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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-27354
 IMPAX LABORATORIES,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

65-0403311(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer Identification
    No.)30831 Huntwood Avenue, Hayward, CA(Address of principal
    executive offices)

94544(Zip Code)   Registrants telephone number, including area code:
 (510) 476-2000
  Securities registered pursuant to Section 12(b) of the
    Act: None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, par value $0.01 per share
 (Title of class)
  Series A Junior Participating Preferred Stock Purchase
    Rights
 (Title of class)
  o þ
  o þ
  þ o
  Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 Forward-Looking Statements


1PART I


2Item 1.


Business


2Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


29Item 2.


Properties


29Item 3.


Legal Proceedings


30Item 4.


Submission of Matters to a Vote of Security
    Holders


34PART II


34Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


34Item 6.


Selected Financial Data


36Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


36Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


52Item 8.


Financial Statements and Supplementary Data


52Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


52Item 9A(T).


Controls and Procedures


52Item 9B.


Other Information


53PART III


53Item 10.


Directors, Executive Officers and Corporate
    Governance


53Item 11.


Executive Compensation


53Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


53Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


53Item 14.


Principal Accounting Fees and Services


53PART IV


54Item 15.


Exhibits and Financial Statement Schedules


54SIGNATURESEXHIBIT INDEX




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Forward-Looking
    Statements   1




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PART I  Item 1.
    Business  Our
    Business
             2




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over-the-counter
      
    53 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®

    and
    Prilosec®.
    24 applications pending at the FDA, including two tentatively
    approved (i.e., satisfying substantive FDA requirements
    but remaining subject to statutory pre-approval restrictions),
    that address approximately $13.5 billion in recent
    12 month U.S. product sales.
    40 products in various stages of development for which
    applications have not yet been filed.    Form 10-K
    Controlled-Release
    Technology
     3




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Our
    Products
  Generic
    Pharmaceuticals
    Product

Generic of2004 OR EARLIERPentoxifyline 400 mg Tablets(1)

Trental®Orphenadrine 100 mg Tablets

Norflex®Omeprazole 10 and 20 mg
    Capsules(2c)

Prilosec®Minocycline 50, 75 and 100 mg Capsules

Minocin®Sotalol 80, 120(1), 160(1) and 240 mg(1) Tablets

Betapace®Terbutaline 2.5 and 5 mg Tablets

Brethine®Fludrocortisone 0.1 mg Tablets

Florinef®Rimantadine 100 mg Tablets

Flumadine®Riluzole 50 mg Tablets(1)

Rilutek®Pyridostigmine 60 mg Tablets

Mestinon®Chloroquine 250 mg Tablets

N/AChloroquine 500 mg Tablets

Aralen®Flavoxate 100 mg Tablets

Urispas®Loratadine Orally Disintegrating Tablets, 10mg(1)

Claritin
    Reditab®Fenofibrate 67, 134 and 200 mg Capsules

Lofibra®Loratadine and Pseudoephedrine Sulfate 5/120 mg ER Tablets

Claritin-D
    12-hr®Methitest (Methyltestosterone) 10 and 25 mg(1) Tablets
    (2 separate ANDAs)

Android®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

ProAmatineMetformin HCl 500 mg ER Tablets(1)

Glucophage
    XR®Oxycodone Hydrochloride 80 mg ER Tablets(1)

OxyContin®Bupropion Hydrochloride 200 mg ER Tablets (twice daily)

Wellbutrin
    SR®2005Dantrolene Sodium 25, 50 and 100 mg Capsules

Dantrium®Anagrelide Hydrochloride 0.5 and 1.0 mg Capsules(1)

Agrylin®Carprofen 25, 75 and 100 mg Caplets (a veterinary product)

Rimadyl®Metformin HCI 750 mg ER Tablets(1)

Glucophage
    XR®Oxycodone Hydrochloride 10, 20 and 40 mg Tablets(1)

OxyContin®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® 4




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Product

Generic ofBethanechol Chloride 5, 10, 25 and 50 mg Tablets (4
    separate ANDAs)

Urecholine®Oxybutynin Chloride 15 mg ER
    Tablets(2a)

Ditropan
    XL®Bupropion Hydrochloride 300 mg ER
    Tablets(2b)

    (once daily)

Wellbutrin
    XL®2007Nadolol /Bendroflumethiazide 40/5 and 80/5 mg Tablets

Corzide®Oxybutynin Chloride 5 and 10 mg ER
    Tablets(2a)

Ditropan
    XL®Alprazolam 0.5, 1, 2 and 3 mg ER Tablets(1)

Xanax
    XR®Gemfibrozil 600 mg Tablets(1)

Lopid®Dipyridamole 25, 50, 75 mg Tablets USP

Persantine®Baclofen 10 and 20 mg Tablets (2 separate ANDAs)(1)

N/A2008Primidone 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®Benzphetamine 50 mg Tablets(1)

Didrex®Bupropion Hydrochloride 150 mg ER
    Tablets(2b)

    (once daily)

Wellbutrin
    XL®2009Omeprazole 40 mg
    Capsules(2c)

Prilosec®Minocycline HCI 45, 90 and 135 mg ER Tablets(1)

Solodyn®     (1)
    
    Not currently marketed.(2)
    
    Multiple products filed under same ANDA, including (i) 2a:
    Oxybutynin Chloride products, (ii) 2b: Bupropion Hydrochloride
    products, and (iii) 2c: Omeprazole products.    Product

Generic ofCyclobenzaprine CD 15 and 30 mg Capsules

Amrix®Doxycycline Hyclate DR 75 and 100 mg Tablets

Doryx®Divalproex Sodium 250 and 500 mg ER Tablets

Depakote
    ER®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®Tamsulosin 0.4 mg Capsules

Flomax®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®   Brand-Name
    Pharmaceuticals
   5




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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.    Sales and
    Marketing
   6




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Rx
    Partner and OTC Partner Alliance Agreements
    Years Ended December 312008


2007


2006($ in 000s)Gross Revenue and% Gross RevenueTeva Agreement

$
40,947



14
%

$
42,480



13
%

$
33,910



18
%Dava Agreement

$
40,831



14
%

$
118,634



35
%

$
2,899



2
%Sub-Total:
    Rx Partner

$
81,778



28
%

$
161,114



48
%

$
36,809



20
%OTC Partner

$
15,946



5
%

$
11,866



4
%

$
13,782



7
%   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
    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  ® ® ® ® ®
 7




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®
      DAVA
    Agreement
  ® ® ®
  OTC
    Partner Alliance Agreements
  ® 12-hour 12-hour ®
  ® 12-hour ® 12-hour
 8




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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
  ® ®
  Promotional
    Partners Alliance Agreements
  Shire
    Co-Promotion Agreement
    Wyeth
    Co-Promotion Agreement
      Manufacturing
     9




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Raw
    Materials
    ® ®
    Quality
    Control
       10




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Research
    and Development
      Regulation
      New Drug Application (NDA).
  Abbreviated New Drug Application
    (ANDA).
   11




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12




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Environmental
    Laws
    Employees
    Executive
    Officers
    Name

Age

Positions with ImpaxArthur A. Koch, Jr.


55


Senior Vice President, Finance, and Chief Financial OfficerCharles V. Hildenbrand


57


Senior Vice President, OperationsChristopher Mengler, R.Ph


46


President, Global Pharmaceuticals DivisionMichael J. Nestor


56


President, Impax Pharmaceuticals Division   Arthur A. Koch, Jr.
  Charles V. Hildenbrand
  Christopher Mengler, R.Ph.,
 13




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Michael J. Nestor
  Item 1A.
    Risk
    Factors  Form 10-K.
  Risks
    Related to Our Business
  Current
    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.
         14




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The
    SEC previously revoked the registration of our common stock due
    to our failure to file periodic reports required by the Exchange
    Act. If we fail to timely file these reports in the future,
    public information about us would become more limited and the
    SEC could again seek to deregister our common stock, which could
    negatively impact our business and liquidity, significantly
    reduce the liquidity of our common stock and prevent investors
    from buying or selling our common stock in the public
    market.
  Form 10-Q
      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.
      Form 10-Q
 15




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® ®
  We
    have experienced operating losses and negative cash flow from
    operations 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 make it difficult for us to repay
    indebtedness, or 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.
    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.
   16




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Any
    delays or unanticipated expenses in connection with the
    construction of our Taiwan facility could have a material
    adverse effect on our results of operations, liquidity and
    financial condition.
      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.
    ® ® ® ® ® ® ®
 17




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® ®
  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.
    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.
   18




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and/or
  The
    time necessary to develop generic drugs may adversely affect
    whether, and the extent to which, we receive a return on our
    capital.
    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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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.
     20




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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.     21




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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.
        A
    substantial portion of our total revenues is derived from sales
    to a limited number of customers.
      We are
    dependent on a small number of suppliers for our raw materials
    that we use to manufacture our products.
   22




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
    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.        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.
   23




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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.
      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.
   24




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Legislative
    or regulatory programs that may influence prices of prescription
    drugs could have a material adverse effect on our
    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.    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.
    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; 25




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
    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.    If we
    are unable to manage our growth, our business will
    suffer.
    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.
  Form 10-K
  Terrorist
    attacks and other acts of violence or war may adversely affect
    our business.
     26




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Because
    of the location of our manufacturing and research and
    development facilities, our operations could be interrupted by
    an earthquake.
      Risks
    Related to Our Stock
  There
    is currently a limited market for our common
    stock.
  ® ® ®
  Our
    stockholders may sustain future dilution in ownership as a
    result of the terms of some of our outstanding securities or
    future issuances of securities.
    Our
    stock price is volatile.
   27




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
    our ability to maintain compliance with SEC reporting
    requirements;
    our ability to relist our common stock on The NASDAQ Stock
    Market and maintain such listing;
    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.  We may
    in the future issue shares of preferred stock which could
    adversely affect the rights of holders of our common stock and
    the value of our common stock.
      
    exercising voting, redemption, and conversion rights to the
    detriment of the holders of common stock;
    receiving preferences over the holders of common stock regarding
    our assets in the event of our dissolution or liquidation;
    delaying, deferring, or preventing a change in control of our
    company, even when holders of common stock may desire to effect
    such a transaction;
    discouraging bids for our common stock at a premium over the
    market price of the common stock; and
    otherwise adversely affecting the market price of the common
    stock.  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.
   28




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We do
    not pay dividends on our common stock and do not anticipate
    doing so in the foreseeable future.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties   29




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Item 3.
    Legal
    Proceedings  Patent
    Infringement Litigation
  AstraZeneca
    AD et al. v. Impax Laboratories, Inc.
    (Omeprazole)
  ® ® 30-month
  Aventis
    Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc.
    (Fexofenadine/Pseudoephedrine)
  ® ® ®
   30




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® ® ®
  Abbott
    Laboratories v. Impax Laboratories, Inc.
    (Fenofibrate)
  ®
    Impax
    Laboratories, Inc. v. Aventis Pharmaceuticals, Inc.
    (Riluzole)
  ®
  Wyeth v.
    Impax Laboratories, Inc. (Venlafaxine)
  ® ® ®
  Endo
    Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc.
    (Oxymorphone)
  ®
 31




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lmpax
    Laboratories, Inc. v. Medicis Pharmaceutical Corp.
    (Minocycline)
  ®
  Pfizer
    Inc., et aI. v. Impax Laboratories, Inc.
    (Tolterodine)
  ®
  Boehringer
    Ingelheim Pharmaceuticals, et al. v. Impax Laboratories,
    Inc. (Tamsulosin)
  ®
  Purdue
    Pharma Products L.P., et al. v. Impax Laboratories, Inc.
    (Tramadol)
  ®
  Eli
    Lilly and Company v. Impax Laboratories, Inc.
    (Duloxetine)
  ®
  Warner
    Chilcott, Ltd. et. al. v. Impax Laboratories, Inc.
    (Doxycycline Hyclate)
  ®
 32




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Eurand,
    Inc., et al. v. Impax Laboratories, Inc.
    (Cyclobenzaprine)
  ®
  Other
    Litigation Related to Our Business
  Axcan
    Scandipharm Inc. v. Ethex Corp, et al. (Lipram
    UL)
  ® ®
  Freeberg v.
    Impax Laboratories, Inc., et al. (Freeberg)
    Securities
    Litigation
      Insurance
   33




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Stock
    Price
  Form 10-K Form 10-Q
  ® ® ®
  mark-up,
  Price Rangeper ShareHigh


LowYear Ending 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/aYear Ended December 31, 2007First Quarter

$
10.76


$
8.30Second Quarter

$
12.00


$
4.55Third Quarter

$
12.40


$
8.00Fourth Quarter

$
12.15


$
9.45   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 34




---



##### Table of Contents




    broker-dealers or other participants who hold or clear shares
    directly or indirectly through the Depository
    Trust Company, or its nominee, Cede & Co.  Dividends
    Unregistered
    Sales of Equity Securities
    Equity
    Compensation Plans
    Number of SecuritiesRemaining Available forNumber of Securities to



Future Issuance Underbe Issued Upon

Weighted Average

Equity CompensationExercise of Outstanding

Exercise Price of

Plans (ExcludingOptions, Warrants and

Outstanding Options,

Securities Reflected inRights

Warrants and Rights

Column (a))Plan Category

(a)

(b)

(c)Equity compensation plans approved by security holders


6,027,029


$
10.45



244,631Equity compensation plans not approved by security holders


2,253,211
(1)

$
10.72



1,641,200
(2)Total:


8,280,240


$
10.53



1,885,831     (1)
    
    Represents options issued pursuant to the Impax Laboratories,
    Inc. Amended and Restated 2002 Equity Incentive Plan in excess
    of the number of shares authorized for issuance under such plan.
    See Note 15 to our consolidated audited financial
    statements for information concerning our equity compensation
    plans.(2)
    
    Includes 435,793 shares of common stock available for future
    issuance under the Impax Laboratories, Inc. 2001 Non-Qualified
    Employee Stock Purchase Plan. 35




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Form 10-K.
  For the Years Ended December 31,2008


2007


2006


2005


2004($ in 000s, except per share data)Statements of Operations Data:Total revenues

$
210,071


$
273,753


$
135,246


$
112,400


$
91,086Research and development


59,809



39,992



29,635



26,095



23,069Total operating expenses


114,179



89,590



74,245



59,588



76,301Income (loss) from operations


3,923



76,507



(11,247
)


(5,623
)


(46,551
)Net income (loss)


18,700



125,925



(12,044
)


(5,780
)


(48,825
)Net income (loss) per share  basic

$
0.32


$
2.14


$
(0.20
)

$
(0.10
)

$
(0.84
)Net income (loss) per share  diluted

$
0.31


$
2.06


$
(0.20
)

$
(0.10
)

$
(0.84
)   As of December 31,2008


2007


2006


2005


2004($ in 000s)Balance Sheet Data:Cash, cash equivalents and short-term investments

$
119,985


$
143,496


$
29,834


$
56,081


$
79,039Working capital


126,639



110,107



81,919



55,796



76,151Total assets


514,582



516,459



343,888



260,285



259,077Long-term debt


5,990



20,510



89,603



80,285



102,047Total liabilities


355,184



382,292



347,864



251,399



244,831Accumulated deficit


(41,590
)


(60,290
)


(186,215
)


(174,171
)


(168,390
)Total stockholders equity (deficit)

$
159,398


$
134,167


$
(3,976
)

$
8,886


$
14,246   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  12-month
  Overview
   36




---



##### Table of Contents



Global Product Sales, net. Revenue Recognition in
    Financial Statements Revenue
    Recognition
  Rx Partner and OTC Partner. No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21) EITF 00-21. 3 18 1 18 EITF 00-21
  Research Partner.
  Promotional Partner.
 37




---



##### Table of Contents



Critical
    Accounting Estimates
        Chargebacks.
 38




---



##### Table of Contents



December 31,2008


2007


2006($ in 000s)Chargeback reserveBeginning balance

$
2,977


$
4,401


$
4,438Provision recorded during the period


50,144



33,972



26,664Credits issued during the period


(49,065
)


(35,396
)


(26,701
)Ending balance

$
4,056


$
2,977


$
4,401Provision as a percent of Global product sales, gross


28
%


23
%


21
%     Rebates.
    December 31,2008


2007


2006($ in 000s)Rebate reserveBeginning balance

$
3,603


$
3,124


$
5,391Provision recorded during the period


20,361



15,968



13,856Credits issued during the period


(19,164
)


(15,489
)


(16,123
)Ending balance

$
4,800


$
3,603


$
3,124Provision as a percent of Global product sales, gross


11
%


11
%


11
%    39




---



##### Table of Contents



Returns.
    December 31,2008


2007


2006($ in 000s)Accrued product returnsBeginning balance

$
14,261


$
12,903


$
10,625Provision related to sales recorded in the period


5,719



5,459



7,220Credits recorded in the period


(6,305
)


(4,101
)


(4,942
)Ending balance

$
13,675


$
14,261


$
12,903Provision as a percent of Global product sales, gross


3
%


4
%


6
%   non-AB-rated ®
  Medicaid.
  Shelf-Stock Adjustments.
 40




---



##### Table of Contents



Estimated Lives of Alliance Agreements.
      Third-Party Research and Development
    Agreements.
 41




---



##### Table of Contents



Share-Based Compensation. Share-Based
    Payments Accounting for Stock
    Issued to Employees
  Income Taxes. ®
  Fair Value of Financial Instruments.
  Contingencies. Accounting for
    Contingencies
  Goodwill and Other
    Intangible Assets
 42




---



##### Table of Contents



Allowance for Doubtful Accounts.
  Results
    of Operations
  Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Total
    Revenues
  ® ® ® ® ® ® ® ® ®
  Cost of
    Revenues
  ®
  Gross
    Profit
  ® ®
  Research
    and Development Expenses
   43




---



##### Table of Contents



Patent
    Litigation Expenses
    Selling,
    General and Administrative Expenses
    Other
    income (expense), net
    Interest
    Income
    Interest
    Expense
    Income
    Taxes
    Net
    Income
   44




---



##### Table of Contents



Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Total
    Revenues
    ® ® ® ®
  ® ® i.e. ® ® ® ®
  ®
      Cost of
    Revenues
  ®
  Gross
    Profit
  ®
  Research
    and Development Expenses
   45




---



##### Table of Contents



Patent
    Litigation Expenses
  ®
  Selling,
    General and Administrative Expenses
    Litigation
    Settlement and Related Expenses
    Interest
    Income
    Interest
    Expense
    Income
    Taxes
    Net
    Income (Loss)
    Liquidity
    and Capital Resources
   46




---



##### Table of Contents



Cash
    and Cash Equivalents
      Cash
    Flows
  Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007.
    ® ®
         47




---



##### Table of Contents



Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006.
  ® ®
      Outstanding
    Debt Obligations
  Senior
    Lenders; Wachovia Bank
       48




---



##### Table of Contents



3.5% Debentures
  Form 10-K,
    20-day
     49




---



##### Table of Contents



Solvay
    Promissory Note
    Commitments
    and Contractual Obligations
    Payments Due by PeriodLess Than








More Than($ in 000s)

Total


1 Year


1-3 Years


3-5 Years


5 YearsContractual Obligations(a)Credit Facilities and Long- Term Debt(b)

$
20,647


$
14,657


$
3,873


$
2,117


$
Interest Expense Payable  Long-Term Debt


1,286



686



520



80



Open Purchase Order Commitments


11,796



11,796











Operating Lease(c)


6,806



1,412



2,324



2,038



1,032Construction Contracts(d)


1,988



1,988











Total

$
42,523


$
30,539


$
6,717


$
4,235


$
1,032     (a)
    
    Liabilities for incomes taxes under FIN 48 were excluded as
    the Company is not able to make a reasonably reliable estimate
    of the amount and period of related future payments. As of
    December 31, 2008, the Company had $7.5 million of
    gross unrecognized tax benefits under FIN 48.(b)
    
    Represents the principal portion of payments of debt
    obligations, including: (i) $12.75 million
    3.5% Debentures callable on June 15, 2009, interest
    paid semi-annually, starting December 15, 2005;
    (ii) 6.0% note payable to Solvay in 24 quarterly
    principal and interest installment payments of $549,165
    commencing March 2007 through December 2012; and
    (iii) Vendor financing agreement related to software
    licenses with interest at 3.10% in two monthly installments of
    $0 and thirty-four monthly principal and interest installments
    of $12,871 commencing December 2006 through November 2009.(c)
    
    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.(d)
    
    Construction contracts are related to our currently under
    construction 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
    is expected to be completed and equipment to be installed,
    validated, and approved by FDA in 2009, and product shipments to
    begin in early 2010. In conjunction with the construction of our
    Taiwan facility, we have entered into several contracts,
    amounting to an aggregate of approximately $16,617,000 and
    $853,000 as of December 31, 2008 and 2007, respectively. As
    of December 31, 2008 and 2007, we had remaining commitments
    under these contracts of approximately $1,988,000 and $422,000,
    respectively.  Off
    Balance-Sheet Arrangements
   50




---



##### Table of Contents



Recent
    Accounting Pronouncements
    No. 07-3, (EITF 07-3). EITF 07-3, EITF 07-3
  No. 07-1 (EITF 07-1). EITF 07-1 EITF 07-1 EITF 07-1
      No. FAS 142-3, FAS 142-3). FAS 142-3 FAS 142-3
 51




---



##### Table of Contents



14-1, 14-1). 14-1 14-1
  EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 EITF 03-6-1
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk      Item 8.
    Financial
    Statements and Supplementary Data  page F-1 Form 10-K
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15(e)
 52




---



##### Table of Contents



Form 10-K. Rule 13a-15(e)
  Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f)
  Report of
    Management on Internal Control over Financial
    Reporting
    Item 9B.
    Other
    Information   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   53




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Consolidated Financial Statements
  page F-1 Form 10-K.
  Financial Statement Schedules
  page F-1 Form 10-K
  Exhibits
  ExhibitNo.

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.(3)3
.2

By-Laws.(2)4
.1

Specimen of Common Stock Certificate.(2)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.(2)4
.4

Supplemental Indenture, dated as of July 6, 2005, between
    the Company and HSBC Bank USA, National Association, as
    Trustee.(2)4
.5

Registration Rights Agreement, dated as of June 27, 2005,
    between the Company and the Initial Purchasers named therein.(2)4
.6

Promissory Note dated June 7, 2006, issued by the Company
    to Solvay Pharmaceuticals, Inc.(2)4
.7

Preferred Stock Rights Agreement, dated as of January 20,
    2009, by and between the Company and StockTrans, Inc., as Rights
    Agent.(3)10
.1

Amended and Restated Loan and Security Agreement, dated as of
    December 15, 2005, between the Company and Wachovia Bank,
    National Association.(2)10
.1.1

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.(4)10
.1.2

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.10
.2

Purchase Agreement, dated June 26, 2005, between the
    Company and the Purchasers named therein.(2)10
.3

Impax Laboratories Inc. 1995 Stock Incentive Plan.*(2)10
.3.1

Amendment No. 1 to Impax Laboratories, Inc. 1995 Stock
    Incentive Plan, dated July 1, 1998.*10
.3.2

Amendment No. 2 to Impax Laboratories, Inc. 1995 Stock
    Incentive Plan, dated May 25, 1999.*10
.4

Impax Laboratories Inc. 1999 Equity Incentive Plan.*10
.4.1

Form of Stock Option Grant under the Impax Laboratories, Inc.
    1999 Equity Incentive Plan.*10
.5

Impax Laboratories Inc. 2001 Non-Qualified Employee Stock
    Purchase Plan.*(2)10
.6

Impax Laboratories Inc. Amended and Restated 2002 Equity
    Incentive Plan.*10
.6.1

Form of Stock Option Grant under the Impax Laboratories, Inc.
    Amended and Restated 2002 Equity Incentive Plan.*10
.6.2

Form of Stock Bonus Agreement under the Impax Laboratories, Inc.
    Amended and Restated 2002 Equity Incentive Plan.* 54




---



##### Table of Contents



ExhibitNo.

Description of Document10
.7

Impax Laboratories Inc. Executive Non-Qualified Deferred
    Compensation Plan, restated effective January 1, 2005.*(4)10
.8

Employment Agreement, dated as of December 14, 1999,
    between the Company and Charles Hsiao, Ph.D.*(4)10
.9

Employment Agreement, dated as of December 14, 1999,
    between the Company and Larry Hsu, Ph.D.*(4)10
.10

Offer of Employment Letter, dated August 12, 2004, between
    the Company and Charles V. Hildenbrand.*10
.11

Offer of Employment Letter, dated February 9, 2005, between
    the Company and Arthur A. Koch, Jr.*10
.12.1

Employment Agreement, dated as of September 1, 2006,
    between the Company and David S. Doll.*(2)10
.12.2

Separation Agreement and General Release, dated July 30,
    2008, between the Company and David S. Doll.*(2)10
.12.3

Consulting Agreement, effective as of September 4, 2008,
    between the Company and David S. Doll.*(2)10
.13

Offer of Employment Letter, effective as of March 31, 2008,
    between the Company and Michael Nestor.*10
.14

Offer of Employment Letter, effective as of January 5,
    2009, between the Company and Christopher Mengler.*10
.15

Strategic Alliance Agreement, dated June 27, 2001, between
    the Company and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.1

Letter Amendment, dated October 8, 2003, to Strategic
    Alliance Agreement, dated June 27, 2001, between the
    Company and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.2

Letter Agreement, dated March 24, 2005, between the Company
    and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.3

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.**(5)10
.15.4

Amendment, dated January 24, 2006, to Strategic Alliance
    Agreement, dated June 27, 2001, between the Company and
    Teva Pharmaceuticals Curacao N.V.**(6)10
.15.5

Amendment, dated February 9, 2007, to Strategic Alliance
    Agreement, dated June 27, 2001, between the Company and
    Teva Pharmaceuticals Curacao N.V.**(5)10
.16

Development, License and Supply Agreement, dated as of
    June 18, 2002, between the Company and Wyeth, acting
    through its Wyeth Consumer Healthcare Division.**(5)10
.16.1

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.(6)10
.16.2

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.(6)10
.17

Licensing, Contract Manufacturing and Supply Agreement, dated as
    of June 18, 2002, between the Company and Schering
    Corporation.**(6)10
.17.1

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
    Corporation.**(5)10
.17.2

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
    Corporation.**(5)10
.18

Supply and Distribution Agreement, dated as of November 3,
    2005, between the Company and DAVA Pharmaceuticals, Inc.**(5)10
.18.1

Amendment No. 2, dated February 6, 2007, to Supply and
    Distribution Agreement, dated November 3, 2005, between the
    Company and DAVA Pharmaceuticals, Inc.**(6)10
.19

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.(7) 55




---



##### Table of Contents



ExhibitNo.

Description of Document10
.20

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.(7)10
.21

Sublicense Agreement, effective as of March 30, 2007,
    between the Company and DAVA Pharmaceuticals, Inc.(7)10
.22

Promotional Services Agreement, dated as of January 19,
    2006, between the Company and Shire US Inc.**(5)10
.23

Co-promotion Agreement, dated as of July 16, 2008, between
    the Company and Wyeth, acting through its Wyeth Pharmaceuticals
    Division.**(7)10
.24

Joint Development Agreement, dated as of November 26, 2008,
    between the Company and Medicis Pharmaceutical Corporation.**(5)10
.25

Special Cash Bonus Payments and Directors Fees.*(8)10
.26

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).10
.27

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).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.31
.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 and 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 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.(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 Registration
    Statement on Form 10 filed on October 10, 2008.(3)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 22, 2009.(4)
    
    Incorporated by reference to Amendment No. 2 to the
    Companys Registration Statement on Form 10 filed on
    December 2, 2008.(5)
    
    Incorporated by reference to Amendment No. 6 to the
    Companys Registration Statement on Form 10 filed on
    January 14, 2009.(6)
    
    Incorporated by reference to Amendment No. 1 to the
    Companys Registration Statement on Form 10 filed on
    November 12, 2008.(7)
    
    Incorporated by reference to Amendment No. 7 to the
    Companys Registration Statement on Form 10 filed on
    January 21, 2009.(8)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 6, 2009. 56




---



##### Table of Contents



Impax
    Laboratories, Inc.
  INDEX TO
    FINANCIAL STATEMENTS
  Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2008, 2007


F-3Consolidated Statements of Operations for each of
    the three years ended December 31, 2008


F-4Consolidated Statements of Changes in
    Stockholders Equity (Deficit) for each of the three years
    ended December 31, 2008 and Consolidated Statements of
    Comprehensive Income (Loss) for each of the three years ended
    December 31, 2008


F-5Consolidated Statements of Cash Flows for each of
    the three years ended December 31, 2008


F-6Notes to Consolidated Financial Statements for
    the three years ended December 31, 2008


F-7 to F-58Schedule II, Valuation and Qualifying
    Accounts


S-1  Page F-1 of F-58




---



##### Table of Contents



Impax
    Laboratories, Inc.
 Report of
    Independent Registered Public Accounting Firm           Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
  /s/  Grant
    Thornton, LLP     Page F-2 of F-58




---



##### Table of Contents



Impax
    Laboratories, Inc.
  CONSOLIDATED
    BALANCE SHEETS
 (amounts in
    thousands, except share and per share data)
  December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
69,275


$
37,462Short-term investments


50,710



106,034Accounts receivable, net


43,306



51,503Inventory, net


32,305



27,568Current portion of deferred product manufacturing costs-alliance
    agreements


13,578



11,923Current portion of deferred income taxes


17,996



27,376Prepaid expenses and other current assets


9,298



8,592Total current assets


236,468



270,458Property, plant and equipment, net


95,629



81,223Deferred product manufacturing costs-alliance agreements


93,144



82,474Deferred income taxes, net


52,599



47,937Other assets


9,168



6,793Goodwill


27,574



27,574Total assets

$
514,582


$
516,459LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
14,657


$
69,234Accounts payable


12,797



16,898Accrued expenses


41,360



35,838Current portion of deferred revenue-alliance agreements


35,015



26,381Current portion of accrued exclusivity period fee payments due


6,000



12,000Total current liabilities


109,829



160,3513.5% Debentures






12,750Long-term debt


5,990



7,760Fair value of common stock purchase warrants






2,285Deferred revenue-alliance agreements


225,804



181,720Accrued exclusivity period fee payments due






6,000Other liabilities


13,561



11,426Total liabilities

$
355,184


$
382,292Commitments 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, 2008
    and 2007

$



$
Common stock, $0.01 par value, 90,000,000 shares
    authorized and 60,135,686 and 59,066,277 issued at
    December 31, 2008 and 2007, respectively


602



591Additional paid-in capital


203,538



196,049Treasury stock-acquired as a result of achievement of milestone
    under the Teva Agreement, 243,729 shares


(2,157
)


(2,157
)Accumulated other comprehensive loss


(995
)


(26
)Accumulated deficit


(41,590
)


(60,290
)Total stockholders equity

$
159,398


$
134,167Total liabilities and stockholders equity

$
514,582


$
516,459    Page F-3 of F-58




---



##### Table of Contents



Impax
    Laboratories, Inc.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (amounts in
    thousands, except share and per share data)
  Years Ended December 31,2008


2007


2006Revenues:Global product sales, net

$
98,602


$
87,978


$
78,201Rx Partner


81,778



161,114



36,809OTC Partner


15,946



11,866



13,782Research Partner


833







Promotional Partner


12,891



12,759



6,434Other


21



36



20Total revenues


210,071



273,753



135,246Cost of revenues


91,969



107,656



72,248Gross profit


118,102



166,097



62,998Operating expenses:Research and development


59,809



39,992



29,635Patent litigation


6,472



10,025



9,693Litigation settlement










2,556Selling, general and administrative


47,898



39,573



32,361Total operating expenses


114,179



89,590



74,245Income (loss) from operations


3,923



76,507



(11,247
)Change in fair value of common stock purchase warrants


1,234



(110
)


1,098Gain on repurchase of 3.5% Debentures


1,319







Other income (expense), net


21,576



73



(192
)Interest income


4,218



4,751



2,233Interest expense


(2,599
)


(4,113
)


(3,796
)Income (loss) before income taxes


29,671



77,108



(11,904
)Provision (benefit) for income taxes


10,971



(48,817
)


140Net income (loss)

$
18,700


$
125,925


$
(12,044
)Net income (loss) per share:Basic

$
0.32


$
2.14


$
(0.20
)Diluted

$
0.31


$
2.06


$
(0.20
)Weighted average common shares outstanding:Basic


59,072,752



58,810,452



58,996,365Diluted


60,782,721



61,217,470



58,996,365    Page F-4 of F-58




---



##### 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,
    2008 (dollars
    and shares in thousands)
  AccumulatedAdditional








OtherCommon Stock


Paid-In


Treasury


Accumulated


ComprehensiveStockholders Equity (Deficit)

Shares


Par Value


Capital


Stock


Deficit


Loss


TotalBalance at December 31, 2005


58,977


$
590


$
182,467


$



$
(174,171
)

$



$
8,8862006Exercise of common stock purchase warrants, stock options, and
    sale of common stock under ESPP


52







659















659Share-based compensation expense










683















683Achievement of milestone under the Teva Agreement


(244
)










(2,157
)










(2,157
)Currency translation adjustments






















(3
)


(3
)Net loss


















(12,044
)






(12,044
)Balance at December 31, 2006


58,785


$
590


$
183,809


$
(2,157
)

$
(186,215
)

$
(3
)

$
(3,976
)2007Exercise 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


















125,925







125,925Balance at December 31, 2007


58,822


$
591


$
196,049


$
(2,157
)

$
(60,290
)

$
(26
)

$
134,1672008Exercise 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















644Currency translation adjustments






















(969
)


(969
)Net income


















18,700







18,700Balance at December 31, 2008


59,892


$
602


$
203,538


$
(2,157
)

$
(41,590
)

$
(995
)

$
159,398   Years Ended December 31,Comprehensive Income (Loss)

2008


2007


2006Net income (loss)

$
18,700


$
125,925


$
(12,044
)Currency translation adjustments


(969
)


(23
)


(3
)Comprehensive income (loss)

$
17,731


$
125,902


$
(12,047
)    Page F-5 of F-58




---



##### Table of Contents



Impax
    Laboratories, Inc.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (amounts in
    thousands)
  Years Ended December 31,2008


2007


2006Cash flows from operating activities:Net income (loss)

$
18,700


$
125,925


$
(12,044
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


9,895



8,612



7,307Bad debt expense


568



550



Tax benefit on reversal of valuation allowance on deferred tax
    asset






(81,485
)


Deferred income taxes, net


4,718



17,483



Tax benefit related to exercise of employee stock options






(10,477
)


Provision for uncertain tax positions


1,397



6,118



Gain, net on repurchase of 3.5% Debentures


(1,319
)






Deferred revenue  Rx Partners


94,876



234,816



115,391Deferred product manufacturing costs  Rx Partners


(33,928
)


(64,681
)


(42,431
)Deferred revenue recognized  Rx Partners


(81,778
)


(161,114
)


(36,809
)Amortization deferred product manufacturing costs  Rx
    Partners


22,713



46,363



14,006Deferred revenue  OTC Partners


16,399



15,359



11,215Deferred product manufacturing costs  OTC Partners


(16,087
)


(13,014
)


(11,678
)Deferred revenue recognized  OTC Partners


(15,946
)


(11,866
)


(13,782
)Amortization deferred product manufacturing costs 
    OTC Partners


14,977



9,900



12,421Deferred revenue  Research Partner


40,000







Deferred revenue recognized  Research Partner


(833
)






Payments on exclusivity period fee


(12,000
)


(18,200
)


(14,400
)Payments on accrued litigation settlements


(2,197
)


(2,573
)


(12,000
)Accrued litigation settlement expense


3,500







2,556Share-based compensation expense


5,817



1,513



683Fair value of shares issued under severance arrangement


561







Accretion of interest income on short-term investments


(2,867
)


(3,147
)


(1,004
)Change in fair value of common stock purchase warrants


(1,234
)


110



(1,098
)Changes in assets and liabilities:Accounts receivable


7,629



9,868



(31,393
)Inventory


(4,737
)


6,543



(846
)Prepaid expenses and other current assets


(4,184
)


(6,324
)


1,960Accounts payable and accrued expenses


(814
)


7,546



4,372Other liabilities


738



1,189



1,814Net cash provided by (used in) operating activities

$
64,564


$
119,014


$
(5,760
)Cash flows from investing activities:Purchase of short-term investments

$
(202,133
)

$
(244,119
)

$
(57,530
)Maturities of short-term investments


260,324



164,667



35,302Purchases of property, plant and equipment


(25,863
)


(18,836
)


(21,475
)Net cash provided by (used in) investing activities

$
32,328


$
(98,288
)

$
(43,703
)Cash flows from financing activities:Repayment of long-term debt

$
(65,234
)

$
(253
)

$
(108
)Tax benefit related to exercise of employee stock options






10,477



Proceeds from stock option exercises and purchases under ESPP


155



113



93Net cash (used in) provided by financing activities

$
(65,079
)

$
10,337


$
(15
)Net increase (decrease) in cash and cash equivalents

$
31,813


$
31,063


$
(49,478
)Cash and cash equivalents, beginning of the year

$
37,462


$
6,399


$
55,877Cash and cash equivalents, end of year

$
69,275


$
37,462


$
6,399    Years Ended December 31,2008


2007


2006(in $000s)Cash paid for interest

$
2,970


$
4,556


$
3,409Cash paid for income taxes

$
8,381


$
14,106


$
500       Page F-6 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2008, 2007, 2006
  1.
    THE
    COMPANY              2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Use of
    Estimates
   Page F-7 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Principles
    of Consolidation
    Cash
    and Cash Equivalents
    Short-Term
    Investments
    Fair
    Value of Financial Instruments
    Contingencies
    Allowance
    for Doubtful Accounts
  case-by-case
 Page F-8 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Concentration
    of Credit Risk
      Percent of Total Accounts Receivable

2008


2007


2006Customer #1


22.9
%


8.7
%


7.1
%Customer #2


20.4
%


19.1
%


13.5
%Customer #3


20.4
%


15.8
%


11.2
%Customer #4


13.5
%


26.1
%


45.5
%Customer #5


6.0
%






Customer #6






8.4
%


5.0
%Total-Five largest customers


83.2
%


78.1
%


82.3
%   Percent of Gross Revenues

2008


2007


2006Customer #1


18.0
%


13.2
%


17.3
%Customer #2


14.0
%


12.7
%


18.3
%Customer #3


13.9
%


35.5
%


Customer #4


11.6
%


10.3
%


17.9
%Customer #5


10.9
%


5.5
%


8.4
%Customer #6










5.5
%Total-Five largest customers


68.4
%


77.2
%


67.4
%     Inventory
  and/or
   Page F-9 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Property,
    Plant and Equipment
  construction-in-progress
  Goodwill
        Revenue
    Recognition
   Page F-10 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 00-21, (EITF 00-21),
  
    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.  EITF 00-21,
  Global
    product sales, net:
    Returns
     
  Rebates
    and Chargebacks
   Page F-11 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Shelf-Stock
    Adjustments
    Medicaid
    Cash
    Discounts
    RX
    Partner and OTC Partner
     Page F-12 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     
  
    Research
    Partner:
    EITF 00-21.
  Promotional
    Partner:
   Page F-13 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EITF 00-21.
  Shipping
    and Handling Fees and Costs
    Research
    and Development
    Derivatives
    Income
    Taxes
     Page F-14 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-Based
    Compensation
    Litigation
    Settlement
  ®
  Earnings
    (loss) per Share
    Other
    Comprehensive Income (Loss)
    Deferred
    Financing Costs
   Page F-15 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Translation
    3.
    RECENT
    ACCOUNTING PRONOUNCEMENTS  FAS 157-2
  No. 07-3, (EITF 07-3). EITF 07-3, EITF 07-3
  No. 07-1 (EITF 07-1). EITF 07-1 EITF 07-1
     Page F-16 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. FAS 142-3, FAS 142-3). FAS 142-3
    14-1, 14-1). 14-1 14-1
  EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 EITF 03-6-1
  4.
    INVESTMENTS   Page F-17 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Gross


GrossAmortized


Unrecognized


Unrecognized


FairCost


Gains


Losses


Value(In $000s)December 31, 2008Commercial paper

$
6,194


$



$



$
6,194Government agency 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   Gross


GrossAmortized


Unrecognized


Unrecognized


FairCost


Gains


Losses


Value(In $000s)December 31, 2007Commercial paper

$
94,107


$



$



$
94,107Government agency obligations


7,000











7,000Corporate bonds


3,202



5



(8
)


3,199Asset-backed securities


1,503







(64
)


1,439Certificates of deposit


222











222Total short-term investments

$
106,034


$
5


$
(72
)

$
105,967   5.
    ACCOUNTS
    RECEIVABLE    December 31,2008


2007(In $000s)Gross accounts receivable

$
54,591


$
60,272Less: Rebate reserve


(4,800
)


(3,603
)Less: Chargeback reserve


(4,056
)


(2,977
)Less: Other deductions


(2,429
)


(2,189
)Accounts receivable, net

$
43,306


$
51,503    Page F-18 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 31,2008


2007


2006(In $000s)Rebate reserveBeginning balance

$
3,603


$
3,124


$
5,391Provision recorded during the period


20,361



15,968



13,856Credits issued during the period


(19,164
)


(15,489
)


(16,123
)Ending balance

$
4,800


$
3,603


$
3,124   For the Years Ended December 31,2008


2007


2006(In $000s)Chargeback reserveBeginning balance

$
2,977


$
4,401


$
4,438Provision recorded during the period


50,144



33,972



26,664Credits issued during the period


(49,065
)


(35,396
)


(26,701
)Ending balance

$
4,056


$
2,977


$
4,401   6.
    INVENTORY    December 31,2008


2007(In $000s)Raw materials

$
16,940


$
15,005Work in process


1,397



1,827Finished goods


16,504



11,373Total inventory, net

$
34,841


$
28,205Less: Non-current inventory, net


(2,536
)


(637
)Inventory, net

$
32,305


$
27,568       and/or
 Page F-19 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      7.
    PROPERTY,
    PLANT AND EQUIPMENT    December 31,2008


2007(In $000s)Land

$
2,270


$
2,270Buildings and improvements


55,310



51,287Equipment


49,983



44,001Office furniture and equipment


6,733



5,332Construction-in-progress


21,019



10,323Property, plant and equipment, gross


135,315



113,213Less: Accumulated depreciation


(39,686
)


(31,990
)Property, plant and equipment, net

$
95,629


$
81,223    Page F-20 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    ACCRUED
    EXPENSES    December 31,2008


2007(In $000s)Payroll related expenses

$
15,147


$
9,983Product returns


13,675



14,261Shelf stock price protection


572



384Medicaid rebates


584



566Royalty expense


259



551Physician detailing sales force fees


2,279



2,096Legal and professional fees


2,087



3,382Litigation settlements


4,526



1,555Other


2,231



3,060Total accrued expenses

$
41,360


$
35,838         December 31,2008


2007


2006(In $000s)Beginning balance

$
14,261


$
12,903


$
10,625Provision related to sales recorded in the period


5,719



5,459



7,220Credits recorded in the period


(6,305
)


(4,101
)


(4,942
)Ending balance

$
13,675


$
14,261


$
12,903  Page F-21 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    FAIR
    VALUE OF COMMON STOCK PURCHASE WARRANTS  Common
    Stock Purchase Warrants
      No. 00-19, (EITF 00-19),
      Common


CommonStock


Stock


TotalPurchase


Purchase


ReportedWarrants


Warrants


LiabilityOutstanding


Value


ValueEnding balance December 31, 2005


741,503


$
5.36


$
3,977,000Warrants exercised in 2006


(100,000
)Ending 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





$



$
     For the Years Ended December 31,2008


2007


2006Volatility (range)


43.0 - 49.0
%


24.2 - 46.4
%


48.7 - 57.6
%Risk-free interest rate (range)


1.25 - 1.50
%


3.4 - 4.9
%


4.7 - 5.2
%Dividend yield


0
%


0
%


0
%    Page F-22 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    INCOME
    TAXES    For the Years Ended December 31,2008


2007


2006(In $000s)Current:Federal taxes

$
6,315


$
8,383


$
320State taxes


(62
)


6,802



190Total current tax expense


6,253



15,185



510Deferred:Federal taxes

$
3,478


$
17,830


$
(4,971
)Federal taxes-change in valuation allowance






(66,783
)


4,651State taxes


1,240



(347
)


(2,391
)State taxes-change in valuation allowance






(14,702
)


2,341Foreign taxes










Total deferred tax expense (benefit)


4,718



(64,002
)


(370
)Provision for (benefit from) income taxes

$
10,971


$
(48,817
)

$
140     For the Years Ended December 31,2008


2007


2006(In $000s)Income (loss) before income taxes

$
29,671






$
77,108






$
(11,904
)Tax provision (benefit) at federal statutory rate


10,385



35.0
%


26,988



35.0
%


(4,047
)


(34.0
)%Increase (decrease) in tax rate resulting from:State and local taxes, net of federal benefit


130



0.5
%


2,886



3.8
%


(1,699
)


(14.3
)%Increase in federal statutory tax rate on deferred tax accounts










(1,993
)


(2.6
)%






Research and development credits


(2,228
)


(7.5
)%


(1,306
)


(1.7
)%


(996
)


(8.3
)%Share-based compensation


1,438



4.9
%


528



0.7
%


232



2.0
%Domestic manufacturing deduction


(531
)


(1.8
)%


(676
)


(0.9
)%






Change in warrant fair value


(432
)


(1.5
)%


38



0.1
%


(373
)


(3.1
)%Provision for uncertain tax positions


1,050



3.5
%


6,118



7.9
%






Other, net


1,159



3.9
%


85



0.1
%


31



0.2
%Change in valuation allowance










(81,485
)


(105.7
)%


6,992



58.7
%Provision for (benefit from) income taxes

$
10,971



37.0
%

$
(48,817
)


(63.3
)%

$
140



1.2
%    Page F-23 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31,2008


2007(In $000s)Deferred tax assets:Net operating loss carryforwards

$
830


$
1,024Research and development credits


3,009



6,118Inventory reserves


2,490



1,249Accrued expenses


11,711



10,230Deferred revenues


87,789



81,654Accrued exclusivity period fee payments


3,073



7,145Litigation settlements


2,376



3,345Depreciation and amortization


371



Other


4,838



3,752Gross deferred tax assets

$
116,487


$
114,517Deferred tax liabilities:Tax depreciation and amortization in excess of book amounts

$
2,205


$
1,508Deferred manufacturing costs


42,267



37,468Deferred revenues


854



Other


566



228Gross deferred tax liabilities

$
45,892


$
39,204Deferred tax assets, net

$
70,595


$
75,313     December 31,2008


2007(In $000s)Current deferred tax assets

$
23,940


$
32,336Current deferred tax liabilities


(5,944
)


(4,960
)Current deferred tax assets, net


17,996



27,376Non-current deferred tax assets


92,547



82,181Non-current deferred tax liabilities


(39,948
)


(34,244
)Non-current deferred tax assets, net


52,599



47,937Deferred tax assets, net of valuation allowance

$
70,595


$
75,313    Page F-24 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Year

Amount(In $000s)2020

$
2,0752021


4,9682022


1,9552023


3,775Total

$
12,773     (In $000s)Balance at January 1, 2008

$
6,118Increase/(decrease) based on prior year tax positions


Increase/(decrease) based on current year tax positions


1,397Balance at December 31, 2008

$
7,515        Page F-25 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    REVOLVING
    LINE OF CREDIT            12.
    LONG-TERM
    DEBT  3.5% Convertible
    Senior Subordinated Debentures
  Form 10-K
   Page F-26 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               Page F-27 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007(In $000s)3.5% Debentures(1)

$
12,750


$
75,0008.17% Term loan  Cathay Bank(2)






2,2157.5% Term loan  Cathay Bank(3)






2,957Subordinated promissory note(4)


7,760



9,428Vendor financing agreement(5)


137



144Total Debt

$
20,647


$
89,744Less: Current portion of long-term debt


(14,657
)


(69,234
)Long-term debt

$
5,990


$
20,510     (1)
    
    In August and September 2008, the Company repurchased at a
    discount an aggregate of $62,250,000 face value principal amount
    of its 3.5% Debentures at the request of the holders. The
    remaining $12,750,000 principal amount matures on June 15,
    2012, but is subject to repurchase by the Company at 100% of the
    outstanding principal amount on June 15, 2009, at the
    option of the holders.(2)
    
    Term loan payable at 8.17% to Cathay Bank in 83 monthly
    installments of $19,540 commencing June 28, 2001 through
    May 27, 2008 with a balance due on June 28, 2008. The
    8.17% Cathay Bank loan was collateralized by land, building and
    building improvements in the Companys 35,000 square
    foot headquarters and research facility in Hayward, California.
    This loan was paid in full without penalty in May 2008.(3)
    
    Term loan payable at 7.5% to Cathay Bank in 83 monthly
    installments of $24,629 commencing November 14, 2001
    through October 13, 2008 with a balance of $2,917,598 due
    on November 14, 2008. The 7.5% Cathay Bank loan was
    collateralized by land, building and building improvements in
    the Companys 50,000 square foot manufacturing
    facility in Hayward, California. This loan was paid in full
    without penalty in May 2008.(4)
    
    Subordinated promissory note in the amount of $11,000,000
    related to the June 2006 settlement of litigation brought by
    Solvay Pharmaceuticals, Inc. (Solvay). In the
    settlement, the Company agreed to pay $23,000,000 to Solvay,
    with such amount recorded as litigation settlement expense in
    the Companys 2004 financial statements. The settlement
    included a $12,000,000 cash payment upon signing of the
    settlement agreement with the remaining $11,000,000 to be paid
    under the terms of the subordinated promissory note between the
    Company and Solvay. The subordinated promissory note interest
    rate is 6.0% per annum, and requires the Company to pay 24
    quarterly installments of $549,165, commencing in March 2007
    through December 2012. Additionally, the subordinated promissory
    note becomes immediately due and payable upon the occurrence of
    a default in any payment due, a change in control of the
    Company, voluntary or involuntary bankruptcy proceeding by or
    against the Company, and working capital less than 150% of the
    remaining unpaid balance of the subordinated promissory note. At
    December 31, 2008, none of these events has occurred to
    date.(5)
    
    Vendor financing agreement related to software licenses, with
    interest at 3.1% annum, and two monthly installments of $0 and
    thirty-four monthly installments of $12,871, commencing December
    2006 through November 2009. Page F-28 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     (In $000s)2009

$
14,6572010


1,8792011


1,9942012


2,1172013


Thereafter


Total

$
20,647   13.
    ALLIANCE
    AGREEMENTS  Strategic
    Alliance Agreement with Teva
    Product Development, Manufacture and
    Sales: product-linked true-up
  Cost Sharing:
  Advance Deposit: debt-like
  
    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 Page F-29 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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.
    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:
   Page F-30 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (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.   Page F-31 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     1 18 4 18 1 18
  Teva
    Agreement Transactions
  The Advance Deposit:
    Share-Settlement Option:
  Interest Forgiveness and FDA Approval
    Provision:
  Sale of Common Stock:
 Page F-32 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Contingent Stock Repurchase Option:
  Arrangement with Anchen:
 Page F-33 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred revenueBeginning balance

$
181,149


$
136,157


$
78,014


$
Additions:Cost sharing


700



732



861



3,660Product related deferrals


59,706



133,873



92,502



89,990Subtotal


60,406



134,605



93,363



93,650Exclusivity charges






(47,133
)


(3,467
)


Forgiveness of advance deposit














6,000Forgiveness of interest














4,370Stock repurchase










2,157



Total additions

$
60,406


$
87,472


$
92,053


$
104,020Less: amounts recognized:Forgiveness of advance deposit

$
(333
)

$
(333
)

$
(333
)

$
(1,500
)Forgiveness of interest


(243
)


(243
)


(243
)


(1,094
)Stock repurchase


(120
)


(120
)


(659
)


Cost sharing


(583
)


(516
)


(466
)


(916
)Product related revenue


(39,668
)


(41,268
)


(32,209
)


(22,496
)Total amount recognized


(40,947
)


(42,480
)


(33,910
)


(26,006
)Total deferred revenue

$
200,608


$
181,149


$
136,157


$
78,014   InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred product manufacturing costsBeginning balance

$
75,296


$
49,728


$
27,059


$
Additions


33,621



46,246



35,530



36,079Less amounts amortized


(20,556
)


(20,678
)


(12,861
)


(9,020
)Total deferred product manufacturing costs

$
88,361


$
75,296


$
49,728


$
27,059  Page F-34 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    DeferredDeferred


ProductRevenue


Manufacturing CostsRecognition


Amortization(In $000s)2009

$
19,112


$
8,4152010


19,112



8,4152011


19,112



8,4152012


19,112



8,4152013


19,112



8,415Thereafter


105,048



46,286Totals

$
200,608


$
88,361   OTC
    Partners Alliance Agreements
         Page F-35 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    12-hour 24-hour ® ® 24-hour
  12-hour 12-hour 12-hour
   Page F-36 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred revenueBeginning balance

$
20,591


$
17,098


$
19,665


$
Additions:Upfront fees and milestone payments






84



42



8,310Cost sharing and other






424



158



1,060Product related deferrals


16,399



14,851



11,015



39,601Total additions

$
16,399


$
15,359


$
11,215


$
48,971Less: amounts recognized:Upfront fees and milestone payments


(297
)


(315
)


(786
)


(6,071
)Cost sharing and other


(112
)


(312
)


(221
)


(793
)Product related revenue


(15,537
)


(11,239
)


(12,775
)


(22,442
)Total amount recognized


(15,946
)


(11,866
)


(13,782
)


(29,306
)Total deferred revenue

$
21,044


$
20,591


$
17,098


$
19,665   InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred product manufacturing costsBeginning balance

$
17,251


$
14,137


$
14,880


$
Additions:Product related deferrals


16,037



12,172



11,727



29,981Cost sharing and other


50



842



(49
)


5,181Total additions

$
16,087


$
13,014


$
11,678


$
35,162Less: amount amortized:Product related cost


(14,634
)


(9,201
)


(12,024
)


(17,260
)Cost sharing and other


(343
)


(699
)


(397
)


(3,022
)Total amount amortized


(14,977
)


(9,900
)


(12,421
)


(20,282
)Total deferred product manufacturing costs

$
18,361


$
17,251


$
14,137


$
14,880  Page F-37 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    DeferredDeferred


ProductRevenue


Manufacturing CostsRecognition


Amortization(In $000s)2009

$
5,903


$
5,1632010


5,903



5,1632011


1,949



1,7032012


1,158



1,0112013


1,158



1,011Thereafter


4,973



4,310Total

$
21,044


$
18,361   Supply &
    Distribution Agreement with DAVA Pharmaceuticals, Inc.
  ®
      EITF 00-21 EITF 00-21.  
 Page F-38 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Page F-39 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred revenueBeginning balance

$
6,361


$
24,784


$
5,655


$
Additions:Upfront fees and milestone payments










9,000



1,000Product related deferrals


34,470



100,211



13,028



4,738Total additions


34,470



100,211



22,028



5,738Less: amounts recognized:Upfront fees and milestone payments


(858
)


(7,975
)


(1,150
)


(17
)Product related revenue


(39,973
)


(110,659
)


(1,749
)


(66
)Total amount recognized


(40,831
)


(118,634
)


(2,899
)


(83
)Total deferred revenue

$



$
6,361


$
24,784


$
5,655   InceptionThroughFor the Years Ended December 31,


Dec 31,2008


2007


2006


2005(In $000s)Deferred product manufacturing costsBeginning balance

$
1,850


$
9,100


$
3,344


$
Additions


307



18,435



6,901



3,401Less: amount recognized


(2,157
)


(25,685
)


(1,145
)


(57
)Total deferred product manufacturing costs

$



$
1,850


$
9,100


$
3,344   Agreements
    with Medicis Pharmaceutical Corporation
    License
    and Settlement Agreement
  ® ®
 Page F-40 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ® ® ®
  Joint
    Development Agreement
  ® ®
    1.  Research &
    Development Services
      2.  Royalty
    Fees Earned  Mediciss Sale of Advanced Form
    SOLODYN ® (Brand)
    Product
  ® ® ®
 Page F-41 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ®
  3.  Accounting
    for Sales of the Companys Four Generic Dermatology
    Products
      Year EndedDecember 31,2008(In $000s)Deferred revenueBeginning balance

$
Additions:Up-front fees and milestone payments


40,000Product related deferrals


Total additions


40,000Less: amounts recognized:Up-front fees and milestone payments


(833
)Product related revenue


Total amount recognized


(833
)Total deferred revenue

$
39,167     DeferredRevenueRecognition(In $000s)2009

$
10,0002010


10,0002011


10,0002012


9,1672013


Thereafter


Total

$
39,167  Page F-42 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Shire
    Laboratories Promotional Services Agreement
      Agreements
    with Wyeth
    Settlement
    and Release Agreement
    License
    Agreement
   Page F-43 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Co-Promotion
    Agreement
      14.
    EMPLOYEE
    BENEFIT PLANS  401(k)
    Defined Contribution Plan
    Employee
    Stock Purchase Plan
  Form S-8
  Deferred
    Compensation Plan
   Page F-44 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      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
   Page F-45 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageExerciseNumber of Shares


PriceStock Options

Under Option


per ShareOutstanding at December 31, 2005


7,152,301


$
10.06Options granted


291,000


$
6.85Options exercised


(8,613
)

$
4.21Options forfeited


(296,517
)

$
21.38Outstanding 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


$
10.53Vested and expected to vest at December 31, 2008


8,155,317


$
10.58Options exercisable at December 31, 2008


6,396,840


$
10.58       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


$
10.30  Page F-46 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        For the Years Ended December 31,2008

2007

2006Volatility (range)

64.1%-67.7%

67.7%-75.2%

76.2%-76.3%Volatility (weighted average)

66.8%

69.9%

76.3%Risk-free interest rate (weighted average)

3.0%

4.0%

4.7%Dividend yield

0%

0%

0%Expected life (years)

6.25

6.07

6.25Weighted average grant date fair value per option

$5.58

$7.43

$4.91       For the Years Ended December 31,2008


2007


2006(In $000s)Cost of revenues

$
1,522


$
418


$
168Research and development


2,262



563



236Selling, general and administrative


2,033



532



279Total

$
5,817


$
1,513


$
683  Page F-47 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      16.
    STOCKHOLDERS
    EQUITY (DEFICIT)  Preferred
    Stock
    Common
    Stock
    Shareholders
    Rights Plan
      17.
    EARNINGS
    PER SHARE   Page F-48 of F-58




---



##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      For the Years Ended December 31,2008


2007


2006(In $000s, except share and per share amounts)Numerator:Net income (loss)

$
18,700


$
125,925


$
(12,044
)Denominator:Weighted average common shares outstanding


59,072,752



58,810,452



58,996,365Effect of dilutive options and and common stock purchase warrants


1,709,969



2,407,018



Diluted weighted average common shares outstanding


60,782,721



61,217,470



58,996,365Basic net income (loss) per share

$
0.32


$
2.14


$
(0.20
)Diluted net income (loss) per share

$
0.31


$
2.06


$
(0.20
)     04-8, (EITF 04-08). EITF 04-08,
  18.
    SEGMENT
    INFORMATION       Page F-49 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Global


Impax


Corporate


TotalYear Ended December 31, 2008

Division


Division


and Other


Company(In $000s)Revenues, net

$
197,180


$
12,891


$



$
210,071Cost of revenues


80,724



11,245







91,969Research and development


43,502



16,307







59,809Patent Litigation


6,472











6,472Income (loss) before income taxes

$
60,944


$
(16,198
)

$
(15,075
)

$
29,671   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

$
118,964


$
(8,585
)

$
(33,271
)

$
77,108   Global


Impax


Corporate


TotalYear Ended December 31, 2006

Division


Division


and Other


CompanyRevenues, net

$
128,812


$
6,434


$



$
135,246Cost of revenues


66,675



5,573







72,248Research and development


24,362



5,273







29,635Patent Litigation


9,693











9,693Income (loss) before income taxes

$
25,781


$
(6,208
)

$
(31,477
)

$
(11,904
)   19.
    COMMITMENTS
    AND CONTINGENCIES  Leases
   Page F-50 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years EndedDecember 31,(In $000s)2009

$
1,4122010


1,2652011


1,0592012


1,0142013


1,024Thereafter


1,032Total minimum lease payments

$
6,806   Purchase
    Order Commitments
    Taiwan
    Facility Construction
    20.
    LEGAL AND
    REGULATORY MATTERS  Patent
    Litigation
       Page F-51 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Patent
    Infringement Litigation
  AstraZeneca
    AD et al. v. Impax Laboratories, Inc.
    (Omeprazole)
  ® ® 30-month
  Aventis
    Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc.
    Fexofenadine(Pseudoepbedrine)
  ®
 Page F-52 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ® ®
  ® ® ®
  Abbott
    Laboratories v. Impax Laboratories, Inc.
    (Fenofibrate)
  ®
    Impax
    Laboratories, Inc. v. Aventis Pharmaceuticals, Inc.
    (Riluzole)
  ®
  Wyeth v.
    Impax Laboratories, Inc. (Venlafaxine)
  ® ®
 Page F-53 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ®
  Endo
    Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc.
    (Oxymorphone)
  ®
  lmpax
    Laboratories, Inc. v. Medicis Pharmaceutical Corp.
    (Minocycline)
  ®
  Pfizer
    Inc., et aI. v. Impax Laboratories, Inc.
    (Tolterodine)
  ®
  Boehringer
    Ingelheim Pharmaceuticals, et al. v. Impax Laboratories,
    Inc. (Tamsulosin)
  ®
 Page F-54 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Purdue
    Pharma Products L.P., et al. v. Impax Laboratories, Inc.
    (Tramadol)
  ®
  Eli Lilly
    and Company v. Impax Laboratories, Inc.
    (Duloxetine)
  ®
  Warner
    Chilcott, Ltd. et.al. v. Impax Laboratories, Inc.
    (Doxycycline Hyclate)
  ®
  Eurand,
    Inc., et al. v. Impax Laboratories, Inc.
    (Cyclobenzaprine)
  ®
  Other
    Litigation Related to Our Business
  Axcan
    Scandipharm Inc. v. Ethex Corp, et al. (Lipram
    UL)
  ® ®
  Freeberg v.
    Impax Laboratories, Inc., et al. (Freeberg)
   Page F-55 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Securities
    Litigation
      21.
    SUBSEQUENT
    EVENTS     Page F-56 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  22.
    SUPPLEMENTARY
    FINANCIAL INFORMATION (unaudited)    2008 Quarters Ended:March 31


June 30


September 30


December 31(In $000s except share and per share amounts)Revenues:Global product sales, gross

$
38,990


$
45,703


$
42,343


$
54,544Less: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


1,163



1,474



2,213



1,906Global product sales, net


23,457



26,625



20,709



27,811RX 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)

$
959


$
17,597


$
(8,914
)

$
9,058Net income (loss) per share (basic)

$
0.02


$
0.30


$
(0.15
)

$
0.15Net income (loss) per share (diluted)

$
0.02


$
0.29


$
(0.15
)

$
0.15Weighted average common 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       
    The Company recognized $1.2 million in income during in the
    fourth quarter 2008, resulting from the adjustment of the
    assumptions used to determine the change in the fair value of
    the common stock purchase warrants. Page F-57 of F-58




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##### Table of Contents



IMPAX
    LABORATORIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2007 Quarters Ended:March 31


June 30


September 30


December 31(In $000s except share and per share amounts)Revenues:Global product sales, gross

$
32,478


$
33,880


$
42,289


$
39,852Less:Chargebacks


7,202



7,419



10,559



8,792Rebates


3,375



3,520



4,306



4,767Returns


968



1,291



1,639



1,565Other credits


1,174



1,336



1,191



1,417Global product sales, net


19,759



20,314



24,594



23,311RX Partner


8,278



33,296



81,634



37,906OTC Partner


2,408



2,305



4,081



3,072Promotional Partner


3,201



3,279



3,104



3,175Other


17



9



7



3Total revenues


33,663



59,203



113,420



67,467Gross profit

$
13,677


$
30,902


$
87,428


$
34,090Net income (loss)

$
(7,770
)

$
83,792


$
43,402


$
6,501Net income (loss) per share (basic)

$
(0.13
)

$
1.42


$
0.74


$
0.11Net income (loss) per share (diluted)

$
(0.13
)

$
1.37


$
0.71


$
0.11Weighted average common shares outstanding:Basic


58,794,020



58,807,656



58,818,971



58,821,964Diluted


58,794,020



61,193,296



61,293,615



61,301,862       
    As more fully discussed above in the Alliance Agreements
    footnote, the settlement of a patent infringement lawsuit
    resulted in the Company being granted a license permitting it to
    manufacture and sell its oxycodone product (under the terms of
    the DAVA Agreement), resulting in the Companys
    determination to shorten the revenue recognition period of the
    DAVA Agreement. The license authorized the Company to sell a
    fixed amount of its product (under a sub-license granted to
    DAVA) through June 2007. The increased amount of revenue
    recognized in the third quarter of 2007 resulted from the
    recognition of these product sales over the resulting revised
    shorter recognition period.
    As more fully discussed above in the Income Taxes footnote, at
    June 30, 2007, the Company reversed the valuation allowance
    on the deferred tax asset, resulting in a significant tax
    benefit for the second quarter of 2007. Page F-58 of F-58




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##### Table of Contents



SCHEDULE II,
    VALUATION AND QUALIFYING ACCOUNTS  For the Year Ended December 31, 2006Column 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


Period(In $000s)Deferred tax asset valuation allowance

$
84,970


$
6,992


$



$



$
91,962Inventory reserve


5,776



(2,857
)










2,919   For the Year Ended December 31, 2007Column 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


Period(In $000s)Deferred tax asset valuation allowance

$
91,962


$
(81,485
)

$
(10,477
)

$



$
Inventory reserve


2,919



229











3,148Reserve for bad debts






550











550   For the Year Ended December 31, 2008Column 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


Period(In $000s)Deferred tax asset valuation allowance

$



$
333


$



$



$
333Inventory reserve


3,148



1,257











4,405Reserve for bad debts


550



568







(290
)


828    S-1




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##### Table of Contents



SIGNATURES    IMPAX LABORATORIES, INC.
   Date: March 12, 2009

By: /s/  Larry
    Hsu, Ph.D.Name:     Larry
    Hsu, Ph.D.
    Title: President and Chief Executive Officer     Signature

Title

Date/s/  Larry
    Hsu, Ph.DLarry
    Hsu, Ph.D

President, Chief Executive Officer (Principal Executive Officer)
    and Director

March 12, 2009/s/  Arthur
    A. Koch, Jr.Arthur
    A. Koch, Jr.

Senior Vice President, Finance, and
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

March 12, 2009/s/  Leslie
    Z. Benet, Ph.D.Leslie
    Z. Benet, Ph.D.

Director

March 12, 2009/s/  Robert
    L. BurrRobert
    L. Burr

Chairman of the Board

March 12, 2009/s/  Nigel
    Ten Fleming, Ph.D.Nigel
    Ten Fleming, Ph.D.

Director

March 12, 2009/s/  Michael
    MarkbreiterMichael
    Markbreiter

Director

March 12, 2009/s/  Oh
    Kim SunOh
    Kim Sun

Director

March 12, 2009/s/  Peter
    R. TerreriPeter
    R. Terreri

Director

March 12, 2009




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##### Table of Contents



EXHIBIT INDEX  ExhibitNo.

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.(3)3
.2

By-Laws.(2)4
.1

Specimen of Common Stock Certificate.(2)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.(2)4
.4

Supplemental Indenture, dated as of July 6, 2005, between
    the Company and HSBC Bank USA, National Association, as
    Trustee.(2)4
.5

Registration Rights Agreement, dated as of June 27, 2005,
    between the Company and the Initial Purchasers named therein.(2)4
.6

Promissory Note dated June 7, 2006, issued by the Company
    to Solvay Pharmaceuticals, Inc.(2)4
.7

Preferred Stock Rights Agreement, dated as of January 20,
    2009, by and between the Company and StockTrans, Inc., as Rights
    Agent.(3)10
.1

Amended and Restated Loan and Security Agreement, dated as of
    December 15, 2005, between the Company and Wachovia Bank,
    National Association.(2)10
.1.1

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.(4)10
.1.2

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.10
.2

Purchase Agreement, dated June 26, 2005, between the
    Company and the Purchasers named therein.(2)10
.3

Impax Laboratories Inc. 1995 Stock Incentive Plan.*(2)10
.3.1

Amendment No. 1 to Impax Laboratories, Inc. 1995 Stock
    Incentive Plan, dated July 1, 1998.*10
.3.2

Amendment No. 2 to Impax Laboratories, Inc. 1995 Stock
    Incentive Plan, dated May 25, 1999.*10
.4

Impax Laboratories Inc. 1999 Equity Incentive Plan.*10
.4.1

Form of Stock Option Grant under the Impax Laboratories, Inc.
    1999 Equity Incentive Plan.*10
.5

Impax Laboratories Inc. 2001 Non-Qualified Employee Stock
    Purchase Plan.*(2)10
.6

Impax Laboratories Inc. Amended and Restated 2002 Equity
    Incentive Plan.*10
.6.1

Form of Stock Option Grant under the Impax Laboratories, Inc.
    Amended and Restated 2002 Equity Incentive Plan.*10
.6.2

Form of Stock Bonus Agreement under the Impax Laboratories, Inc.
    Amended and Restated 2002 Equity Incentive Plan.*10
.7

Impax Laboratories Inc. Executive Non-Qualified Deferred
    Compensation Plan, restated effective January 1, 2005.*(4)10
.8

Employment Agreement, dated as of December 14, 1999,
    between the Company and Charles Hsiao, Ph.D.*(4)10
.9

Employment Agreement, dated as of December 14, 1999,
    between the Company and Larry Hsu, Ph.D.*(4)10
.10

Offer of Employment Letter, dated August 12, 2004, between
    the Company and Charles V. Hildenbrand.*10
.11

Offer of Employment Letter, dated February 9, 2005, between
    the Company and Arthur A. Koch, Jr.*10
.12.1

Employment Agreement, dated as of September 1, 2006,
    between the Company and David S. Doll.*(2)10
.12.2

Separation Agreement and General Release, dated July 30,
    2008, between the Company and David S. Doll.*(2)10
.12.3

Consulting Agreement, effective as of September 4, 2008,
    between the Company and David S. Doll.*(2)10
.13

Offer of Employment Letter, effective as of March 31, 2008,
    between the Company and Michael Nestor.*




---



##### Table of Contents



ExhibitNo.

Description of Document10
.14

Offer of Employment Letter, effective as of January 5,
    2009, between the Company and Christopher Mengler.*10
.15

Strategic Alliance Agreement, dated June 27, 2001, between
    the Company and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.1

Letter Amendment, dated October 8, 2003, to Strategic
    Alliance Agreement, dated June 27, 2001, between the
    Company and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.2

Letter Agreement, dated March 24, 2005, between the Company
    and Teva Pharmaceuticals Curacao N.V.**(5)10
.15.3

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.**(5)10
.15.4

Amendment, dated January 24, 2006, to Strategic Alliance
    Agreement, dated June 27, 2001, between the Company and
    Teva Pharmaceuticals Curacao N.V.**(6)10
.15.5

Amendment, dated February 9, 2007, to Strategic Alliance
    Agreement, dated June 27, 2001, between the Company and
    Teva Pharmaceuticals Curacao N.V.**(5)10
.16

Development, License and Supply Agreement, dated as of
    June 18, 2002, between the Company and Wyeth, acting
    through its Wyeth Consumer Healthcare Division.**(5)10
.16.1

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.(6)10
.16.2

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.(6)10
.17

Licensing, Contract Manufacturing and Supply Agreement, dated as
    of June 18, 2002, between the Company and Schering
    Corporation.**(6)10
.17.1

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
    Corporation.**(5)10
.17.2

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
    Corporation.**(5)10
.18

Supply and Distribution Agreement, dated as of November 3,
    2005, between the Company and DAVA Pharmaceuticals, Inc.**(5)10
.18.1

Amendment No. 2, dated February 6, 2007, to Supply and
    Distribution Agreement, dated November 3, 2005, between the
    Company and DAVA Pharmaceuticals, Inc.**(6)10
.19

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.(7)10
.20

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.(7)10
.21

Sublicense Agreement, effective as of March 30, 2007,
    between the Company and DAVA Pharmaceuticals, Inc.(7)10
.22

Promotional Services Agreement, dated as of January 19,
    2006, between the Company and Shire US Inc.**(5)10
.23

Co-promotion Agreement, dated as of July 16, 2008, between
    the Company and Wyeth, acting through its Wyeth Pharmaceuticals
    Division.**(7)10
.24

Joint Development Agreement, dated as of November 26, 2008,
    between the Company and Medicis Pharmaceutical Corporation.**(5)10
.25

Special Cash Bonus Payments and Directors Fees.*(8)10
.26

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).10
.27

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).




---



##### Table of Contents



ExhibitNo.

Description of Document11
.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.31
.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 and 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 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.(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 Registration
    Statement on Form 10 filed on October 10, 2008.(3)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 22, 2009.(4)
    
    Incorporated by reference to Amendment No. 2 to the
    Companys Registration Statement on Form 10 filed on
    December 2, 2008.(5)
    
    Incorporated by reference to Amendment No. 6 to the
    Companys Registration Statement on Form 10 filed on
    January 14, 2009.(6)
    
    Incorporated by reference to Amendment No. 1 to the
    Companys Registration Statement on Form 10 filed on
    November 12, 2008.(7)
    
    Incorporated by reference to Amendment No. 7 to the
    Companys Registration Statement on Form 10 filed on
    January 21, 2009.(8)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 6, 2009.