (Doxycycline Hyclate)
 ®
 Eurand, Inc., et al. v. Impax Laboratories, Inc. (Cyclobenzaprine)
 ® Markman
 Genzyme Corp. v. Impax Laboratories, Inc. (Sevelamer Hydrochloride)
 ® Markman
 Genzyme Corp. v. Impax Laboratories, Inc. (Sevelamer Carbonate)
 ® Markman
 The Research Foundation of State University of New York et al. v. Impax Laboratories,
Inc. (Doxycycline Monohydrate)
 ®
  40




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##### Table of Contents



Elan Pharma International Ltd. and Fournier Laboratories Ireland Ltd. v. Impax
Laboratories, Inc. and Abbott Laboratories and Laboratories Fournier S.A. v. Impax
Laboratories, Inc. (Fenofibrate)
 ®
 Daiichi Sankyo, Inc. et al. v. Impax Laboratories, Inc. (Colesevelam)
 ®
  41




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##### Table of Contents



Other Litigation Related to Our Business
 Axcan Scandipharm Inc. v. Ethex Corp, et al. (Lipram UL)
 ® ®
 Budeprion XL Litigation
 Kelly v. Teva Pharmaceuticals Indus. Ltd, et al. Morgan v. Teva Pharmaceuticals Indus. Ltd, et al. th Weber v. Teva Pharmaceuticals Indus., Ltd., et al Rosenfeld v. Teva Pharmaceuticals
USA, Inc.. et al. Henchenski and Vogel v. Teva
Pharmaceuticals Industries Ltd., et al., Anderson v.
Teva Pharmaceuticals Indus., Ltd., et al. Brown et al. v.
Teva Pharmaceuticals Inds., Ltd., et al. Latvala et al. v.
Teva Pharmaceuticals Inds., Ltd., et al. Jordan v. Teva
Pharmaceuticals Indus. Ltd et al Leighty v. Teva Pharmaceuticals Indus. Ltd et al ® ® In re:
Budeprion XL Marketing Sales Practices, and Products Liability Litigation
  42




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##### Table of Contents



Insurance
  
 Item 4. Submission of Matters to a Vote of Security Holders
   43




---



##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Stock Price
  ® ® ®
  Price Rangeper ShareHigh
    
    
    LowYear Ending December 31, 2009First Quarter
    
    $
    7.74
    
    
    $
    2.50Second Quarter
    
    $
    7.59
    
    
    $
    4.89Third Quarter
    
    $
    9.10
    
    
    $
    7.02Fourth Quarter
    
    $
    13.87
    
    
    $
    8.59Year Ended December 31, 2008First Quarter
    
    $
    11.40
    
    
    $
    6.50Second Quarter (through May 23, 2008)
    
    $
    9.55
    
    
    $
    8.00Third Quarter
    
    $
    n/a
    
    
    $
    n/aFourth Quarter
    
    $
    n/a
    
    
    $
    n/a
 Holders
  
    
    any beneficial owners of common stock whose shares are held in the names of various
dealers, clearing agencies, banks, brokers and other fiduciaries; and
 
    
    broker-dealers or other participants who hold or clear shares directly or indirectly
through the Depository Trust Company, or its nominee, Cede & Co.
  44




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##### Table of Contents



Dividends
  Unregistered Sales of Securities
  Purchases of Equity Securities by the Issuer
  TotalNumber ofShares (or
    
    
    MaximumUnits)
    
    
    Number (orPurchased
    
    
    Approximate Dollaras Part of
    
    
    Value) of Shares (orPublicly
    
    
    Units) that May YetTotal
    
    Average
    
    
    Announced
    
    
    Be Purchased UnderNumber of Shares
    
    Price Paid Per
    
    
    Plans or
    
    
    the Plans orPeriod
    
    (or Units) Purchased(1)
    
    Share (or Unit)
    
    
    Programs
    
    
    ProgramsOctober 1, 2009 to
October 31, 2009
    
    11,692 shares of
 common stock
    
    $
    9.32
    
    
    
    
    
    
    
    November 1, 2009 to
November 30, 2009
    
    8,813 shares of 
common stock
    
    $
    11.49
    
    
    
    
    
    
    
    December 1, 2009 to
December 31, 2009
    
    4,637 shares of 
common stock
    
    $
    12.65
    
    
    
    
    
    
    
    
 (1)
    
    Represents shares of our common stock that we accepted during the indicated periods as a tax
withholding from certain of our employees in connection with the vesting of shares of
restricted stock pursuant to the terms of our Amended and Restated 2002 Equity Incentive Plan
(the 2002 Plan).  45




---



##### Table of Contents



Equity Compensation Plans
  Number ofSecuritiesRemainingAvailable forNumber of
    
    
    
    
    
    
    Future IssuanceSecurities to be
    
    
    
    
    
    
    Under EquityIssued Upon
    
    
    Weighted Average
    
    
    CompensationExercise of
    
    
    Exercise Price of
    
    
    Plans (ExcludingOutstanding
    
    
    Outstanding
    
    
    Securities reflectedOptions, Warrants
    
    
    Options, Warrants
    
    
    inand Rights
    
    
    and Rights
    
    
    Column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by
security holders
    
    
    8,229,818
    (1)
    
    $
    9.87
    
    
    
    1,378,639Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    363,041
    (2)Total:
    
    
    8,229,818
    
    
    $
    9.87
    
    
    
    1,741,680
 
 (1)
    
    Represents options issued pursuant to the 2002 Plan, and the Impax Laboratories Inc. 1999
Equity Incentive Plan.(2)
    
    Represents 363,041 shares of common stock available for future issuance under the Impax
Laboratories, Inc. 2001 Non-Qualified Employee Stock Purchase Plan.   46




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##### Table of Contents



Item 6. Selected Financial Data
  TM
 For the Years Ended December 31($ in 000s, except per share data)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(as adjusted)
    
    
    (as adjusted)Statements of Operations Data:Total revenues
    
    $
    358,409
    
    
    $
    210,071
    
    
    $
    273,753
    
    
    $
    135,246
    
    
    $
    112,400Research and development
    
    
    63,274
    
    
    
    59,237
    
    
    
    39,992
    
    
    
    29,635
    
    
    
    26,095Total operating expenses
    
    
    117,683
    
    
    
    114,179
    
    
    
    89,590
    
    
    
    74,245
    
    
    
    59,588Income (loss) from operations
    
    
    70,413
    
    
    
    3,923
    
    
    
    76,507
    
    
    
    (11,247
    )
    
    
    (5,623
    )Net income (loss)
    
    
    50,061
    
    
    
    15,987
    
    
    
    125,410
    
    
    
    (12,044
    )
    
    
    (5,780
    )Net income (loss) per share  basic
    
    $
    0.83
    
    
    $
    0.27
    
    
    $
    2.13
    
    
    $
    (0.20
    )
    
    $
    (0.10
    )Net income (loss) per share  diluted
    
    $
    0.82
    
    
    $
    0.26
    
    
    $
    2.05
    
    
    $
    (0.20
    )
    
    $
    (0.10
    )
 As of December 31($ in 000s)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(as adjusted)
    
    
    (as adjusted)Balance Sheet Data:Cash, cash equivalents and
short-term investments
    
    $
    90,369
    
    
    $
    119,985
    
    
    $
    143,496
    
    
    $
    29,834
    
    
    $
    56,081Working capital
    
    
    170,143
    
    
    
    126,784
    
    
    
    110,108
    
    
    
    81,919
    
    
    
    55,796Total assets
    
    
    660,756
    
    
    
    514,287
    
    
    
    513,745
    
    
    
    343,888
    
    
    
    260,285Long-term debt
    
    
    
    
    
    
    5,990
    
    
    
    16,061
    
    
    
    89,603
    
    
    
    80,285Total liabilities
    
    
    438,529
    
    
    
    354,637
    
    
    
    377,697
    
    
    
    347,864
    
    
    
    251,399Retained earnings (deficit)
    
    
    828
    
    
    
    (49,233
    )
    
    
    (65,220
    )
    
    
    (186,215
    )
    
    
    (174,171
    )Total stockholders equity (deficit)
    
    $
    222,227
    
    
    $
    159,650
    
    
    $
    136,048
    
    
    $
    (3,976
    )
    
    $
    8,886
  47




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
 General
     48




---



##### Table of Contents



Revenue Recognition
 Global product sales, net.
 Private Label Product sales.
  49




---



##### Table of Contents



Rx Partner and OTC Partner.
   50




---



##### Table of Contents



Research Partner.
 Promotional Partner.
 Impact of Economic and Regulatory Conditions
     51




---



##### Table of Contents



Critical Accounting Estimates
     52




---



##### Table of Contents



Chargebacks.
  As of December 31,2009
    
    
    2008
    
    
    2007($ in 000s)Chargeback reserveBeginning balance
    
    $
    4,056
    
    
    $
    2,977
    
    
    $
    4,401Provision recorded during the period
    
    
    126,105
    
    
    
    50,144
    
    
    
    33,972Credits issued during the period
    
    
    (108,713
    )
    
    
    (49,065
    )
    
    
    (35,396
    )Ending balance
    
    $
    21,448
    
    
    $
    4,056
    
    
    $
    2,977Provision as a percent of Global product sales, gross
    
    
    24
    %
    
    
    28
    %
    
    
    23
    %
    53




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##### Table of Contents



Rebates.
  As of December 31,2009
    
    
    2008
    
    
    2007($ in 000s)Rebate reserveBeginning balance
    
    $
    4,800
    
    
    $
    3,603
    
    
    $
    3,124Provision recorded during the period
    
    
    72,620
    
    
    
    20,361
    
    
    
    15,968Credits issued during the period
    
    
    (39,639
    )
    
    
    (19,164
    )
    
    
    (15,489
    )Ending balance
    
    $
    37,781
    
    
    $
    4,800
    
    
    $
    3,603Provision as a percent of Global product sales, gross
    
    
    14
    %
    
    
    11
    %
    
    
    11
    %
    54




---



##### Table of Contents



Returns.
  As of December 31,2009
    
    
    2008
    
    
    2007($ in 000s)Returns reserveBeginning balance
    
    $
    13,675
    
    
    $
    14,261
    
    
    $
    12,903Provision recorded during the period
    
    
    11,847
    
    
    
    5,719
    
    
    
    5,459Credits issued during the period
    
    
    (3,408
    )
    
    
    (6,305
    )
    
    
    (4,101
    )Ending balance
    
    $
    22,114
    
    
    $
    13,675
    
    
    $
    14,261Provision as a percent of Global product sales, gross
    
    
    2
    %
    
    
    3
    %
    
    
    4
    %
   55




---



##### Table of Contents



Medicaid.
 Shelf-Stock Adjustments.
 Allowance for Uncollectible Amounts
  56




---



##### Table of Contents



Estimated Lives of Alliance Agreements.
   57




---



##### Table of Contents



58




---



##### Table of Contents



Third-Party Research and Development Agreements.
 Share-Based Compensation.
  59




---



##### Table of Contents



Income Taxes. ®
 Fair Value of Financial Instruments.
 Contingencies.
  60




---



##### Table of Contents



Goodwill.
 Adoption
of FASB ASC Topic 470.
  61




---



##### Table of Contents



Results of Operations
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Overview
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2009
    
    
    2008
    
    
    $
    
    
    %(as adjusted)Total revenues
    
    $
    358,409
    
    
    $
    210,071
    
    
    $
    148,338
    
    
    
    71
    %Gross profit
    
    
    188,096
    
    
    
    118,102
    
    
    
    69,994
    
    
    
    59
    %Income from operations
    
    
    70,413
    
    
    
    3,923
    
    
    
    66,490
    
    
    
    nmIncome before income taxes
    
    
    70,977
    
    
    
    26,009
    
    
    
    44,968
    
    
    
    173
    %Provision for income taxes
    
    
    21,006
    
    
    
    10,069
    
    
    
    10,937
    
    
    
    109
    %49,971
    
    
    
    15,940
    
    
    
    34,031
    
    
    
    213
    %Non-controlling interest
    
    
    90
    
    
    
    47
    
    
    
    43
    
    
    
    91
    %Net income
    
    $
    50,061
    
    
    $
    15,987
    
    
    $
    34,074
    
    
    
    213
    %
 Net Income
 ® ®
  62




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##### Table of Contents



Global Division
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2009
    
    
    2008
    
    
    $
    
    
    %(as adjusted)RevenuesGlobal product sales, net
    
    $
    287,079
    
    
    $
    96,006
    
    
    $
    191,073
    
    
    
    199
    %Private Label product sales
    
    
    5,513
    
    
    
    2,596
    
    
    
    2,917
    
    
    
    112
    %Rx Partner
    
    
    33,835
    
    
    
    81,778
    
    
    
    (47,943
    )
    
    
    (59
    )%OTC Partner
    
    
    6,842
    
    
    
    15,946
    
    
    
    (9,104
    )
    
    
    (57
    )%Research Partner
    
    
    11,680
    
    
    
    833
    
    
    
    10,847
    
    
    
    nmOther
    
    
    12
    
    
    
    21
    
    
    
    (9
    )
    
    
    (43
    )%Total revenues
    
    
    344,961
    
    
    
    197,180
    
    
    
    147,781
    
    
    
    75
    %Cost of revenues
    
    
    158,270
    
    
    
    80,724
    
    
    
    77,546
    
    
    
    96
    %Gross profit
    
    
    186,691
    
    
    
    116,456
    
    
    
    70,235
    
    
    
    60
    %Operating expenses:Research and development
    
    
    38,698
    
    
    
    42,930
    
    
    
    (4,232
    )
    
    
    (10
    )%Patent litigation
    
    
    5,379
    
    
    
    6,472
    
    
    
    (1,093
    )
    
    
    (17
    )%Selling, general and administrative
    
    
    10,891
    
    
    
    11,445
    
    
    
    (554
    )
    
    
    (5
    )%Total operating expenses
    
    
    54,968
    
    
    
    60,847
    
    
    
    (5,879
    )
    
    
    (10
    )%Income from operations
    
    $
    131,723
    
    
    $
    55,609
    
    
    
    76,114
    
    
    
    137
    %
 Revenues
     63




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##### Table of Contents



® ® ® ® ® ® ® ® ®
   Cost of Revenues
  Gross Profit
 ®
 Research and Development Expenses
   64




---



##### Table of Contents



Patent Litigation Expenses
  Selling, General and Administrative Expenses
   65




---



##### Table of Contents



Impax Division
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2009
    
    
    2008
    
    
    $
    
    
    %(as adjusted)Promotional Partner revenue
    
    $
    13,448
    
    
    $
    12,891
    
    
    
    557
    
    
    
    4
    %Cost of revenues
    
    
    12,043
    
    
    
    11,245
    
    
    
    798
    
    
    
    7
    %Gross profit
    
    
    1,405
    
    
    
    1,646
    
    
    
    (241
    )
    
    
    (15
    )%Operating expenses:Research and development
    
    
    24,576
    
    
    
    16,307
    
    
    
    8,269
    
    
    
    51
    %Selling, general and administrative
    
    
    3,469
    
    
    
    2,671
    
    
    
    798
    
    
    
    30
    %Total operating expenses
    
    
    28,045
    
    
    
    18,978
    
    
    
    9,067
    
    
    
    48
    %Loss from operations
    
    $
    (26,640
    )
    
    $
    (17,332
    )
    
    
    (9,308
    )
    
    
    (54
    )%
 Revenues
  Cost of Revenues
  Gross Profit
  Research and Development Expenses
  Selling, General and Administrative Expenses
   66




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##### Table of Contents



Corporate and other
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2009
    
    
    2008
    
    
    $
    
    
    %(as adjusted)Litigation settlement
    
    $
    9,318
    
    
    $
    
    
    
    
    9,318
    
    
    
    nmGeneral and administrative expenses
    
    
    25,352
    
    
    
    34,354
    
    
    
    (9,002
    )
    
    
    (26
    )%Total operating expenses
    
    
    34,670
    
    
    
    34,354
    
    
    
    316
    
    
    
    1
    %Loss from operations
    
    
    (34,670
    )
    
    
    (34,354
    )
    
    
    (316
    )
    
    
    (1
    )%Change in fair value of common stock purchase warrant
    
    
    
    
    
    
    1,234
    
    
    
    (1,234
    )
    
    
    (100
    )%Other income, net
    
    
    57
    
    
    
    21,529
    
    
    
    (21,472
    )
    
    
    (100
    )%Loss on repurchase of 3.5% Debentures
    
    
    
    
    
    
    (113
    )
    
    
    113
    
    
    
    100
    %Interest income
    
    
    753
    
    
    
    4,218
    
    
    
    (3,465
    )
    
    
    (82
    )%Interest expense
    
    
    (246
    )
    
    
    (4,782
    )
    
    
    4,536
    
    
    
    95
    %Loss before income taxes
    
    
    (34,106
    )
    
    
    (12,268
    )
    
    
    (21,838
    )
    
    
    (178
    )%Provision for income taxes
    
    $
    21,006
    
    
    $
    10,069
    
    
    
    10,937
    
    
    
    109
    %
 Litigation settlement
  General and administrative expenses
  Other income, net
   67




---



##### Table of Contents



Interest Income
  Interest Expense
  Income Taxes
   68




---



##### Table of Contents



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Overview
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2008
    
    
    2007
    
    
    $
    
    
    %(as adjusted)
    
    
    (as adjusted)Total revenues
    
    $
    210,071
    
    
    $
    273,753
    
    
    $
    (63,682
    )
    
    
    (23
    )%Gross profit
    
    
    118,102
    
    
    
    166,097
    
    
    
    (47,995
    )
    
    
    (29
    )%Income from operations
    
    
    3,923
    
    
    
    76,507
    
    
    
    (72,584
    )
    
    
    (95
    )%Income before income taxes
    
    
    26,009
    
    
    
    73,997
    
    
    
    (47,988
    )
    
    
    (65
    )%Provision (benefit) for income taxes
    
    
    10,069
    
    
    
    (51,351
    )
    
    
    61,420
    
    
    
    nm15,940
    
    
    
    125,348
    
    
    
    (109,408
    )
    
    
    (87
    )%Non-controlling interest
    
    
    47
    
    
    
    62
    
    
    
    (15
    )
    
    
    (24
    )%Net income
    
    $
    15,987
    
    
    $
    125,410
    
    
    $
    (109,423
    )
    
    
    (87
    )%
 Net Income
 ® ®
  69




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##### Table of Contents



Global Division
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2008
    
    
    2007
    
    
    $
    
    
    %(as adjusted)
    
    
    (as adjusted)RevenuesGlobal product sales, net
    
    $
    96,006
    
    
    $
    85,037
    
    
    $
    10,969
    
    
    
    13
    %Private Label product sales
    
    
    2,596
    
    
    
    2,941
    
    
    
    (345
    )
    
    
    (12
    )%Rx Partner
    
    
    81,778
    
    
    
    161,114
    
    
    
    (79,336
    )
    
    
    (49
    )%OTC Partner
    
    
    15,946
    
    
    
    11,866
    
    
    
    4,080
    
    
    
    34
    %Research Partner
    
    
    833
    
    
    
    
    
    
    
    833
    
    
    
    nmOther
    
    
    21
    
    
    
    36
    
    
    
    (15
    )
    
    
    (42
    )%Total revenues
    
    
    197,180
    
    
    
    260,994
    
    
    
    (63,814
    )
    
    
    (24
    )%Cost of revenues
    
    
    80,724
    
    
    
    96,829
    
    
    
    (16,105
    )
    
    
    (17
    )%Gross profit
    
    
    116,456
    
    
    
    164,165
    
    
    
    (47,709
    )
    
    
    (29
    )%Operating expenses:Research and development
    
    
    42,930
    
    
    
    31,170
    
    
    
    11,760
    
    
    
    38
    %Patent litigation
    
    
    6,472
    
    
    
    10,025
    
    
    
    (3,553
    )
    
    
    (35
    )%Selling, general and administrative
    
    
    11,445
    
    
    
    7,076
    
    
    
    4,369
    
    
    
    62
    %Total operating expenses
    
    
    60,847
    
    
    
    48,271
    
    
    
    12,576
    
    
    
    26
    %Income from operations
    
    $
    55,609
    
    
    $
    115,894
    
    
    
    (60,285
    )
    
    
    (52
    )%
 Revenues
  ®
   70




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##### Table of Contents



® ® ® ® ® ® ® ®
  Cost of Revenues
 ®
 Gross Profit
 ® ®
 Research and Development Expenses
  Patent Litigation Expenses
  Selling, General and Administrative Expenses
   71




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##### Table of Contents



Impax Division
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2008
    
    
    2007
    
    
    $
    
    
    %(as adjusted)
    
    
    (as adjusted)Promotional Partner revenue
    
    $
    12,891
    
    
    $
    12,759
    
    
    
    132
    
    
    
    1
    %Cost of revenues
    
    
    11,245
    
    
    
    10,827
    
    
    
    418
    
    
    
    4
    %Gross profit
    
    
    1,646
    
    
    
    1,932
    
    
    
    (286
    )
    
    
    (15
    )%Operating expenses:Research and development
    
    
    16,307
    
    
    
    8,822
    
    
    
    7,485
    
    
    
    85
    %Selling, general and administrative
    
    
    2,671
    
    
    
    1,696
    
    
    
    975
    
    
    
    57
    %Total operating expenses
    
    
    18,978
    
    
    
    10,518
    
    
    
    8,460
    
    
    
    80
    %Loss from operations
    
    $
    (17,332
    )
    
    $
    (8,586
    )
    
    
    (8,746
    )
    
    
    (102
    )%
 Revenues
  Cost of Revenues
  Gross Profit
  Research and Development Expenses
  Selling, General and Administrative Expenses
   72




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##### Table of Contents



Corporate and other
  Year Ended
    
    
    Increase/December 31
    
    
    December 31
    
    
    (Decrease)(in $000s)
    
    2008
    
    
    2007
    
    
    $
    
    
    %(as adjusted)
    
    
    (as adjusted)General and administrative expenses
    
    $
    34,354
    
    
    $
    30,801
    
    
    
    3,553
    
    
    
    12
    %Loss from operations
    
    
    (34,354
    )
    
    
    (30,801
    )
    
    
    (3,553
    )
    
    
    (12
    )%Change in fair value of common stock purchase warrant
    
    
    1,234
    
    
    
    (110
    )
    
    
    1,344
    
    
    
    nmOther income, net
    
    
    21,529
    
    
    
    11
    
    
    
    21,518
    
    
    
    nmLoss on repurchase of 3.5% Debentures
    
    
    (113
    )
    
    
    
    
    
    
    (113
    )
    
    
    nmInterest income
    
    
    4,218
    
    
    
    4,751
    
    
    
    (533
    )
    
    
    (11
    )%Interest expense
    
    
    (4,782
    )
    
    
    (7,162
    )
    
    
    2,380
    
    
    
    33
    %Provision for income taxes
    
    $
    10,069
    
    
    $
    (51,351
    )
    
    
    61,420
    
    
    
    nm
 General and Administrative Expenses
  Other income, net
  Interest Income
   73




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Interest Expense
  Income Taxes
   74




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##### Table of Contents



Liquidity and Capital Resources
    Cash and Cash Equivalents
  Cash Flows
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008.
  ® ®
  75




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76




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##### Table of Contents



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007.
   ® ®
      77




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##### Table of Contents



Outstanding Debt Obligations
 Senior Lenders; Wachovia Bank
     78




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##### Table of Contents



3.5% Debentures
      Subordinated Promissory Note
  Vendor Financing Agreement
 
  79




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##### Table of Contents



Commitments and Contractual Obligations
  Payments Due by PeriodLess
    
    
    
    
    
    
    
    
    
    
    MoreThan 1
    
    
    1-3
    
    
    3-5
    
    
    Than 5($ in 000s)
    
    Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsContractual Obligations (a)Credit Facilities and Long-Term Debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest Expense Payable  Long-Term Debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Open Purchase Order Commitments
    
    
    22,078
    
    
    
    22,078
    
    
    
    
    
    
    
    
    
    
    
    Operating Leases(b)
    
    
    5,403
    
    
    
    1,275
    
    
    
    3,097
    
    
    
    819
    
    
    
    212Construction Contracts(c)
    
    
    1,355
    
    
    
    1,355
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    28,836
    
    
    $
    24,708
    
    
    $
    3,097
    
    
    $
    819
    
    
    $
    212
 
 (a)
    
    Liabilities for uncertain tax positions FASB ASC Topic 740, Sub-topic 10, were excluded as we
are not able to make a reasonably reliable estimate of the amount and period of related future
payments. As of December 31, 2009, we had a $1.2 million provision for uncertain tax
positions.(b)
    
    We lease office, warehouse, and laboratory facilities under non-cancelable operating leases
through June 2015. We also lease certain equipment under various non-cancelable operating
leases with various expiration dates through 2013.(c)
    
    Construction contracts are related to our facility in Taiwan, R.O.C., which is intended to be
utilized for manufacturing, research and development, warehouse, and administrative space.
The construction phase of this project was completed and equipment was installed, validated,
and approved by the FDA in 2009; we expect shipments of commercial product to begin in early
2010. In conjunction with the construction of our Taiwan facility, we entered into several
contracts, amounting to an aggregate of approximately $16.6 million as of December 31, 2009
and 2008. As of December 31, 2009 and 2008, we had remaining commitments under these
contracts of approximately $1.4 million and $2.0 million, respectively. Off Balance-Sheet Arrangements
   80




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Recent Accounting Pronouncements
      81




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82




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##### Table of Contents



Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
   
 Item 8.
    
    Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
   83




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Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
    84




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Managements Report on Internal Control Over Financial Reporting
      85




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 Board of Directors and Stockholders

Impax Laboratories, Inc. We have audited Impax Laboratories, Inc. and Subsidiaries (a Delaware corporation) (the Company) internal control
over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys
management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companys internal
control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A companys internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. In our opinion, Impax Laboratories, Inc. and Subsidiaries maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated
Frameworkissued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Impax Laboratories, Inc. and Subsidiaries as of December 31, 2009 and 2008
and the related consolidated statements of operations, changes in stockholders equity (deficit), comprehensive income
and cash flows for each of the three years in the period ended December 31, 2009 and our report dated February 26, 2010
expressed an unqualified opinion. /s/ GRANT THORNTON LLP Philadelphia, Pennsylvania

February 26, 2010  86




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Changes in Internal Control over Financial Reporting
  
 Item 9B. Other Information
   87




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Code of Ethics
   
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
   88




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)(1) Consolidated Financial Statements
  (a)(2) Financial Statement Schedules
   89




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##### Table of Contents



(a)(3) Exhibits
 Exhibit No.
    
    Description of Document3.1.1
    
    
    Restated Certificate of Incorporation, dated August 30, 2004.(1)3.1.2
    
    
    Certificate of Designation of Series A Junior Participating Preferred Stock, as filed with
the Secretary of State of Delaware on January 21, 2009.(2)3.2
    
    
    Amended and Restated Bylaws, effective June 29, 2009.(3)4.1
    
    
    Specimen of Common Stock Certificate.(4)4.2
    
    
    Form of Debenture (incorporated by reference to Exhibit A to the Indenture, dated as of June
27, 2005, between the Company and HSBC Bank USA, National Association, as Trustee, listed on
Exhibit 4.3)4.3
    
    
    Indenture, dated as of June 27, 2005, between the Company and HSBC Bank USA, National
Association, as Trustee.(4)4.4
    
    
    Supplemental Indenture, dated as of July 6, 2005, between the Company and HSBC Bank USA,
National Association, as Trustee.(4)4.5
    
    
    Registration Rights Agreement, dated as of June 27, 2005, between the Company and the
Initial Purchasers named therein.(4)4.6
    
    
    Promissory Note dated June 7, 2006, issued by the Company to Solvay Pharmaceuticals, Inc.(4)4.7
    
    
    Preferred Stock Rights Agreement, dated as of January 20, 2009, by and between the Company
and StockTrans, Inc., as Rights Agent.(2)10.1.1
    
    
    Amended and Restated Loan and Security Agreement, dated as of December 15, 2005, between the
Company and Wachovia Bank, National Association.(4)10.1.2
    
    
    First Amendment, dated October 14, 2008, to Amended and Restated Loan and Security
Agreement, dated December 15, 2005, between the Company and Wachovia Bank, National
Association.(5)10.1.3
    
    
    Second Amendment to Amended and Restated Loan and Security Agreement, effective as of
December 31, 2008, by and among the Company and Wachovia Bank, National Association.(6)10.1.4
    
    
    Third Amendment to Amended and Restated Loan and Security Agreement, effective as of March
31, 2009, by and among the Company and Wachovia Bank, National Association.(7)10.2
    
    
    Purchase Agreement, dated June 26, 2005, between the Company and the Purchasers named
therein.(4)10.3.1
    
    
    Impax Laboratories Inc. 1995 Stock Incentive Plan.*(4)10.3.2
    
    
    Amendment No. 1 to Impax Laboratories, Inc. 1995 Stock Incentive Plan, dated July 1,
1998.*(6)10.3.3
    
    
    Amendment No. 2 to Impax Laboratories, Inc. 1995 Stock Incentive Plan, dated May 25,
1999.*(6)10.4.1
    
    
    Impax Laboratories Inc. 1999 Equity Incentive Plan.*(6)10.4.2
    
    
    Form of Stock Option Grant under the Impax Laboratories, Inc. 1999 Equity Incentive Plan.*(6)10.5
    
    
    Impax Laboratories Inc. 2001 Non-Qualified Employee Stock Purchase Plan.*(4)10.6.1
    
    
    Impax Laboratories Inc. Amended and Restated 2002 Equity Incentive Plan.*(8)10.6.2
    
    
    Form of Stock Option Grant under the Impax Laboratories, Inc. Amended and Restated 2002
Equity Incentive Plan.*(6)10.6.3
    
    
    Form of Stock Bonus Agreement under the Impax Laboratories, Inc. Amended and Restated 2002
Equity Incentive Plan.*(6)10.6.4
    
    
    Amendment to Impax Laboratories, Inc. Amended and Restated 2002 Equity Incentive Plan,
effective May 19, 2009.*(9)10.7
    
    
    Impax Laboratories Inc. Executive Non-Qualified Deferred Compensation Plan, restated
effective January 1, 2005.*(5)10.8.1
    
    
    Employment Agreement, dated December 14, 1999, by and between the Company and Larry Hsu,
Ph.D.*(5)
  90




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Exhibit No.
    
    Description of Document10.8.2
    
    
    Amendment No. 1, dated May 19, 2009, to Employment Agreement, dated December 14, 1999, by
and between the Company and Larry Hsu, Ph.D.*(9)10.8.3
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Larry Hsu,
Ph.D.*(10)10.9.1
    
    
    Offer of Employment Letter, dated August 12, 2004, between the Company and Charles V.
Hildenbrand.*(6)10.9.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Charles V.
Hildenbrand.*(10)10.10.1
    
    
    Offer of Employment Letter, dated February 9, 2005, between the Company and Arthur A. Koch,
Jr.*(6)10.10.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Arthur A. Koch,
Jr.*(10)10.11.1
    
    
    Employment Agreement, dated as of September 1, 2006, between the Company and David S.
Doll.*(4)10.11.2
    
    
    Separation Agreement and General Release, dated July 30, 2008, between the Company and David
S. Doll.*(4)10.11.3
    
    
    Consulting Agreement, effective as of September 4, 2008, between the Company and David S.
Doll.*(4)10.12.1
    
    
    Offer of Employment Letter, effective as of March 31, 2008, between the Company and Michael
Nestor.*(6)10.12.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Michael J.
Nestor.*(10)10.13.1
    
    
    Offer of Employment Letter, effective as of January 5, 2009, between the Company and
Christopher Mengler.*(6)10.13.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Christopher
Mengler, R.Ph.*(10)10.14
    
    
    2008 Cash Incentive Awards for Executive Officers.*(11)10.14.1
    
    
    Strategic Alliance Agreement, dated June 27, 2001, between the Company and Teva
Pharmaceuticals Curacao N.V.**(12)10.14.2
    
    
    Letter Amendment, dated October 8, 2003, to Strategic Alliance Agreement, dated June 27,
2001, between the Company and Teva Pharmaceuticals Curacao N.V.**(12)10.14.3
    
    
    Letter Agreement, dated March 24, 2005, between the Company and Teva Pharmaceuticals Curacao
N.V.**(12)10.14.4
    
    
    Letter Amendment, dated March 24, 2005 and effective January 1, 2005, to Strategic Alliance
Agreement, dated June 27, 2001, between the Company and Teva Pharmaceuticals Curacao
N.V.**(12)10.14.5
    
    
    Amendment, dated January 24, 2006, to Strategic Alliance Agreement, dated June 27, 2001,
between the Company and Teva Pharmaceuticals Curacao N.V.**(13)10.14.6
    
    
    Amendment, dated February 9, 2007, to Strategic Alliance Agreement, dated June 27, 2001,
between the Company and Teva Pharmaceuticals Curacao N.V.**(12)10.15.1
    
    
    Development, License and Supply Agreement, dated as of June 18, 2002, between the Company
and Wyeth, acting through its Wyeth Consumer Healthcare Division.**(12)10.15.2
    
    
    Amendment, dated as of July 9, 2004, to Development, License and Supply Agreement, dated as
of June 18, 2002, between the Company and Wyeth, acting through its Wyeth Consumer
Healthcare Division.(13)10.15.3
    
    
    Amendment, dated as of February 14, 2005, to Development, License and Supply Agreement,
dated as of June 18, 2002, between the Company and Wyeth, acting through its Wyeth Consumer
Healthcare Division.(13)10.16.1
    
    
    Licensing, Contract Manufacturing and Supply Agreement, dated as of June 18, 2002, between
the Company and Schering-Plough Corporation.**(13)10.16.2
    
    
    Amendment No. 3, effective as of July 23, 2004, to Licensing, Contract Manufacturing and
Supply Agreement, dated as of June 18, 2002, between the Company and Schering-Plough
Corporation.**(12)
  91




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Exhibit No.
    
    Description of Document10.16.3
    
    
    Amendment No. 4, effective as of December 15, 2006, to Licensing, Contract Manufacturing and
Supply Agreement, dated as of June 18, 2002, between the Company and Schering-Plough
Corporation.**(12)10.17.1
    
    
    Supply and Distribution Agreement, dated as of November 3, 2005, between the Company and
DAVA Pharmaceuticals, Inc.**(12)10.17.2
    
    
    Amendment No. 2, dated February 6, 2007, to Supply and Distribution Agreement, dated
November 3, 2005, between the Company and DAVA Pharmaceuticals, Inc.**(13)10.18
    
    
    Patent License Agreement, dated as of March 30, 2007, by and among Purdue Pharma L.P., The
P.F. Laboratories, Inc., Purdue Pharmaceuticals L.P. and the Company.(14)10.19
    
    
    Supplemental License Agreement, dated as of March 30, 2007, by and among Purdue Pharma L.P.,
The P.F. Laboratories, Inc., Purdue Pharmaceuticals L.P. and the Company.(14)10.20
    
    
    Sublicense Agreement, effective as of March 30, 2007, between the Company and DAVA
Pharmaceuticals, Inc.(14)10.21
    
    
    Promotional Services Agreement, dated as of January 19, 2006, between the Company and Shire
US Inc.(3)10.22
    
    
    License and Distribution Agreement, dated as of January 19, 2006, between the Company and
Shire LLC.***10.23
    
    
    Co-promotion Agreement, dated as of July 16, 2008, between the Company and Wyeth, acting
through its Wyeth Pharmaceuticals Division.**(9)10.24
    
    
    Joint Development Agreement, dated as of November 26, 2008, between the Company and Medicis
Pharmaceutical Corporation.****10.25
    
    
    Construction Work Agreement, dated as of February 18, 2008, by and between Impax
Laboratories (Taiwan), Inc., a wholly-owned subsidiary of the Company, and E&C Engineering
Corporation (English translation from the Taiwanese language).(6)10.26
    
    
    Construction Agreement, dated as of March 11, 2008, by and between Impax Laboratories
(Taiwan), Inc., a wholly-owned subsidiary of the Company, and Fu Tsu Construction (English
translation from the Taiwanese language).(6)11.1
    
    
    Statement re computation of per share earnings (incorporated by reference to Note 17 to the
Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K).21.1
    
    
    Subsidiaries of the registrant.23.1
    
    
    Consent of Grant Thornton LLP31.1
    
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    
    Certifications of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certifications of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Management contract, compensatory plan or arrangement.**
    
    Confidential treatment granted for certain portions of this exhibit pursuant to Rule 24b-2
under the Exchange Act, which portions are omitted and filed separately with the SEC.***
    
    Confidential treatment requested for certain portions of this exhibit pursuant to Rule 24b-2
under the Exchange Act, which portions are omitted and filed separately with the SEC.****
    
The
Company is re-filing the Joint Development Agreement, dated as of November 26, 2008 (the
Joint Development Agreement), with Medicis Pharmaceutical Corporation to disclose a
milestone payment that was previously omitted in accordance with an order granting
confidential treatment pursuant to Rule 24b-2 under the Exchange Act. Certain portions of the
Joint Development Agreement remain confidential pursuant to an order granting confidential
treatment under the Exchange Act, which portions are omitted and filed separately with the
SEC.  92




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##### Table of Contents



(1)
    
    Incorporated by reference to Amendment No. 5 to the Companys Registration Statement on Form
10 filed on December 23, 2008.(2)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on January 22,
2009.(3)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 2, 2009.(4)
    
    Incorporated by reference to the Companys Registration Statement on Form 10 filed on October
10, 2008.(5)
    
    Incorporated by reference to Amendment No. 2 to the Companys Registration Statement on Form
10 filed on December 2, 2008.(6)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the year ended
December 31, 2008.(7)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009.(8)
    
    Incorporated by reference to the Companys Definitive Proxy Statement on Schedule 14A filed
on April 8, 2009.(9)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter
ended June 30, 2009.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on January 14,
2010.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on March 5, 2009.(12)
    
    Incorporated by reference to Amendment No. 6 to the Companys Registration Statement on Form
10 filed on January 14, 2009.(13)
    
    Incorporated by reference to Amendment No. 1 to the Companys Registration Statement on Form
10 filed on November 12, 2008.(14)
    
    Incorporated by reference to Amendment No. 7 to the Companys Registration Statement on Form
10 filed on January 21, 2009.  93




---



##### 



Impax Laboratories, Inc.  INDEX TO FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2009
    
    
    F-5Consolidated Statements of Changes in Stockholders Equity (Deficit) and
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2009
    
    
    F-6Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2009
    
    
    F-7Notes to Consolidated Financial Statements for each of the three years in the period ended
December 31, 2009
    
    
    F-9Schedule II, Valuation and Qualifying Accounts
    
    
    S-1
   F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders

Impax Laboratories, Inc. We have audited the accompanying consolidated balance sheets of Impax Laboratories, Inc. and Subsidiaries (a Delaware
corporation) (the Company) as of December 31, 2009 and 2008 and the related consolidated statements of operations,
changes in stockholders equity (deficit), comprehensive income and cash flows for each of the three years in the
period ended December 31, 2009. Our audits of the basic consolidated financial statements included the financial
statement schedule, listed in the index appearing under Item 15. These financial statements and financial statement
schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Our audits of the financial statements included examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Impax Laboratories, Inc. and Subsidiaries as of December 31, 2009 and 2008, and the results of
their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth therein.  F-2




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##### Table of Contents



As discussed in Note 2 to the consolidated financial statements, the Company has adopted the provisions of accounting
for convertible debt instruments which may be settled in cash or common stock upon conversion. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Companys internal control over financial reporting as of December 31, 2009, based on criteria established
in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated February 26, 2010 expressed an unqualified opinion. /s/ GRANT THORNTON LLP Philadelphia, Pennsylvania

February 26, 2010  F-3




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##### Table of Contents



IMPAX LABORATORIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 December 31,
    
    
    December 31,2009
    
    
    2008(as adjusted)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    31,770
    
    
    $
    69,275Short-term investments
    
    
    58,599
    
    
    
    50,710Accounts receivable, net
    
    
    185,854
    
    
    
    43,306Inventory, net
    
    
    49,130
    
    
    
    32,305Current portion of deferred product manufacturing costs-alliance agreements
    
    
    11,624
    
    
    
    13,578Current portion of deferred income taxes, net
    
    
    32,286
    
    
    
    17,900Prepaid expenses and other current assets
    
    
    4,748
    
    
    
    9,298Total current assets
    
    
    374,011
    
    
    
    236,372Property, plant and equipment, net
    
    
    101,650
    
    
    
    95,629Deferred product manufacturing costs-alliance agreements
    
    
    96,619
    
    
    
    93,144Deferred income taxes, net
    
    
    48,544
    
    
    
    52,551Other assets
    
    
    12,358
    
    
    
    9,017Goodwill
    
    
    27,574
    
    
    
    27,574Total assets
    
    $
    660,756
    
    
    $
    514,287LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt, net
    
    $
    
    
    
    $
    14,416Accounts payable
    
    
    23,295
    
    
    
    12,797Accrued expenses
    
    
    93,682
    
    
    
    41,108Accrued profit sharing and royalty expenses
    
    
    53,695
    
    
    
    252Current portion of deferred revenue-alliance agreements
    
    
    33,196
    
    
    
    35,015Current portion of accrued exclusivity period fee payments due
    
    
    
    
    
    
    6,000Total current liabilities
    
    
    203,868
    
    
    
    109,588Long-term debt
    
    
    
    
    
    
    5,990Deferred revenue-alliance agreements
    
    
    224,522
    
    
    
    225,804Other liabilities
    
    
    10,139
    
    
    
    13,255Total liabilities
    
    $
    438,529
    
    
    $
    354,637Commitments and contingencies (Notes 19 and 20)Stockholders equity:Preferred Stock, $0.01 par value, 2,000,000 shares authorized,
0 shares outstanding at December 31, 2009 and 2008
    
    $
    
    
    
    $
    Common stock, $0.01 par value, 90,000,000 shares authorized and
62,210,089 and 60,135,686 shares issued at
December 31, 2009 and 2008, respectively
    
    
    622
    
    
    
    602Additional paid-in capital
    
    
    223,239
    
    
    
    211,128Treasury stock-acquired as a result of achievement of milestone under
the Teva Agreement, 243,729 shares
    
    
    (2,157
    )
    
    
    (2,157
    )Accumulated other comprehensive loss
    
    
    (524
    )
    
    
    (995
    )Retained earnings (Accumulated deficit)
    
    
    828
    
    
    
    (49,233
    )222,008
    
    
    
    159,345Noncontrolling interest
    
    
    219
    
    
    
    305Total stockholders equity
    
    
    222,227
    
    
    
    159,650Total liabilities and stockholders equity
    
    $
    660,756
    
    
    $
    514,287
   F-4




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##### Table of Contents



IMPAX LABORATORIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS  (amounts in thousands, except share and per share data)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(as adjusted)
    
    
    (as adjusted)Revenues:Global product sales, net
    
    $
    287,079
    
    
    $
    96,006
    
    
    $
    85,037Private Label product sales
    
    
    5,513
    
    
    
    2,596
    
    
    
    2,941Rx Partner
    
    
    33,835
    
    
    
    81,778
    
    
    
    161,114OTC Partner
    
    
    6,842
    
    
    
    15,946
    
    
    
    11,866Research Partner
    
    
    11,680
    
    
    
    833
    
    
    
    Promotional Partner
    
    
    13,448
    
    
    
    12,891
    
    
    
    12,759Other
    
    
    12
    
    
    
    21
    
    
    
    36Total revenues
    
    
    358,409
    
    
    
    210,071
    
    
    
    273,753Cost of revenues
    
    
    170,313
    
    
    
    91,969
    
    
    
    107,656Gross profit
    
    
    188,096
    
    
    
    118,102
    
    
    
    166,097Operating expenses:Research and development
    
    
    63,274
    
    
    
    59,237
    
    
    
    39,992Patent litigation
    
    
    5,379
    
    
    
    6,472
    
    
    
    10,025Litigation settlement
    
    
    9,318
    
    
    
    
    
    
    
    Selling, general and administrative
    
    
    39,712
    
    
    
    48,470
    
    
    
    39,573Total operating expenses
    
    
    117,683
    
    
    
    114,179
    
    
    
    89,590Income from operations
    
    
    70,413
    
    
    
    3,923
    
    
    
    76,507Change in fair value of common stock
purchase warrants
    
    
    
    
    
    
    1,234
    
    
    
    (110
    )Loss on repurchase of 3.5% Debentures
    
    
    
    
    
    
    (113
    )
    
    
    Other income, net
    
    
    57
    
    
    
    21,529
    
    
    
    11Interest income
    
    
    753
    
    
    
    4,218
    
    
    
    4,751Interest expense
    
    
    (246
    )
    
    
    (4,782
    )
    
    
    (7,162
    )Income before income taxes
    
    
    70,977
    
    
    
    26,009
    
    
    
    73,997Provision (benefit) for income taxes
    
    
    21,006
    
    
    
    10,069
    
    
    
    (51,351
    )Net income before noncontrolling interest
    
    
    49,971
    
    
    
    15,940
    
    
    
    125,348Add back loss attributable to noncontrolling interest
    
    
    90
    
    
    
    47
    
    
    
    62Net income
    
    $
    50,061
    
    
    $
    15,987
    
    
    $
    125,410Net Income per share:Basic
    
    $
    0.83
    
    
    $
    0.27
    
    
    $
    2.13Diluted
    
    $
    0.82
    
    
    $
    0.26
    
    
    $
    2.05Weighted average common shares outstanding:Basic
    
    
    60,279,602
    
    
    
    59,072,752
    
    
    
    58,810,452Diluted
    
    
    61,080,184
    
    
    
    60,782,721
    
    
    
    61,217,470
   F-5




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##### Table of Contents



IMPAX LABORATORIES, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
 AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2009
 (amounts in thousands)
 Retained
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Earnings/
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Treasury
    
    
    (Accumulated
    
    
    ComprehensiveStockholders Equity (Deficit)
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Stock
    
    
    Deficit)
    
    
    Loss
    
    
    TotalBalance at December 31, 2006
    
    
    58,785
    
    
    $
    590
    
    
    $
    183,809
    
    
    $
    (2,157
    )
    
    $
    (186,215
    )
    
    $
    (3
    )
    
    $
    (3,976
    )2007Adoption of FASB ASC Topic 470
accounting for convertible debt
    
    
    
    
    
    
    
    
    
    
    6,666
    
    
    
    
    
    
    
    (4,415
    )
    
    
    
    
    
    
    2,251Exercise of common stock purchase
warrants, stock options, and sale of
common stock under ESPP
    
    
    37
    
    
    
    1
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    1,513
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,513Tax benefit related to
exercise of employee stock options
    
    
    
    
    
    
    
    
    
    
    10,477
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,477Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )
    
    
    (23
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,410
    
    
    
    
    
    
    
    125,410Balance at December 31, 2007
    
    
    58,822
    
    
    $
    591
    
    
    $
    202,715
    
    
    $
    (2,157
    )
    
    $
    (65,220
    )
    
    $
    (26
    )
    
    $
    135,9032008Exercise of common stock purchase
warrants and stock options,
issuance of restricted stock and
sale of common stock under ESPP
    
    
    994
    
    
    
    10
    
    
    
    1,029
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,039Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    5,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,817Issuance of common stock
    
    
    76
    
    
    
    1
    
    
    
    643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    644Reversal of deferred tax liability on
3.5% Debenture conversion option
as a result of repurchase
    
    
    
    
    
    
    
    
    
    
    924
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    924Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (969
    )
    
    
    (969
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,987
    
    
    
    
    
    
    
    15,987Balance at December 31, 2008
    
    
    59,892
    
    
    $
    602
    
    
    $
    211,128
    
    
    $
    (2,157
    )
    
    $
    (49,233
    )
    
    $
    (995
    )
    
    $
    159,3452009Exercise of stock options
issuance of restricted stock and
sale of common stock under ESPP
    
    
    2,074
    
    
    
    20
    
    
    
    4,507
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,527Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    7,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,391Tax benefit related to
exercise of employee stock options
    
    
    
    
    
    
    
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    471
    
    
    
    471Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,061
    
    
    
    
    
    
    
    50,061Balance at December 31, 2009
    
    
    61,966
    
    
    $
    622
    
    
    $
    223,239
    
    
    $
    (2,157
    )
    
    $
    828
    
    
    $
    (524
    )
    
    $
    222,008
 Years Ended December 31,Comprehensive Income
    
    2009
    
    
    2008
    
    
    2007Net income
    
    $
    50,061
    
    
    $
    15,987
    
    
    $
    125,410Currency translation adjustments
    
    
    471
    
    
    
    (969
    )
    
    
    (23
    )Comprehensive income
    
    $
    50,532
    
    
    $
    15,018
    
    
    $
    125,387
   F-6




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##### Table of Contents



IMPAX LABORATORIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(as adjusted)
    
    
    (as adjusted)Cash flows from operating activities:Net income
    
    $
    50,061
    
    
    $
    15,987
    
    
    $
    125,410Adjustments to reconcile net income to net cash (used in)
provided by operating activities:Depreciation
    
    
    11,266
    
    
    
    9,588
    
    
    
    8,144Amortization of 3.5% Debentures discount
and deferred financing costs
    
    
    307
    
    
    
    2,416
    
    
    
    3,368Amortization of Wachovia Credit Agreement deferred financing costs
    
    
    75
    
    
    
    74
    
    
    
    148Bad debt expense
    
    
    229
    
    
    
    568
    
    
    
    550Deferred income taxes (benefit)
    
    
    (10,379
    )
    
    
    3,816
    
    
    
    16,427Tax benefit on reversal of valuation allowance on deferred tax asset
    
    
    
    
    
    
    
    
    
    
    (82,963
    )Tax benefit related to the exercise of employee stock options
    
    
    (213
    )
    
    
    
    
    
    
    (10,477
    )Change in accrual for uncertain tax positions
    
    
    (6,308
    )
    
    
    1,397
    
    
    
    6,118Loss, net on repurchase of 3.5% Debentures
    
    
    
    
    
    
    113
    
    
    
    Deferred revenue  Rx Partners
    
    
    35,295
    
    
    
    94,876
    
    
    
    234,816Deferred product manufacturing costs  Rx Partners
    
    
    (24,089
    )
    
    
    (33,928
    )
    
    
    (64,681
    )Deferred revenue recognized  Rx Partners
    
    
    (33,835
    )
    
    
    (81,778
    )
    
    
    (161,114
    )Amortization deferred product manufacturing costs  Rx Partners
    
    
    18,410
    
    
    
    22,713
    
    
    
    46,363Deferred revenue  OTC Partners
    
    
    1,960
    
    
    
    16,399
    
    
    
    15,359Deferred product manufacturing costs  OTC Partners
    
    
    (1,929
    )
    
    
    (16,087
    )
    
    
    (13,014
    )Deferred revenue recognized  OTC Partners
    
    
    (6,842
    )
    
    
    (15,946
    )
    
    
    (11,866
    )Amortization deferred product manufacturing costs  OTC Partners
    
    
    6,087
    
    
    
    14,977
    
    
    
    9,900Deferred revenue  Research Partners
    
    
    12,000
    
    
    
    40,000
    
    
    
    Deferred revenue recognized  Research Partners
    
    
    (11,680
    )
    
    
    (833
    )
    
    
    Accrued profit sharing and royalty expense
    
    
    53,912
    
    
    
    360
    
    
    
    921Profit sharing and royalty payments
    
    
    (469
    )
    
    
    (656
    )
    
    
    (944
    )Payments on exclusivity period fee
    
    
    (6,000
    )
    
    
    (12,000
    )
    
    
    (18,200
    )Accrued litigation settlement expense
    
    
    5,865
    
    
    
    3,500
    
    
    
    Payments on accrued litigation settlements
    
    
    (11,495
    )
    
    
    (2,197
    )
    
    
    (2,573
    )Share-based compensation expense
    
    
    7,391
    
    
    
    5,817
    
    
    
    1,514Fair value of shares issued under severance arrangement
    
    
    
    
    
    
    561
    
    
    
    Accretion of interest income on short-term investments
    
    
    (519
    )
    
    
    (2,867
    )
    
    
    (3,147
    )Change in fair value of stock purchase warrants
    
    
    
    
    
    
    (1,234
    )
    
    
    110Changes in assets and liabilities:Accounts receivable
    
    
    (142,777
    )
    
    
    7,629
    
    
    
    9,868Inventory
    
    
    (16,825
    )
    
    
    (4,737
    )
    
    
    6,543Prepaid expenses and other assets
    
    
    2,179
    
    
    
    (4,184
    )
    
    
    (6,324
    )Accounts payable and accrued expenses
    
    
    57,059
    
    
    
    (517
    )
    
    
    7,569Other liabilities
    
    
    3,107
    
    
    
    737
    
    
    
    1,189Net cash (used in) provided by operating activities
    
    $
    (8,157
    )
    
    $
    64,564
    
    
    $
    119,014Cash flows from investing activities:Purchase of short-term investments
    
    
    (66,626
    )
    
    
    (202,133
    )
    
    
    (244,119
    )Maturities of short-term investments
    
    
    59,256
    
    
    
    260,324
    
    
    
    164,667Acquisition of ANDA intellectual property rights
    
    
    (750
    )
    
    
    
    
    
    
    Purchases of property, plant and equipment
    
    
    (13,667
    )
    
    
    (25,863
    )
    
    
    (18,836
    )Net cash (used in) provided by investing activities
    
    $
    (21,787
    )
    
    $
    32,328
    
    
    $
    (98,288
    )
  F-7




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##### Table of Contents



IMPAX LABORATORIES, INC.  CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(dollars in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(as adjusted)
    
    
    (as adjusted)Cash flows from financing activities:Repayment of long-term debt
    
    
    (12,887
    )
    
    
    (65,234
    )
    
    
    (253
    )Tax benefit related to the exercise of employee stock options
    
    
    213
    
    
    
    
    
    
    
    10,477Proceeds from exercise of stock options
and purchases under the ESPP
    
    
    5,113
    
    
    
    155
    
    
    
    113Net cash (used in) provided by financing activities
    
    $
    (7,561
    )
    
    $
    (65,079
    )
    
    $
    10,337Net (decrease) increase in cash and cash equivalents
    
    $
    (37,505
    )
    
    $
    31,813
    
    
    $
    31,063Cash and cash equivalents, beginning of period
    
    $
    69,275
    
    
    $
    37,462
    
    
    $
    6,399Cash and cash equivalents, end of period
    
    $
    31,770
    
    
    $
    69,275
    
    
    $
    37,462
  Years Ended December 31,(in $000s)
    
    2009
    
    
    2008
    
    
    2007(as adjusted)
    
    
    (as adjusted)Cash paid for interest
    
    $
    622
    
    
    $
    2,970
    
    
    $
    4,556Cash paid for income taxes
    
    $
    415
    
    
    $
    8,381
    
    
    $
    14,106
     F-8




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##### Table of Contents



IMPAX LABORATORIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS ENDED DECEMBER 31, 2009, 2008, 2007
 1. THE COMPANY
        F-9




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Use of Estimates
  Principles of Consolidation
  Cash and Cash Equivalents
  Short-Term Investments
  Fair Value of Financial Instruments
  Contingencies
 TM
  F-10




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Allowance for Doubtful Accounts
  Concentration of Credit Risk
   Percent of Total Accounts Receivable
    
    2009
    
    
    2008
    
    
    2007Customer #1
    
    
    19.9
    %
    
    
    22.9
    %
    
    
    8.7
    %Customer #2
    
    
    18.7
    %
    
    
    20.4
    %
    
    
    19.1
    %Customer #3
    
    
    43.8
    %
    
    
    20.4
    %
    
    
    15.8
    %Customer #4
    
    
    
    %
    
    
    13.5
    %
    
    
    26.1
    %Customer #5
    
    
    
    %
    
    
    6.0
    %
    
    
    
    %Customer #6
    
    
    
    %
    
    
    
    %
    
    
    8.4
    %Customer #7
    
    
    3.6
    %
    
    
    
    %
    
    
    
    %Customer #8
    
    
    2.7
    %
    
    
    
    %
    
    
    
    %Total-Five largest customers
    
    
    88.7
    %
    
    
    83.2
    %
    
    
    78.1
    %
 Percent of Gross Revenues
    
    2009
    
    
    2008
    
    
    2007Customer #1
    
    
    22.2
    %
    
    
    18.0
    %
    
    
    13.2
    %Customer #2
    
    
    5.7
    %
    
    
    14.0
    %
    
    
    12.7
    %Customer #3
    
    
    
    %
    
    
    13.9
    %
    
    
    35.5
    %Customer #4
    
    
    26.5
    %
    
    
    11.6
    %
    
    
    10.3
    %Customer #5
    
    
    15.3
    %
    
    
    10.9
    %
    
    
    5.5
    %Customer #6
    
    
    3.9
    %
    
    
    
    %
    
    
    
    %Total-Five largest customers
    
    
    73.6
    %
    
    
    68.4
    %
    
    
    77.2
    %
   F-11




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Inventory
   Property, Plant and Equipment
   F-12




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Goodwill
    Debt
  Twelve Months Ended:December 31,
    
    
    December 31,
    
    
    December 31,(in $000s except per share amounts)
    
    2009
    
    
    2008
    
    
    2007Additional interest expense
    
    $
    253
    
    
    $
    2,183
    
    
    $
    3,048Reduction in gain on
extinguishment of debt
    
    
    
    
    
    
    (1,432
    )
    
    
    Benefit for income taxes
    
    
    (89
    )
    
    
    (902
    )
    
    
    (2,533
    )Decrease in net income
    
    $
    (164
    )
    
    $
    (2,713
    )
    
    $
    (515
    )Decrease in Net income per share:Basic
    
    $
    
    
    
    $
    (0.05
    )
    
    $
    (0.01
    )Diluted
    
    $
    
    
    
    $
    (0.04
    )
    
    $
    (0.01
    )
   F-13




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Revenue Recognition
   
    
    the delivered item has value to the customer on a stand alone basis;
 
    
    there is objective and reliable evidence of the fair value of the
undelivered item; and
 
    
    if the arrangement includes a general right of return relative to the
delivered item, delivery or performance of the undelivered item is considered probable
and substantially in the control of the vendor.
  Global product sales, net:
  Returns
    F-14




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Rebates and Chargebacks
   Shelf-Stock Adjustments
  Medicaid
  Cash Discounts
  Private Label Product sales
   F-15




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Rx Partner and OTC Partner
       F-16




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Research Partner:
   Promotional Partner:
   Shipping and Handling Fees and Costs
  Research and Development
  Derivatives
   F-17




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Income Taxes
   Share-Based Compensation
  Litigation Settlements
 ®
  F-18




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Earnings per Share
  Other Comprehensive Income
  Deferred Financing Costs
  Foreign Currency Translation
   F-19




---



##### Table of Contents



3. RECENT ACCOUNTING PRONOUNCEMENTS
     F-20




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##### Table of Contents



3. RECENT ACCOUNTING PRONOUNCEMENTS (continued)
        F-21




---



##### Table of Contents



3. RECENT ACCOUNTING PRONOUNCEMENTS (continued)
    F-22




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##### Table of Contents



4. INVESTMENTS
   Gross
    
    
    Gross(in $000s)
    
    Amortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairDecember 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueCommercial paper
    
    $
    13,387
    
    
    $
    4
    
    
    $
    (1
    )
    
    $
    13,390Government sponsored enterprise obligations
    
    
    41,953
    
    
    
    32
    
    
    
    (1
    )
    
    
    41,984Corporate bonds
    
    
    3,021
    
    
    
    1
    
    
    
    (1
    )
    
    
    3,021Asset-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Certificates of deposit
    
    
    238
    
    
    
    
    
    
    
    
    
    
    
    238Total short-term investments
    
    $
    58,599
    
    
    $
    37
    
    
    $
    (3
    )
    
    $
    58,633
 Gross
    
    
    Gross(in $000s)
    
    Amortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairDecember 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueCommercial paper
    
    $
    6,194
    
    
    $
    
    
    
    $
    
    
    
    $
    6,194Government sponsored enterprise obligations
    
    
    35,948
    
    
    
    52
    
    
    
    (6
    )
    
    
    35,994Corporate bonds
    
    
    7,856
    
    
    
    
    
    
    
    (54
    )
    
    
    7,802Asset-backed securities
    
    
    481
    
    
    
    
    
    
    
    (31
    )
    
    
    450Certificates of deposit
    
    
    231
    
    
    
    
    
    
    
    
    
    
    
    231Total short-term investments
    
    $
    50,710
    
    
    $
    52
    
    
    $
    (91
    )
    
    $
    50,671
  F-23




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##### Table of Contents



5. ACCOUNTS RECEIVABLE
  December 31,
    
    
    December 31,(in $000s)
    
    2009
    
    
    2008Gross accounts receivable
    
    $
    254,094
    
    
    $
    54,591Less: Rebate reserve
    
    
    (37,781
    )
    
    
    (4,800
    )Less: Chargeback reserve
    
    
    (21,448
    )
    
    
    (4,056
    )Less: Other deductions
    
    
    (9,011
    )
    
    
    (2,429
    )Accounts receivable, net
    
    $
    185,854
    
    
    $
    43,306
  (in $000s)
    
    December 31,
    
    
    December 31,
    
    
    December 31,Rebate reserve
    
    2009
    
    
    2008
    
    
    2007Beginning balance
    
    $
    4,800
    
    
    $
    3,603
    
    
    $
    3,124Provision recorded during the period
    
    
    72,620
    
    
    
    20,361
    
    
    
    15,968Credits issued during the period
    
    
    (39,639
    )
    
    
    (19,164
    )
    
    
    (15,489
    )Ending balance
    
    $
    37,781
    
    
    $
    4,800
    
    
    $
    3,603
 (in $000s)
    
    December 31,
    
    
    December 31,
    
    
    December 31,Chargeback reserve
    
    2009
    
    
    2008
    
    
    2007Beginning balance
    
    $
    4,056
    
    
    $
    2,977
    
    
    $
    4,401Provision recorded during the period
    
    
    126,105
    
    
    
    50,144
    
    
    
    33,972Credits issued during the period
    
    
    (108,713
    )
    
    
    (49,065
    )
    
    
    (35,396
    )Ending balance
    
    $
    21,448
    
    
    $
    4,056
    
    
    $
    2,977
   F-24




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##### Table of Contents



6. INVENTORY
  December 31,
    
    
    December 31,(in $000s)
    
    2009
    
    
    2008Raw materials
    
    $
    30,758
    
    
    $
    16,940Work in process
    
    
    2,768
    
    
    
    1,397Finished goods
    
    
    17,051
    
    
    
    16,504Total inventory, net
    
    $
    50,577
    
    
    $
    34,841Less: Non-current inventory, net
    
    
    (1,447
    )
    
    
    (2,536
    )Total inventory-current, net
    
    $
    49,130
    
    
    $
    32,305
       F-25




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##### Table of Contents



7. PROPERTY, PLANT AND EQUIPMENT
  December 31,
    
    
    December 31,(in $000s)
    
    2009
    
    
    2008Land
    
    $
    2,270
    
    
    $
    2,270Buildings and improvements
    
    
    77,778
    
    
    
    55,310Equipment
    
    
    59,612
    
    
    
    49,983Office furniture and equipment
    
    
    7,425
    
    
    
    6,733Construction-in-progress
    
    
    4,880
    
    
    
    21,019Property, plant and equipment, gross
    
    $
    151,965
    
    
    $
    135,315Less: Accumulated depreciation
    
    
    (50,315
    )
    
    
    (39,686
    )Property, plant and equipment, net
    
    $
    101,650
    
    
    $
    95,629
   F-26




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##### Table of Contents



8. ACCRUED EXPENSES
  December 31,
    
    
    December 31,(in $000s)
    
    2009
    
    
    2008Payroll-related expenses
    
    $
    15,274
    
    
    $
    15,147Product returns
    
    
    22,114
    
    
    
    13,675Income taxes payable
    
    
    31,627
    
    
    
    Shelf stock price protection
    
    
    225
    
    
    
    572Medicaid rebates
    
    
    9,759
    
    
    
    584Physician detailing sales force fees
    
    
    2,449
    
    
    
    2,279Legal and professional fees
    
    
    3,660
    
    
    
    2,087Litigation settlements
    
    
    5,865
    
    
    
    4,526Other
    
    
    2,709
    
    
    
    2,238Total accrued expenses
    
    $
    93,682
    
    
    $
    41,108
 Accrued Litigation Settlement Expenses
   Taiwan Facility Construction
  Product Returns
  (in $000s)
    
    December 31,
    
    
    December 31,
    
    
    December 31,Returns Reserve
    
    2009
    
    
    2008
    
    
    2007(in $000s)Beginning balance
    
    $
    13,675
    
    
    $
    14,261
    
    
    $
    12,903Provision related to
sales recorded in the period
    
    
    11,847
    
    
    
    5,719
    
    
    
    5,459Credits issued during the period
    
    
    (3,408
    )
    
    
    (6,305
    )
    
    
    (4,101
    )Ending balance
    
    $
    22,114
    
    
    $
    13,675
    
    
    $
    14,261
  F-27




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##### Table of Contents



9. FAIR VALUE OF COMMON STOCK PURCHASE WARRANTS
 Common Stock Purchase Warrants
      Common
    
    
    CommonStock
    
    
    Stock
    
    
    TotalPurchase
    
    
    Purchase
    
    
    ReportedWarrants
    
    
    Warrants
    
    
    LiabilityOutstanding
    
    
    Value
    
    
    ValueEnding balance December 31, 2006
    
    
    641,503
    
    
    $
    3.60
    
    
    $
    2,313,000Warrants exercised in 2007
    
    
    (36,616
    )Ending balance December 31, 2007
    
    
    604,887
    
    
    $
    3.78
    
    
    $
    2,285,000Warrants exercised in 2008
    
    
    (604,887
    )Ending balance December 31, 2008
    
    
    
    
    
    $
    
    
    
    $
    Warrants exercised in 2009
    
    
    Ending balance December 31, 2009
    
    
    
    
    
    $
    
    
    
    $
    
  For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Volatility (range)
    
    
    
    
    
    
    43.0 - 49.0
    %
    
    
    24.2 - 46.4
    %Risk-free interest rate (range)
    
    
    
    
    
    
    1.25 - 1.50
    %
    
    
    3.4 - 4.9
    %Dividend yield
    
    
    
    
    
    
    0
    %
    
    
    0
    %
   F-28




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##### Table of Contents



10. INCOME TAXES
  For the Years Ended December 31,(in $000s)
    
    2009
    
    
    2008
    
    
    2007Current:Federal taxes
    
    $
    29,550
    
    
    $
    6,315
    
    
    $
    8,282State taxes
    
    
    1,715
    
    
    
    (62
    )
    
    
    6,903Total current tax expense
    
    
    31,265
    
    
    
    6,253
    
    
    
    15,185Deferred:Federal taxes
    
    $
    (11,520
    )
    
    $
    4,938
    
    
    $
    14,285Federal taxes-change in valuation allowance
    
    
    
    
    
    
    
    
    
    
    (64,771
    )State taxes
    
    
    1,995
    
    
    
    (1,122
    )
    
    
    (2,303
    )State taxes-change in valuation allowance
    
    
    
    
    
    
    
    
    
    
    (13,747
    )Foreign taxes
    
    
    (734
    )
    
    
    
    
    
    
    Total deferred tax expense (benefit)
    
    
    (10,259
    )
    
    
    3,816
    
    
    
    (66,536
    )Provision for (benefit from) income taxes
    
    $
    21,006
    
    
    $
    10,069
    
    
    $
    (51,351
    )
  For the Years Ended December 31,(in $000s)
    
    2009
    
    
    2008
    
    
    2007Income before income taxes
    
    $
    70,977
    
    
    
    
    
    
    $
    26,009
    
    
    
    
    
    
    $
    73,997Tax provision at
federal statutory rate
    
    
    24,842
    
    
    
    35.0
    %
    
    
    9,103
    
    
    
    35.0
    %
    
    
    25,899
    
    
    
    35.0
    %Increase (decrease) in tax rate resulting from:State and local taxes, net of federal benefit
    
    
    3,628
    
    
    
    5.1
    %
    
    
    25
    
    
    
    0.1
    %
    
    
    2,647
    
    
    
    3.6
    %Increase in federal statutory tax rate
on deferred tax accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,993
    )
    
    
    (2.7
    )%Research and development credits
    
    
    (2,546
    )
    
    
    (3.6
    )%
    
    
    (2,228
    )
    
    
    (8.6
    )%
    
    
    (1,306
    )
    
    
    (1.8
    )%Share-based compensation
    
    
    1,824
    
    
    
    2.6
    %
    
    
    1,438
    
    
    
    5.5
    %
    
    
    528
    
    
    
    0.7
    %Domestic manufacturing deduction
    
    
    (700
    )
    
    
    (1.0
    )%
    
    
    (531
    )
    
    
    (2.0
    )%
    
    
    (676
    )
    
    
    (0.9
    )%Change in warrant fair value
    
    
    
    
    
    
    
    %
    
    
    (432
    )
    
    
    (1.6
    )%
    
    
    38
    
    
    
    
    %Provision for uncertain tax positions
    
    
    (6,084
    )
    
    
    (8.6
    )%
    
    
    1,050
    
    
    
    4.0
    %
    
    
    6,118
    
    
    
    8.3
    %Other, net
    
    
    294
    
    
    
    0.4
    %
    
    
    1,311
    
    
    
    4.9
    %
    
    
    (4,087
    )
    
    
    (5.5
    )%Change in valuation allowance
    
    
    (252
    )
    
    
    (0.3
    )%
    
    
    333
    
    
    
    1.4
    %
    
    
    (78,518
    )
    
    
    (106.1
    )%Provision for (benefit from) income taxes
    
    $
    21,006
    
    
    
    29.6
    %
    
    $
    10,069
    
    
    
    38.7
    %
    
    $
    (51,351
    )
    
    
    (69.4
    )%
   F-29




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##### Table of Contents



10. INCOME TAXES (continued)
  December 31,(in $000s)
    
    2009
    
    
    2008Deferred tax assets:Net operating loss carryforwards
    
    $
    1,648
    
    
    $
    831Research and development credits
    
    
    620
    
    
    
    3,009Inventory reserves
    
    
    2,936
    
    
    
    2,490Accrued expenses
    
    
    21,115
    
    
    
    11,711Deferred revenues
    
    
    100,009
    
    
    
    87,789Accrued exclusivity period fee payments
    
    
    
    
    
    
    3,073Litigation settlements
    
    
    
    
    
    
    2,376Depreciation and amortization
    
    
    492
    
    
    
    371Other
    
    
    3,054
    
    
    
    4,693Gross deferred tax assets
    
    $
    129,874
    
    
    $
    116,343Deferred tax liabilities:Tax depreciation and amortization
in excess of book amounts
    
    $
    3,919
    
    
    $
    2,205Deferred manufacturing costs
    
    
    42,591
    
    
    
    42,267Deferred revenues
    
    
    849
    
    
    
    854Other
    
    
    1,685
    
    
    
    566Gross deferred tax liabilities
    
    $
    49,044
    
    
    $
    45,892Deferred tax assets, net
    
    $
    80,830
    
    
    $
    70,451
  December 31,(in $000s)
    
    2009
    
    
    2008Current deferred tax assets
    
    $
    38,837
    
    
    $
    23,940Current deferred tax liabilities
    
    
    (6,551
    )
    
    
    (6,040
    )Current deferred tax assets, net
    
    
    32,286
    
    
    
    17,900Non-current deferred tax assets
    
    
    91,037
    
    
    
    92,881Non-current deferred tax liabilities
    
    
    (42,493
    )
    
    
    (40,330
    )Non-current deferred tax assets, net
    
    
    48,544
    
    
    
    52,551Deferred tax assets
    
    $
    80,830
    
    
    $
    70,451
    F-30




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##### Table of Contents



10. INCOME TAXES (continued)
  (in $000s)Year
    
    Amount2020
    
    $
    1,5302021
    
    
    4,9692022
    
    
    1,9552023
    
    
    3,775Total
    
    $
    12,229
  (in $000s)Balance at January 1, 2009
    
    $
    7,515Increase/(decrease) based on prior year tax positions
    
    
    (6,482
    )Increase/(decrease) based on current year tax positions
    
    
    174Balance at December 31, 2009
    
    $
    1,207
      F-31




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##### Table of Contents



11. REVOLVING LINE OF CREDIT
      F-32




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##### Table of Contents



12. LONG-TERM DEBT
 3.5% Convertible Senior Subordinated Debentures
       F-33




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##### Table of Contents



12. LONG-TERM DEBT (continued)
 Adoption of FASB ASC Topic 470
        Year Ended December 31:(in $000s)
    
    2009
    
    
    2008
    
    
    2007Contractual interest
    
    $
    202
    
    
    $
    2,084
    
    
    $
    3,089Discount amortization
    
    
    241
    
    
    
    2,078
    
    
    
    2,904Deferred financing cost amortization
    
    
    66
    
    
    
    338
    
    
    
    464Total interest cost
    
    $
    509
    
    
    $
    4,500
    
    
    $
    6,457Effective interest rate on 3.5% Debentures
    
    
    8.7
    %
    
    
    8.7
    %
    
    
    8.6
    %
  F-34




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##### Table of Contents



12. LONG-TERM DEBT (continued)
  December 31,
    
    
    December 31,(in $000s)
    
    2009
    
    
    20083.5% Debentures face value
    
    $
    
    
    
    $
    12,750Unamortized discount
    
    
    
    
    
    
    (241
    )3.5% Debentures net carrying amount
    
    
    
    
    
    
    12,509Subordinated promissory note  (1)
    
    
    
    
    
    
    7,760Vendor financing agreement (2)
    
    
    
    
    
    
    137Total Debt
    
    $
    
    
    
    $
    20,406Less: Current portion
    
    
    
    
    
    
    (14,416
    )Long-term portion
    
    $
    
    
    
    $
    5,990
 
 (1)
    
    In August 2009, the Company repaid-in-full the remaining outstanding balance of
a subordinated promissory note, paying $6,888,000 of principal and $51,000 of accrued
interest expense. Initially, the subordinated promissory note was issued in June 2006 in the
amount of $11.0 million, with an interest rate of 6.0% per annum, and 24 quarterly
installment payments of $549,165, commencing in March 2007.(2)
    
    Vendor financing agreement at 3.10% payable in two monthly installments of $0 and
34 monthly installments of $12,871 commencing December 2006 and ending in November 2009.  F-35




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS
 Strategic Alliance Agreement with Teva
  Product Development, Manufacture and Sales:
 Cost Sharing:
 Advance Deposit:
 
    
    Contingent Sale of Market Exclusivity The Teva Agreement obligated the
Company to deliver and Teva to purchase the exclusive marketing rights for four of the
12 covered products for $22,000,000 to the extent the Company achieved specified
product development milestones relating to four products. Portions of this $22,000,000
purchase price were assigned to milestones based on their negotiated values at the
inception of the Teva Agreement. If some, but not all of the milestones were achieved,
then exclusive marketing rights would transfer only for those products for which the
related milestones were met. To the extent the milestones were not achieved by January
15, 2004 and Teva had not exercised the contingent option to purchase market exclusivity
described below, the related exclusive marketing rights would not be transferred to
Teva, the Company would be required to repay the corresponding portions of the $
22,000,000 advance deposit and Teva would retain non-exclusive marketing rights with
respect to the related products. The milestones and related portions to be repaid were:
$2,000,000 if tentative FDA approval for one specified product was not obtained by June
15, 2002; $5,000,000 if the same product was not launched by February 15, 2003; $
5,000,000 and $4,000,000, respectively, if two additional products were not launched by
December 15, 2003; $1,000,000 if tentative FDA approval of a fourth product was not
received by January 15, 2003; and $5,000,000 if the same product was not launched by
December 15, 2003.
 
    
    Contingent Option to Purchase Market Exclusivity The Company also granted
Teva an option to purchase the exclusive marketing rights to the four specified products
to the extent the product development milestones were not met. Teva could exercise this
right by forgiving repayment of half of the foregoing portions of the $22,000,000
advance deposit payable as assigned in the Teva Agreement to the specified product.
  F-36




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 
    
    The Companys Share Settlement Option To the extent the Company failed to
achieve the milestones and Teva failed to exercise its option to purchase market
exclusivity for the four specified products and the Company was thus required to repay
the advance deposit, the Company had the option to settle, or repay, the applicable
portion of the advance deposit either in cash or with shares of its common stock valued
at the average closing price of the stock during the ten trading days ending two days
prior to the date of Tevas receipt of the shares (Designated Share Price).
 
    
    Interest Forgiveness /FDA Approval Provision Under the terms of the Teva
Agreement, when the Company received FDA approval for any three of the 12 covered
products, the entire amount of interest payable under the advance deposit would be
forgiven. The nominal amount of the accrued interest expected to be incurred over the
life of the advance deposit was estimated not to exceed approximately $4,400,000.
 Sale of Common Stock:
 
    
    Contingent Stock Repurchase Option. The Teva Agreement divided eleven of
the products into three categories, referred to as product tiers. The Tier 1 products
were those pending FDA approval when the Teva Agreement was entered into, whereas Tier 2
and Tier 3 products were those for which applications to the FDA had not as yet been
filed at the inception of the Teva Agreement. The Teva Agreement gave the Company the
option to repurchase from Teva 243,729 shares of its common stock (one-sixth of the
 shares initially sold to Teva) for $1.00 contingent upon Teva achieving a commercial
sale of either a Tier 2 or Tier 3 product.
 Other Provisions
 Revenue Recognition under the Teva Agreement:
    F-37




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
    
    
    Tevas reimbursement of manufacturing costs;
 
    
    The Companys profit share associated with Tevas sales of products to its
customers;
 
    
    The sale of market exclusivity for certain products;
 
    
    The estimated fair value received upon the Companys exercise of the
contingent stock repurchase option upon achieving the commercial sale of a Tier 2 or
Tier 3 product;
 
    
    Tevas reimbursement of regulatory and litigation costs; and
 
    
    The value received as a result of the forgiveness of interest on the advance
deposit upon receipt of the third FDA approval to market a product.
  
    
    Tevas reimbursement of manufacturing costs  at the time the Company
delivers the product to Teva;
 
    
    The Companys pro rata profit share  at the time Teva reports the
Companys respective pro rata profit share to the Company;
 
    
    The sale of market exclusivity  at the time market exclusivity was
delivered by Tevas exercise of its contingent option to purchase market exclusivity;
 
    
    The milestone associated with the first commercial sale of a Tier 2 or Tier
3 product and concurrent exercise of the contingent stock repurchase option  at the
time the right to exercise the option accrued;
 
    
    Cost sharing payments  at the time the related costs are incurred (except
for the $300,000 cost reimbursement payable upon inception of the Teva Agreement,
recognition of which began at such inception); and
 
    
    Forgiveness of interest  at the time the Company received its third FDA
approval to market a product covered by the agreement.
    F-38




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Teva Agreement Transactions
 The Advance Deposit:
  Share-Settlement Option:
 Interest Forgiveness and FDA Approval Provision:
 Sale of Common Stock:
 Contingent Stock Repurchase Option:
  F-39




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Arrangement with Anchen:
  F-40




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
  Inception(in $000s)
    
    For the Years Ended December 31,
    
    
    ThroughDeferred revenue
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    200,608
    
    
    $
    181,149
    
    
    $
    136,157
    
    
    $
    Additions:Cost sharing
    
    
    700
    
    
    
    700
    
    
    
    732
    
    
    
    4,521Product related deferrals
    
    
    34,545
    
    
    
    59,706
    
    
    
    133,873
    
    
    
    182,492Subtotal
    
    
    35,245
    
    
    
    60,406
    
    
    
    134,605
    
    
    
    187,013Exclusivity charges
    
    
    
    
    
    
    
    
    
    
    (47,133
    )
    
    
    (3,467
    )Forgiveness of advance deposit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,000Forgiveness of interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,370Stock repurchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,157Total additions
    
    $
    35,245
    
    
    $
    60,406
    
    
    $
    87,472
    
    
    $
    196,073Less: amounts recognized:Forgiveness of advance deposit
    
    $
    (303
    )
    
    $
    (333
    )
    
    $
    (333
    )
    
    $
    (1,833
    )Forgiveness of interest
    
    
    (222
    )
    
    
    (243
    )
    
    
    (243
    )
    
    
    (1,337
    )Stock repurchase
    
    
    (109
    )
    
    
    (120
    )
    
    
    (120
    )
    
    
    (659
    )Cost sharing
    
    
    (611
    )
    
    
    (583
    )
    
    
    (516
    )
    
    
    (1,382
    )Product related revenue
    
    
    (32,576
    )
    
    
    (39,668
    )
    
    
    (41,268
    )
    
    
    (54,705
    )Total amount recognized
    
    
    (33,821
    )
    
    
    (40,947
    )
    
    
    (42,480
    )
    
    
    (59,916
    )Total deferred revenue
    
    $
    202,032
    
    
    $
    200,608
    
    
    $
    181,149
    
    
    $
    136,157
 (in $000s)
    
    
    
    
    
    
    
    
    
    
    
    
    
    InceptionDeferred product
    
    For the Years Ended December 31,
    
    
    Throughmanufacturing costs
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    88,361
    
    
    $
    75,296
    
    
    $
    49,728
    
    
    $
    Additions
    
    
    24,089
    
    
    
    33,621
    
    
    
    46,246
    
    
    
    71,609Less amounts amortized
    
    
    (18,410
    )
    
    
    (20,556
    )
    
    
    (20,678
    )
    
    
    (21,881
    )Total deferred product
manufacturing costs
    
    $
    94,040
    
    
    $
    88,361
    
    
    $
    75,296
    
    
    $
    49,728
  DeferredDeferred
    
    
    ProductRevenue
    
    
    Manufacturing Costs(in $000s)
    
    Recognition
    
    
    Amortization2010
    
    $
    13,625
    
    
    $
    6,3402011
    
    
    13,625
    
    
    
    6,3402012
    
    
    13,625
    
    
    
    6,3402013
    
    
    13,625
    
    
    
    6,3402014
    
    
    13,625
    
    
    
    6,340Thereafter
    
    
    133,907
    
    
    
    62,340Totals
    
    $
    202,032
    
    
    $
    94,040
  F-41




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 OTC Partners Alliance Agreements
       F-42




---



##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
  ® ®
   F-43




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
  Inception(in $000s)
    
    For the Years Ended December 31,
    
    
    ThroughDeferred revenue
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    21,044
    
    
    $
    20,591
    
    
    $
    17,098
    
    
    $
    Additions:Upfront fees and milestone payments
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    8,352Cost sharing and other
    
    
    
    
    
    
    
    
    
    
    424
    
    
    
    1,218Product related deferrals
    
    
    1,960
    
    
    
    16,399
    
    
    
    14,851
    
    
    
    50,616Total additions
    
    $
    1,960
    
    
    $
    16,399
    
    
    $
    15,359
    
    
    $
    60,186Less: amounts recognized:Upfront fees and milestone payments
    
    
    (276
    )
    
    
    (297
    )
    
    
    (315
    )
    
    
    (6,857
    )Cost sharing and other
    
    
    (112
    )
    
    
    (112
    )
    
    
    (312
    )
    
    
    (1,014
    )Product related revenue
    
    
    (6,454
    )
    
    
    (15,537
    )
    
    
    (11,239
    )
    
    
    (35,217
    )Total amount recognized
    
    
    (6,842
    )
    
    
    (15,946
    )
    
    
    (11,866
    )
    
    
    (43,088
    )Total deferred revenue
    
    $
    16,162
    
    
    $
    21,044
    
    
    $
    20,591
    
    
    $
    17,098
 (in $000s)
    
    
    
    
    
    
    
    
    
    
    
    
    
    InceptionDeferred product
    
    For the Years Ended December 31,
    
    
    Throughmanufacturing costs
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    18,361
    
    
    $
    17,251
    
    
    $
    14,137
    
    
    $
    Additions:Product related deferrals
    
    
    1,897
    
    
    
    16,037
    
    
    
    12,172
    
    
    
    41,708Cost sharing and other
    
    
    32
    
    
    
    50
    
    
    
    842
    
    
    
    5,132Total additions
    
    $
    1,929
    
    
    $
    16,087
    
    
    $
    13,014
    
    
    $
    46,840Less: amount amortized:Product related cost
    
    
    (5,774
    )
    
    
    (14,634
    )
    
    
    (9,201
    )
    
    
    (29,284
    )Cost sharing and other
    
    
    (313
    )
    
    
    (343
    )
    
    
    (699
    )
    
    
    (3,419
    )Total amount amortized
    
    
    (6,087
    )
    
    
    (14,977
    )
    
    
    (9,900
    )
    
    
    (32,703
    )Total deferred product
manufacturing costs
    
    $
    14,203
    
    
    $
    18,361
    
    
    $
    17,251
    
    
    $
    14,137
  DeferredDeferred
    
    
    ProductRevenue
    
    
    Manufacturing Costs(in $000s)
    
    Recognition
    
    
    Amortization2010
    
    $
    6,027
    
    
    $
    5,2852011
    
    
    2,072
    
    
    
    1,8252012
    
    
    1,282
    
    
    
    1,1332013
    
    
    1,282
    
    
    
    1,1332014
    
    
    1,282
    
    
    
    1,133Thereafter
    
    
    4,217
    
    
    
    3,694Total
    
    $
    16,162
    
    
    $
    14,203
  F-44




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Supply & Distribution Agreement with DAVA Pharmaceuticals, Inc.
      F-45




---



##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
  Inception(in $000s)
    
    For the Years Ended December 31,
    
    
    ThroughDeferred revenue
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    
    
    
    $
    6,361
    
    
    $
    24,784
    
    
    $
    Additions:Upfront fees and milestone payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Product related deferrals
    
    
    
    
    
    
    34,470
    
    
    
    100,211
    
    
    
    17,766Total additions
    
    
    
    
    
    
    34,470
    
    
    
    100,211
    
    
    
    27,766Less: amounts recognized:Upfront fees and milestone payments
    
    
    
    
    
    
    (858
    )
    
    
    (7,975
    )
    
    
    (1,167
    )Product related revenue
    
    
    
    
    
    
    (39,973
    )
    
    
    (110,659
    )
    
    
    (1,815
    )Total amount recognized
    
    
    
    
    
    
    (40,831
    )
    
    
    (118,634
    )
    
    
    (2,982
    )Total deferred revenue
    
    $
    
    
    
    $
    
    
    
    $
    6,361
    
    
    $
    24,784
 (in $000s)
    
    
    InceptionDeferred product
    
    For the Years Ended December 31,
    
    
    Throughmanufacturing costs
    
    2009
    
    
    2008
    
    
    2007
    
    
    Dec 31, 2006Beginning balance
    
    $
    
    
    
    $
    1,850
    
    
    $
    9,100
    
    
    $
    Additions
    
    
    
    
    
    
    307
    
    
    
    18,435
    
    
    
    10,302Less: amount recognized
    
    
    
    
    
    
    (2,157
    )
    
    
    (25,685
    )
    
    
    (1,202
    )Total deferred product
manufacturing costs
    
    $
    
    
    
    $
    
    
    
    $
    1,850
    
    
    $
    9,100
  F-46




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Agreements with Medicis Pharmaceutical Corporation
  Joint Development Agreement
 ® ®
  1. Research & Development Services
   2. Royalty Fees Earned  Mediciss Sale of Advanced Form SOLODYN® (Brand) Product
 ® ® ® ®
 3. Accounting for Sales of the Companys Four Generic Dermatology Products
   F-47




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
  (in $000s)
    
    Years Ended December 31,Deferred revenue
    
    2009
    
    
    2008Beginning balance
    
    $
    39,167
    
    
    $
    Additions:Up-front fees and milestone payments
    
    
    12,000
    
    
    
    40,000Product related deferrals
    
    
    
    
    
    
    Total additions
    
    
    12,000
    
    
    
    40,000Less: amounts recognized:Up-front fees and milestone payments
    
    
    (11,680
    )
    
    
    (833
    )Product related revenue
    
    
    
    
    
    
    Total amount recognized
    
    
    (11,680
    )
    
    
    (833
    )Total deferred revenue
    
    $
    39,487
    
    
    $
    39,167
  DeferredRevenue(in $000s)
    
    Recognition2010
    
    $
    13,5382011
    
    
    13,5382012
    
    
    12,4112013
    
    
    2014
    
    
    Thereafter
    
    
    Total
    
    $
    39,487
  F-48




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##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 License and Settlement Agreement
 ® ® ® ® ® ®
  F-49




---



##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Agreements with Shire LLC
 License and Distribution Agreement
  Promotional Services Agreement
   F-50




---



##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Agreements with Wyeth
 Co-Promotion Agreement
  Settlement and Release Agreement
  License Agreement
   F-51




---



##### Table of Contents



13. ALLIANCE AND COLLABORATION AGREEMENTS (continued)
 Exclusive License, Development and Supply Agreement with Putney
 ®.
    F-52




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##### Table of Contents



14. EMPLOYEE BENEFIT PLANS
 4 01(k) Defined Contribution Plan
  Employee Stock Purchase Plan
  Deferred Compensation Plan
    F-53




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##### Table of Contents



15. SHARE-BASED COMPENSATION
  Impax Laboratories, Inc. 1995 Stock Incentive Plan
  Impax Laboratories, Inc. 1999 Equity Incentive Plan
  Impax Laboratories, Inc. 2002 Equity Incentive Plan
   WeightedAverageExerciseNumber of Shares
    
    
    PriceStock Options
    
    Under Option
    
    
    per ShareOutstanding at December 31, 2006
    
    
    7,138,171
    
    
    $
    9.46Options granted
    
    
    1,991,678
    
    
    $
    11.34Options exercised
    
    
    (20,719
    )
    
    $
    2.28Options forfeited
    
    
    (61,369
    )
    
    $
    8.38Outstanding at December 31, 2007
    
    
    9,047,761
    
    
    $
    9.90Options granted
    
    
    539,850
    
    
    $
    8.80Options exercised
    
    
    (956,824
    )
    
    $
    4.18Options forfeited
    
    
    (350,547
    )
    
    $
    9.07Outstanding at December 31, 2008
    
    
    8,280,240
    
    
    $
    10.53Options granted
    
    
    2,489,141
    
    
    $
    6.96Options exercised
    
    
    (1,175,897
    )
    
    $
    3.69Options forfeited
    
    
    (1,363,666
    )
    
    $
    13.86Outstanding at December 31, 2009
    
    
    8,229,818
    
    
    $
    9.87Vested and expected to vest at December 31, 2009
    
    
    8,199,272
    
    
    $
    9.93Options exercisable at December 31, 2009
    
    
    4,598,069
    
    
    $
    11.33
  F-54




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##### Table of Contents



15. SHARE-BASED COMPENSATION (continued)
   Non-Vested
    
    
    WeightedRestricted
    
    
    AverageStock
    
    
    Grant DateRestricted Stock Awards
    
    Awards
    
    
    Fair ValueNon-vested at December 31, 2006
    
    
    
    
    
    $
    Granted
    
    
    272,678
    
    
    $
    11.45Vested
    
    
    
    
    
    $
    Forfeited
    
    
    (2,337
    )
    
    $
    11.48Non-vested at December 31, 2007
    
    
    270,341
    
    
    $
    11.45Granted
    
    
    210,300
    
    
    $
    8.81Vested
    
    
    (64,111
    )
    
    $
    11.45Forfeited
    
    
    (16,814
    )
    
    $
    11.15Non-vested at December 31, 2008
    
    
    399,716
    
    
    $
    10.30Granted
    
    
    886,969
    
    
    $
    6.99Vested
    
    
    (113,204
    )
    
    $
    10.25Forfeited
    
    
    (20,558
    )
    
    $
    7.87Non-vested at December 31, 2009
    
    
    1,152,923
    
    
    $
    7.72
    For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Volatility (range)
    
    
    58.3%-64.2
    %
    
    
    64.1%-67.7
    %
    
    
    67.7%-75.2
    %Volatility (weighted average)
    
    
    60.4
    %
    
    
    66.8
    %
    
    
    69.9
    %Risk-free interest rate (range)
    
    
    2.1%-2.9
    %
    
    
    1.6%-3.8
    %
    
    
    3.4%-5.0
    %Risk-free interest rate (weighted average)
    
    
    2.6
    %
    
    
    3.0
    %
    
    
    4.0
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life (years)
    
    
    6.25
    
    
    
    6.25
    
    
    
    6.07Weighted average grant date fair value per option
    
    $
    4.07
    
    
    $
    5.58
    
    
    $
    7.43
  F-55




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##### Table of Contents



15. SHARE-BASED COMPENSATION (continued)
   For the Years Ended December 31,(in $000s)
    
    2009
    
    
    2008
    
    
    2007Cost of revenues
    
    $
    1,600
    
    
    $
    1,538
    
    
    $
    418Research and development
    
    
    2,677
    
    
    
    2,273
    
    
    
    563Selling, general and administrative
    
    
    3,114
    
    
    
    2,006
    
    
    
    532Total
    
    $
    7,391
    
    
    $
    5,817
    
    
    $
    1,513
    F-56




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##### Table of Contents



16. STOCKHOLDERS EQUITY (DEFICIT)
 Preferred Stock
  Common Stock
  Shareholders Rights Plan
    F-57




---



##### Table of Contents



17. EARNINGS PER SHARE
   For the Years Ended December 31,(in $000s, except share and per share amounts)
    
    2009
    
    
    2008
    
    
    2007Numerator:Net income
    
    $
    50,061
    
    
    $
    15,987
    
    
    $
    125,410Denominator:Weighted average
common shares outstanding
    
    
    60,279,602
    
    
    
    59,072,752
    
    
    
    58,810,452Effect of dilutive options and
and common stock purchase warrants
    
    
    800,582
    
    
    
    1,709,969
    
    
    
    2,407,018Diluted weighted average
common shares outstanding
    
    
    61,080,184
    
    
    
    60,782,721
    
    
    
    61,217,470Basic net income per share
    
    $
    0.83
    
    
    $
    0.27
    
    
    $
    2.13Diluted net income per share
    
    $
    0.82
    
    
    $
    0.26
    
    
    $
    2.05
    F-58




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##### Table of Contents



18. SEGMENT INFORMATION
      F-59




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##### Table of Contents



18. SEGMENT INFORMATION (continued)
  (in $000s)
    
    Global
    
    
    Impax
    
    
    Corporate
    
    
    TotalYear Ended December 31, 2009
    
    Division
    
    
    Division
    
    
    and Other
    
    
    CompanyRevenues, net
    
    $
    344,961
    
    
    $
    13,448
    
    
    $
    
    
    
    $
    358,409Cost of revenues
    
    
    158,270
    
    
    
    12,043
    
    
    
    
    
    
    
    170,313Research and development
    
    
    38,698
    
    
    
    24,576
    
    
    
    
    
    
    
    63,274Patent Litigation
    
    
    5,379
    
    
    
    
    
    
    
    
    
    
    
    5,379Income (loss) before income taxes
    
    $
    131,723
    
    
    $
    (26,640
    )
    
    $
    (34,106
    )
    
    $
    70,977
 Global
    
    
    Impax
    
    
    Corporate
    
    
    TotalYear Ended December 31, 2008
    
    Division
    
    
    Division
    
    
    and Other
    
    
    CompanyRevenues, net
    
    $
    197,180
    
    
    $
    12,891
    
    
    $
    
    
    
    $
    210,071Cost of revenues
    
    
    80,724
    
    
    
    11,245
    
    
    
    
    
    
    
    91,969Research and development
    
    
    42,930
    
    
    
    16,307
    
    
    
    
    
    
    
    59,237Patent Litigation
    
    
    6,472
    
    
    
    
    
    
    
    
    
    
    
    6,472Income (loss) before income taxes
    
    $
    55,609
    
    
    $
    (17,332
    )
    
    $
    (12,268
    )
    
    $
    26,009
 Global
    
    
    Impax
    
    
    Corporate
    
    
    TotalYear Ended December 31, 2007
    
    Division
    
    
    Division
    
    
    and Other
    
    
    CompanyRevenues, net
    
    $
    260,994
    
    
    $
    12,759
    
    
    $
    
    
    
    $
    273,753Cost of revenues
    
    
    96,829
    
    
    
    10,827
    
    
    
    
    
    
    
    107,656Research and development
    
    
    31,170
    
    
    
    8,822
    
    
    
    
    
    
    
    39,992Patent Litigation
    
    
    10,025
    
    
    
    
    
    
    
    
    
    
    
    10,025Income (loss) before income taxes
    
    $
    115,894
    
    
    $
    (8,586
    )
    
    $
    (33,311
    )
    
    $
    73,997
  F-60




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##### Table of Contents



19. COMMITMENTS AND CONTINGENCIES
 Leases
   Years Ended(in $000s)
    
    December 31,2010
    
    $
    1,2752011
    
    
    1,0592012
    
    
    1,0142013
    
    
    1,0242014
    
    
    819Thereafter
    
    
    212Total minimum lease payments
    
    $
    5,403
 Purchase Order Commitments
   F-61




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS
 Patent Litigation
        F-62




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Patent Infringement Litigation
 AstraZeneca AD et al. v. Impax Laboratories, Inc. (Omeprazole)
 ® ®
 Aventis Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc. Fexofenadine(Pseudoephedrine)
 ® ® ®
 ® ® ®
 Abbott Laboratories v. Impax Laboratories, Inc. (Fenofibrate)
 ®
   F-63




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Impax Laboratories, Inc. v. Aventis Pharmaceuticals, Inc. (Riluzole)
 ®
 Wyeth v. Impax Laboratories, Inc. (Venlafaxine)
 ® ® ®
 Endo Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc. (Oxymorphone)
 ® Markman
 Impax Laboratories, Inc. v. Medicis Pharmaceutical Corp. (Minocycline)
 ®
  F-64




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Pfizer Inc., et aI. v. Impax Laboratories, Inc. (Tolterodine)
 ® Pfizer Inc. et al. v. Teva Pharmaceuticals USA, Inc. Pfizer
 Boehringer Ingelheim Pharmaceuticals, et al. v. Impax Laboratories, Inc. (Tamsulosin)
 ®
 Purdue Pharma Products L.P., et al. v. Impax Laboratories, Inc. (Tramadol)
 ® ® Purdue Pharma Products L.P. et al, v. Par
Pharmaceutical, Inc. et al Par
 Eli Lilly and Company v. Impax Laboratories, Inc. (Duloxetine)
 ®
  F-65




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Warner Chilcott, Ltd. et.al. v. Impax Laboratories, Inc. (Doxycycline Hyclate)
 ®
 Eurand, Inc., et al. v. Impax Laboratories, Inc. (Cyclobenzaprine)
 ® Markman
 Genzyme Corp. v. Impax Laboratories, Inc. (Sevelamer Hydrochloride)
 ® Markman
 Genzyme Corp. v. Impax Laboratories, Inc. (Sevelamer Carbonate)
 ® Markman
 The Research Foundation of State University of New York et al. v. Impax Laboratories,
Inc. (Doxycycline Monohydrate)
 ®
  F-66




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Elan Pharma International Ltd. and Fournier Laboratories Ireland Ltd. v. Impax
Laboratories, Inc. Abbott Laboratories and Laboratories Fournier S.A. v. Impax Laboratories,
Inc. (Fenofibrate)
 ®
 Daiichi Sankyo, Inc. et al. v. Impax Laboratories, Inc. (Colesevelam)
 ®
  F-67




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##### Table of Contents



20. LEGAL AND REGULATORY MATTERS (continued)
 Other Litigation Related to Our Business
 Axcan Scandipharm Inc. v. Ethex Corp, et al. (Lipram UL)
 ® ®
 Securities Litigation
  Budeprion XL Litigation
 Kelly v. Teva Pharmaceuticals Indus. Ltd, et al. Morgan v. Teva Pharmaceuticals Indus. Ltd, et al. th Weber v. Teva Pharmaceuticals Indus., Ltd., et
al Rosenfeld v. Teva
Pharmaceuticals USA, Inc.. et al. Henchenski and Vogel v.
Teva Pharmaceuticals Industries Ltd., et al., Anderson v. Teva Pharmaceuticals Indus., Ltd., et al. Brown et al. v. Teva Pharmaceuticals Inds., Ltd., et al. Latvala et al. v. Teva Pharmaceuticals Inds., Ltd., et al. Jordan v. Teva Pharmaceuticals Indus. Ltd et al Leighty v. Teva Pharmaceuticals Indus. Ltd et al ® In re: Budeprion XL Marketing Sales Practices, and Products Liability
Litigation
  F-68




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##### Table of Contents



21. SUPPLEMENTARY FINANCIAL INFORMATION (unaudited)
  2009 Quarters Ended:(in $000s except per share amounts)
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Revenue:Global product sales, gross
    
    $
    78,696
    
    
    $
    81,764
    
    
    $
    82,514
    
    
    $
    281,540Less:Chargebacks
    
    
    22,638
    
    
    
    24,844
    
    
    
    21,265
    
    
    
    57,358Rebates
    
    
    10,819
    
    
    
    13,425
    
    
    
    9,411
    
    
    
    38,965Returns
    
    
    3,256
    
    
    
    3,100
    
    
    
    2,030
    
    
    
    3,461Other credits
    
    
    2,862
    
    
    
    3,008
    
    
    
    3,172
    
    
    
    17,821Global product sales, net
    
    
    39,121
    
    
    
    37,387
    
    
    
    46,636
    
    
    
    163,935Private Label product sales
    
    
    1,297
    
    
    
    2,220
    
    
    
    1,752
    
    
    
    244Rx Partner
    
    
    10,736
    
    
    
    11,119
    
    
    
    8,328
    
    
    
    3,652OTC Partner
    
    
    1,858
    
    
    
    1,628
    
    
    
    1,769
    
    
    
    1,587Research Partner
    
    
    2,611
    
    
    
    2,833
    
    
    
    2,962
    
    
    
    3,274Promotional Partner
    
    
    3,284
    
    
    
    3,224
    
    
    
    3,499
    
    
    
    3,441Other
    
    
    6
    
    
    
    5
    
    
    
    
    
    
    
    1Total revenues
    
    
    58,913
    
    
    
    58,416
    
    
    
    64,946
    
    
    
    176,134Gross profit
    
    
    32,663
    
    
    
    31,132
    
    
    
    36,891
    
    
    
    87,410Net income
    
    $
    2,219
    
    
    $
    3,013
    
    
    $
    6,685
    
    
    $
    38,144Net income per share (basic)
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.11
    
    
    $
    0.63Net income per share (diluted)
    
    $
    0.04
    
    
    $
    0.05
    
    
    $
    0.11
    
    
    $
    0.61Weighted Average:common shares outstanding:Basic
    
    
    59,711,133
    
    
    
    60,112,308
    
    
    
    60,559,064
    
    
    
    60,721,808Diluted
    
    
    60,222,215
    
    
    
    60,552,344
    
    
    
    61,247,700
    
    
    
    62,288,318
    F-69




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##### Table of Contents



21. SUPPLEMENTARY FINANCIAL INFORMATION (unaudited) (continued)
  2008 Quarters Ended:(in $000s except per share amounts)
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Revenues:Global product sales, gross
    
    $
    38,401
    
    
    $
    45,064
    
    
    $
    41,714
    
    
    $
    53,694Less:Chargebacks
    
    
    9,233
    
    
    
    11,033
    
    
    
    13,770
    
    
    
    16,108Rebates
    
    
    4,191
    
    
    
    5,190
    
    
    
    4,173
    
    
    
    6,805Returns
    
    
    946
    
    
    
    1,381
    
    
    
    1,478
    
    
    
    1,914Other credits
    
    
    1,052
    
    
    
    1,474
    
    
    
    2,213
    
    
    
    1,906Global product sales, net
    
    
    22,979
    
    
    
    25,986
    
    
    
    20,080
    
    
    
    26,961Private Label product sales
    
    
    478
    
    
    
    639
    
    
    
    629
    
    
    
    850Rx Partner
    
    
    18,805
    
    
    
    43,870
    
    
    
    9,424
    
    
    
    9,679OTC Partner
    
    
    4,409
    
    
    
    4,932
    
    
    
    3,398
    
    
    
    3,207Research Partner
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    833Promotional Partner
    
    
    3,252
    
    
    
    3,238
    
    
    
    3,238
    
    
    
    3,163Other
    
    
    7
    
    
    
    7
    
    
    
    5
    
    
    
    2Total revenues
    
    
    49,930
    
    
    
    78,672
    
    
    
    36,774
    
    
    
    44,695Gross profit
    
    
    26,552
    
    
    
    57,968
    
    
    
    14,478
    
    
    
    19,104Net income (loss)
    
    $
    460
    
    
    $
    17,088
    
    
    $
    (10,530
    )
    
    $
    8,969Net income (loss) per share (basic)
    
    $
    0.01
    
    
    $
    0.29
    
    
    $
    (0.18
    )
    
    $
    0.15Net income (loss) per share (diluted)
    
    $
    0.01
    
    
    $
    0.28
    
    
    $
    (0.18
    )
    
    $
    0.15Weighted averagecommon shares outstanding:Basic
    
    
    58,833,979
    
    
    
    58,978,703
    
    
    
    59,166,319
    
    
    
    59,308,389Diluted
    
    
    61,126,768
    
    
    
    60,584,709
    
    
    
    59,166,319
    
    
    
    60,624,452
    F-70




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##### Table of Contents



SCHEDULE II, VALUATION AND QUALIFYING ACCOUNTS
 For the Year Ended December 31, 2007
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EBalance at
    
    
    Charge to
    
    
    Charge to
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    End ofDescription
    
    Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    PeriodDeferred tax asset valuation allowance
    
    $
    88,995
    
    
    $
    (78,518
    )
    
    $
    (10,477
    )
    
    $
    
    
    
    $
    Inventory reserve
    
    
    2,919
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    3,148Reserve for bad debts
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    
    
    
    
    550
 For the Year Ended December 31, 2008
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EBalance at
    
    
    Charge to
    
    
    Charge to
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    End ofDescription
    
    Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    PeriodDeferred tax asset valuation allowance
    
    $
    
    
    
    $
    333
    
    
    $
    
    
    
    $
    
    
    
    $
    333Inventory reserve
    
    
    3,148
    
    
    
    1,257
    
    
    
    
    
    
    
    
    
    
    
    4,405Reserve for bad debts
    
    
    550
    
    
    
    568
    
    
    
    
    
    
    
    (290
    )
    
    
    828
 For the Year Ended December 31, 2009
 Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EBalance at
    
    
    Charge to
    
    
    Charge to
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    End ofDescription
    
    Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    PeriodDeferred tax asset valuation allowance
    
    $
    333
    
    
    $
    (333
    )
    
    $
    
    
    
    $
    
    
    
    $
    Inventory reserve
    
    
    4,405
    
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    4,646Reserve for bad debts
    
    
    828
    
    
    
    229
    
    
    
    
    
    
    
    (685
    )
    
    
    372
   S-1




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##### Table of Contents



SIGNATURES
  IMPAX LABORATORIES, INC.By:
    /s/  Larry Hsu, Ph.D.Name:
    Larry Hsu, Ph.D.Title:
    President and Chief Executive Officer   Signature
    
    Title
    
    Date/s/Larry Hsu, Ph.D

Larry Hsu, Ph.D
    
    President, Chief
Executive Officer
(Principal Executive
Officer) and Director
    
    February 26, 2010/s/Arthur A. Koch, Jr.

Arthur A. Koch, Jr.
    
    Senior Vice President,
Finance, and 
Chief Financial Officer
(Principal Financial
and Accounting
Officer)
    
    February 26, 2010/s/Leslie Z. Benet, Ph.D.

Leslie Z. Benet, Ph.D.
    
    Director
    
    February 26, 2010/s/Robert L. Burr

Robert L. Burr
    
    Chairman of the Board
    
    February 26, 2010/s/Nigel Ten Fleming, Ph.D.

Nigel Ten Fleming, Ph.D.
    
    Director
    
    February 26, 2010/s/Michael Markbreiter

Michael Markbreiter
    
    Director
    
    February 26, 2010/s/Oh Kim Sun

Oh Kim Sun
    
    Director
    
    February 26, 2010/s/Peter R. Terreri

Peter R. Terreri
    
    Director
    
    February 26, 2010
  II-1




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Document3.1.1
    
    
    Restated Certificate of Incorporation, dated August 30, 2004.(1)3.1.2
    
    
    Certificate of Designation of Series A Junior Participating Preferred Stock, as filed with
the Secretary of State of Delaware on January 21, 2009.(2)3.2
    
    
    Amended and Restated Bylaws, effective June 29, 2009.(3)4.1
    
    
    Specimen of Common Stock Certificate.(4)4.2
    
    
    Form of Debenture (incorporated by reference to Exhibit A to the Indenture, dated as of June
27, 2005, between the Company and HSBC Bank USA, National Association, as Trustee, listed on
Exhibit 4.3)4.3
    
    
    Indenture, dated as of June 27, 2005, between the Company and HSBC Bank USA, National
Association, as Trustee.(4)4.4
    
    
    Supplemental Indenture, dated as of July 6, 2005, between the Company and HSBC Bank USA,
National Association, as Trustee.(4)4.5
    
    
    Registration Rights Agreement, dated as of June 27, 2005, between the Company and the
Initial Purchasers named therein.(4)4.6
    
    
    Promissory Note dated June 7, 2006, issued by the Company to Solvay Pharmaceuticals, Inc.(4)4.7
    
    
    Preferred Stock Rights Agreement, dated as of January 20, 2009, by and between the Company
and StockTrans, Inc., as Rights Agent.(2)10.1.1
    
    
    Amended and Restated Loan and Security Agreement, dated as of December 15, 2005, between the
Company and Wachovia Bank, National Association.(4)10.1.2
    
    
    First Amendment, dated October 14, 2008, to Amended and Restated Loan and Security
Agreement, dated December 15, 2005, between the Company and Wachovia Bank, National
Association.(5)10.1.3
    
    
    Second Amendment to Amended and Restated Loan and Security Agreement, effective as of
December 31, 2008, by and among the Company and Wachovia Bank, National Association.(6)10.1.4
    
    
    Third Amendment to Amended and Restated Loan and Security Agreement, effective as of March
31, 2009, by and among the Company and Wachovia Bank, National Association.(7)10.2
    
    
    Purchase Agreement, dated June 26, 2005, between the Company and the Purchasers named
therein.(4)10.3.1
    
    
    Impax Laboratories Inc. 1995 Stock Incentive Plan.*(4)10.3.2
    
    
    Amendment No. 1 to Impax Laboratories, Inc. 1995 Stock Incentive Plan, dated July 1,
1998.*(6)10.3.3
    
    
    Amendment No. 2 to Impax Laboratories, Inc. 1995 Stock Incentive Plan, dated May 25,
1999.*(6)10.4.1
    
    
    Impax Laboratories Inc. 1999 Equity Incentive Plan.*(6)10.4.2
    
    
    Form of Stock Option Grant under the Impax Laboratories, Inc. 1999 Equity Incentive Plan.*(6)10.5
    
    
    Impax Laboratories Inc. 2001 Non-Qualified Employee Stock Purchase Plan.*(4)10.6.1
    
    
    Impax Laboratories Inc. Amended and Restated 2002 Equity Incentive Plan.*(8)10.6.2
    
    
    Form of Stock Option Grant under the Impax Laboratories, Inc. Amended and Restated 2002
Equity Incentive Plan.*(6)10.6.3
    
    
    Form of Stock Bonus Agreement under the Impax Laboratories, Inc. Amended and Restated 2002
Equity Incentive Plan.*(6)10.6.4
    
    
    Amendment to Impax Laboratories, Inc. Amended and Restated 2002 Equity Incentive Plan,
effective May 19, 2009.*(9)10.7
    
    
    Impax Laboratories Inc. Executive Non-Qualified Deferred Compensation Plan, restated
effective January 1, 2005.*(5)
  II-2




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##### Table of Contents



Exhibit No.
    
    Description of Document10.8.1
    
    
    Employment Agreement, dated December 14, 1999, by and between the Company and Larry Hsu,
Ph.D.*(5)10.8.2
    
    
    Amendment No. 1, dated May 19, 2009, to Employment Agreement, dated December 14, 1999, by
and between the Company and Larry Hsu, Ph.D.*(9)10.8.3
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Larry Hsu,
Ph.D.*(10)10.9.1
    
    
    Offer of Employment Letter, dated August 12, 2004, between the Company and Charles V.
Hildenbrand.*(6)10.9.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Charles V.
Hildenbrand.*(10)10.10.1
    
    
    Offer of Employment Letter, dated February 9, 2005, between the Company and Arthur A. Koch,
Jr.*(6)10.10.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Arthur A. Koch,
Jr.*(10)10.11.1
    
    
    Employment Agreement, dated as of September 1, 2006, between the Company and David S.
Doll.*(4)10.11.2
    
    
    Separation Agreement and General Release, dated July 30, 2008, between the Company and David
S. Doll.*(4)10.11.3
    
    
    Consulting Agreement, effective as of September 4, 2008, between the Company and David S.
Doll.*(4)10.12.1
    
    
    Offer of Employment Letter, effective as of March 31, 2008, between the Company and Michael
Nestor.*(6)10.12.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Michael J.
Nestor.*(10)10.13.1
    
    
    Offer of Employment Letter, effective as of January 5, 2009, between the Company and
Christopher Mengler.*(6)10.13.2
    
    
    Employment Agreement, dated as of January 1, 2010, between the Company and Christopher
Mengler, R.Ph.*(10)10.14
    
    
    2008 Cash Incentive Awards for Executive Officers.*(11)10.14.1
    
    
    Strategic Alliance Agreement, dated June 27, 2001, between the Company and Teva
Pharmaceuticals Curacao N.V.**(12)10.14.2
    
    
    Letter Amendment, dated October 8, 2003, to Strategic Alliance Agreement, dated June 27,
2001, between the Company and Teva Pharmaceuticals Curacao N.V.**(12)10.14.3
    
    
    Letter Agreement, dated March 24, 2005, between the Company and Teva Pharmaceuticals Curacao
N.V.**(12)10.14.4
    
    
    Letter Amendment, dated March 24, 2005 and effective January 1, 2005, to Strategic Alliance
Agreement, dated June 27, 2001, between the Company and Teva Pharmaceuticals Curacao
N.V.**(12)10.14.5
    
    
    Amendment, dated January 24, 2006, to Strategic Alliance Agreement, dated June 27, 2001,
between the Company and Teva Pharmaceuticals Curacao N.V.**(13)10.14.6
    
    
    Amendment, dated February 9, 2007, to Strategic Alliance Agreement, dated June 27, 2001,
between the Company and Teva Pharmaceuticals Curacao N.V.**(12)10.15.1
    
    
    Development, License and Supply Agreement, dated as of June 18, 2002, between the Company
and Wyeth, acting through its Wyeth Consumer Healthcare Division.**(12)10.15.2
    
    
    Amendment, dated as of July 9, 2004, to Development, License and Supply Agreement, dated as
of June 18, 2002, between the Company and Wyeth, acting through its Wyeth Consumer
Healthcare Division.(13)
  II-3




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##### Table of Contents



Exhibit No.
    
    Description of Document10.15.3
    
    
    Amendment, dated as of February 14, 2005, to Development, License and Supply Agreement,
dated as of June 18, 2002, between the Company and Wyeth, acting through its Wyeth Consumer
Healthcare Division.(13)10.16.1
    
    
    Licensing, Contract Manufacturing and Supply Agreement, dated as of June 18, 2002, between
the Company and Schering-Plough Corporation.**(13)10.16.2
    
    
    Amendment No. 3, effective as of July 23, 2004, to Licensing, Contract Manufacturing and
Supply Agreement, dated as of June 18, 2002, between the Company and Schering-Plough
Corporation.**(12)10.16.3
    
    
    Amendment No. 4, effective as of December 15, 2006, to Licensing, Contract Manufacturing and
Supply Agreement, dated as of June 18, 2002, between the Company and Schering-Plough
Corporation.**(12)10.17.1
    
    
    Supply and Distribution Agreement, dated as of November 3, 2005, between the Company and
DAVA Pharmaceuticals, Inc.**(12)10.17.2
    
    
    Amendment No. 2, dated February 6, 2007, to Supply and Distribution Agreement, dated
November 3, 2005, between the Company and DAVA Pharmaceuticals, Inc.**(13)10.18
    
    
    Patent License Agreement, dated as of March 30, 2007, by and among Purdue Pharma L.P., The
P.F. Laboratories, Inc., Purdue Pharmaceuticals L.P. and the Company.(14)10.19
    
    
    Supplemental License Agreement, dated as of March 30, 2007, by and among Purdue Pharma L.P.,
The P.F. Laboratories, Inc., Purdue Pharmaceuticals L.P. and the Company.(14)10.20
    
    
    Sublicense Agreement, effective as of March 30, 2007, between the Company and DAVA
Pharmaceuticals, Inc.(14)10.21
    
    
    Promotional Services Agreement, dated as of January 19, 2006, between the Company and Shire
US Inc.(3)10.22
    
    
    License and Distribution Agreement, dated as of January 19, 2006, between the Company and
Shire LLC.***10.23
    
    
    Co-promotion Agreement, dated as of July 16, 2008, between the Company and Wyeth, acting
through its Wyeth Pharmaceuticals Division.**(9)10.24
    
    
    Joint Development Agreement, dated as of November 26, 2008, between the Company and Medicis
Pharmaceutical Corporation.****10.25
    
    
    Construction Work Agreement, dated as of February 18, 2008, by and between Impax
Laboratories (Taiwan), Inc., a wholly-owned subsidiary of the Company, and E&C Engineering
Corporation (English translation from the Taiwanese language).(6)10.26
    
    
    Construction Agreement, dated as of March 11, 2008, by and between Impax Laboratories
(Taiwan), Inc., a wholly-owned subsidiary of the Company, and Fu Tsu Construction (English
translation from the Taiwanese language).(6)11.1
    
    
    Statement re computation of per share earnings (incorporated by reference to Note 17 to the
Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K).21.1
    
    
    Subsidiaries of the registrant.23.1
    
    
    Consent of Grant Thornton LLP31.1
    
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    
    Certifications of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certifications of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 *
    
    Management contract, compensatory plan or arrangement.**
    
    Confidential treatment granted for certain portions of this exhibit pursuant to Rule 24b-2
under the Exchange Act, which portions are omitted and filed separately with the SEC.  II-4




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##### Table of Contents



***
    
    Confidential treatment requested for certain portions of this exhibit pursuant to Rule 24b-2
under the Exchange Act, which portions are omitted and filed separately with the SEC.****
    
    The Company is re-filing the Joint Development Agreement, dated as of November 26, 2008 (the
Joint Development Agreement), with Medicis Pharmaceutical Corporation to disclose a
milestone payment that was previously omitted in accordance with an order granting
confidential treatment pursuant to Rule 24b-2 under the Exchange Act. Certain portions of the
Joint Development Agreement remain confidential pursuant to an order granting confidential
treatment under the Exchange Act, which portions are omitted and filed separately with the
SEC.(1)
    
    Incorporated by reference to Amendment No. 5 to the Companys Registration Statement on Form
10 filed on December 23, 2008.(2)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on January 22,
2009.(3)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on July 2, 2009.(4)
    
    Incorporated by reference to the Companys Registration Statement on Form 10 filed on October
10, 2008.(5)
    
    Incorporated by reference to Amendment No. 2 to the Companys Registration Statement on Form
10 filed on December 2, 2008.(6)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the year ended
December 31, 2008.(7)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009.(8)
    
    Incorporated by reference to the Companys Definitive Proxy Statement on Schedule 14A filed
on April 8, 2009.(9)
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter
ended June 30, 2009.(10)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on January 14,
2010.(11)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed on March 5, 2009.(12)
    
    Incorporated by reference to Amendment No. 6 to the Companys Registration Statement on Form
10 filed on January 14, 2009.(13)
    
    Incorporated by reference to Amendment No. 1 to the Companys Registration Statement on Form
10 filed on November 12, 2008.(14)
    
    Incorporated by reference to Amendment No. 7 to the Companys Registration Statement on Form
10 filed on January 21, 2009.  II-5