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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
   ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    June 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number 000-51445
  Adams Respiratory Therapeutics,
    Inc.
 (Exact name of Registrant as
    specified in its Charter)
  Delaware

75-2725552(State of
    incorporation)

(I.R.S. Employer Identification
    No.)4 Mill Ridge Lane

07930Chester, New Jersey

(Zip Code)(Address of principal executive
    offices)   (908) 879-1400
 (Registrants telephone
    number, including area code)
  Securities
    registered pursuant to Section 12(b) of the Securities
    Exchange Act of 1934:
    Common Stock, Par Value $0.01 Per Share (Title
    of class)
  Securities
    registered pursuant to Section 12(g) of the Securities
    Exchange Act of 1934:
    None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
      Form 10-K.




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##### 



TABLE OF
    CONTENTS
  PagePART ISpecial Note
    Regarding Forward-looking Statements

1Item 1.

Business

2Item 1A.

Risk
    Factors

21Item 1B.

Unresolved Staff
    Comments

38Item 2.

Properties

38Item 3.

Legal
    Proceedings

39Item 4.

Submission of
    Matters to a Vote of Security Holders

39PART IIItem 5.

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

40Item 6.

Selected Financial
    Data

43Item 7.

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

45Item 7A.

Quantitative and
    Qualitative Disclosure About Market Risk

64Item 8.

Financial
    Statements and Supplementary Data

64Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure

64Item 9A.

Controls and
    Procedures

64Item 9B.

Other
    Information

66PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance

66Item 11.

Executive
    Compensation

66Item 12.

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

67Item 13.

Certain
    Relationships and Related Transactions, and Director
    Independence

67Item 14.

Principal
    Accountant Fees and Services

67PART IVItem 15.

Exhibits,
    Consolidated Financial Statement Schedules

67EX-3.2 AMENDED AND RESTATED BYLAWSEX-21 SUBSIDIARIESEX-23 CONSENT OF ERNST & YOUNG LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO




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PART I SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Form 10-K
  
    our course of action related to, and the FDAs response to,
    an abbreviated new drug application filing by Perrigo R&D
    Co.;
    FTC and DOJ approval of our settlement agreement with Mutual
    Pharmaceutical Company;
    our involvement in litigation having an adverse impact on our
    business, financial condition, results of operations or cash
    flows;
    our obligations related to product returns and royalty payments;
    our plans with respect to the commercialization of products
    under the Humibid brand;
    our ability to obtain sufficient quantities of raw materials,
    including guaifenesin and dextromethorphan;
    our expectations of the seasonality of our product sales and
    related revenue fluctuations;
    our intentions to market additional products, grow our business
    and expand our product portfolio;
    the need to conduct clinical trials to develop product
    candidates;
    the conversion of prescriptions for long-acting guaifenesin
    combination products into sales of Mucinex DM and
    Mucinex D and their maximum strength versions as a result
    of the FDAs enforcement action against unapproved products;
    the effect of our April 2007 product recall on our business;
    our ability to meet our anticipated operating needs with
    revenues, existing cash and our credit facility;
    the timing of the USPTOs reexamination of the
    patentability of our delivery system for guaifenesin and our
    ability to prevail in the reexamination process;
    our reliance on and continued consolidation of our top customers;
    our expectations of increased pricing pressures;
    our ability to leverage our brand names;
    our intentions with respect to our consumer and professional
    marketing efforts;
    our ability to develop a reputation as an expert and effectively
    compete in the respiratory therapeutics market; and
    our exposure to credit rate and interest rate risk.  Form 10-K.
 1




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Item 1.
    Business  Overview
  Our Company.
      The Respiratory Therapeutics
    Market.
 2




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tm
    Market,
    Ranking and Other Data
      tm tm
 3




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Our
    Products
  FiscalProduct

Active Ingredients

Launch YearMucinex SE

600 mg guaifenesin


2003Mucinex DM

600 mg guaifenesin/30 mg
    dextromethorphan HBr


2005Mucinex D

600 mg guaifenesin/60 mg
    pseudoephedrine HCl


2006Delsym Orange (Adult &
    Children)

5 ml dextromethorphan
    polistirex
    (equivalent to 30 mg dextromethorphan HBr/5 ml)


2006
*Delsym Grape (Adult &
    Children)

5 ml dextromethorphan
    polistirex
    (equivalent to 30 mg dextromethorphan HBr/5 ml)


2008
**Maximum Strength Mucinex SE

1200 mg guaifenesin


2008Maximum Strength Mucinex DM

1200 mg
    guaifenesin/60 mg dextromethorphan HBr


2008Maximum Strength Mucinex D

1200 mg
    guaifenesin/120 mg pseudoephedrine HCl


2008Mucinex Mini-Melts

50 mg guaifenesin


2007100 mg guaifenesin


2007Mucinex Cough Mini-Melts

100 mg guaifenesin/5 mg
    dextromethorphan (HBr)


2008Childrens Mucinex Liquid

100 mg/5 ml guaifenesin


2007Childrens Mucinex Cough
    Liquid

100 mg/5 ml
    guaifenesin
    5 mg/5 ml dextromethorphan (HBr)


2007Childrens Mucinex Cold Liquid

100 mg/5 ml
    guaifenesin
    2.5 mg/5 ml phenylephrine (HCl)


2008Mucinex Moisture Smart Nasal Spray

0.05% oxymetazoline/actuation


2008Mucinex Full ForceNasal Spray

0.05% oxymetazoline/actuation


2008     *
    
    Acquired by Adams in June 2006**
    
    Proposed fiscal launch year  Mucinex SE.
  Mucinex DM.
 4




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Mucinex D.
  Maximum Strength Mucinex.
  Delsym. 12-hour ®
  Mucinex Products for Children.
  Mucinex Nasal Sprays.
  Product Pipeline.
 5




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tm
      Other Products. tm tm tm
  The FDAs Removal of Competing
    Products. tm
   6




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tm
  Our Sales
    and Marketing Strategy
        Professional Marketing. 125-person
  Consumer Marketing.
   7




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Medical Marketing & Media Magazine
  Strength of our Mucinex and Delsym Brands.
    Retailing Today Magazine
  Seasonality
   8




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Trade
    Sales and Distribution
    Percentage of Gross SalesChannel of Distribution

2007


2006


2005Wholesale Drug


14.1
%


25.7
%


34.4
%Drug


33.5



30.1



32.5Mass


33.2



26.9



19.0Food


18.6



16.5



13.4Other


0.6



0.9



0.6  9




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##### Table of Contents



tm
    Channel of Distribution

CustomersWholesale Drug

AmerisourceBergenCardinal HealthMcKessonDrug

CVS*Brooks/EckerdRite AidWalgreens*Food

Peytons/KrogerPublix SupermarketsSafewayMass

KmartTargetWal-Mart*Sams Club     *
    
    Represents customers who each accounted for greater than 10% of
    our gross sales for the fiscal year ended June 30, 2007.        ACV 52 Weeks Ended July 15,2007


2006Drug


Food


Food/Drug/Mass


Drug


Food


Food/Drug/MassMucinex SE


99.5
%


88.2
%


95.5
%


99.5
%


83.8
%


93.9
%Mucinex DM


99.4
%


86.4
%


95.0
%


98.7
%


78.5
%


90.9
%Mucinex D


93.7
%


46.7
%


76.3
%


91.9
%


38.3
%


66.5
%Childrens Mucinex


96.8
%


79.8
%


91.2
%










Delsym


98.8
%


82.5
%


93.4
%


97.7
%


72.1
%


88.7
%  10




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Competition
    The OTC Cough, Cold, Allergy and Sinus Market and the OTC
    Nasal Products Market. ® ® ® ® ® ® ® ® ®
  
    The Procter & Gamble Company
    (Dayquil®,
    Nyquil®,
    Vicks
    44®,
    and Vicks
    Sinex®);
    McNeil Consumer and Specialty Pharmaceuticals, a division of
    McNeil-PPC, Inc., which is an operating company of
    Johnson & Johnson
    (Tylenol®,
    Childrens
    Motrin®,
    Sudafed®,
    Benadryl®,
    PediaCare®
    and Childrens
    Tylenol®);
    Wyeth
    (Robitussin®,
    Dimetapp®
    and Advil Cold and
    Sinus®);
    Novartis Consumer Health, a division of Novartis AG
    (Theraflu®,
    Triaminic®,
    Comtrex®
    and
    4Way®);
    Schering-Plough Corp.
    (Claritin®,
    Coricidin®
    HBP,
    Drixoral®
    and
    Afrin®);
    Bayer AG (Alka Seltzer
    Plus®
    and Aleve Cold and
    Sinus®);
    Matrixx Initiatives, Inc.
    (Zicam®
    and Nasal
    Comforttm); and
    Airborne, Inc.
    (Airborne®).     11




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Brand Rank(1)

Market Share(1)52 Weeks

12 Weeks

4 Weeks

52 Weeks


12 Weeks


4 WeeksBrand

Ended

Ended

Ended

Ended


Ended


EndedPrivate label








19.9
%


24.2
%


25.0
%Claritin®

1

1

1


10.7



16.3



14.2Tylenol®

2

3

3


10.0



8.3



8.5Vicks®

3

5

5


9.2



6.2



6.4Mucinex

4

4

4


8.7



7.7



7.8Benadryl®

5

2

2


5.9



9.2



9.8Robitussin®

6

7

7


5.7



4.2



4.1Sudafed®

7

6

6


5.1



5.2



5.5Airborne

8

8

8


3.6



2.2



2.4Theraflu®

9

10

10


2.7



1.5



1.6Alka Seltzer
    Plus®

10

9

9


2.3



1.6



1.7Triaminic®

11

11

11


2.2



1.4



1.4Zicam®

12

16

16


1.8



0.8



0.9Delsym

13

12

12


1.7



1.1



1.1Dimetapp®

14

13

14


1.5



1.0



1.0Coricidin®

15

15

15


1.1



0.8



0.9Others

16 through 60

through 60

through 60


7.9



8.3



7.7Total








100.0
%


100.0
%


100.0
%     (1)
    
    Includes products sold in the OTC cough, cold, allergy and sinus
    market and does not include other products marketed under these
    brand names.  ® ® ® ® ® ®
    The Prescription Cough Market. tm
 12




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12-hour 12-hour
  License Granted to Mutual.
  
    If Mutual receives FDA approval to market certain 600 mg
    single-ingredient extended-release guaifenesin products, we have
    agreed to grant Mutual a license to sell such products beginning
    no earlier than July 1, 2012, with the following
    exceptions: (i) if Mutual has final FDA approval for the
    600 mg product, and prior to July 1, 2012, a third
    party files an ANDA, certifies against and successfully
    challenges our patents, and gains FDA approval for the
    600 mg product, Mutual may begin selling its product
    60 days prior to the date of first sale by the third party;
    or (ii) if Mutual has not received FDA approval to market
    the 600 mg product at the time the third party commences
    sale of an FDA-approved 600 mg product, Mutual may enter
    into a supply agreement with us to purchase tablets at full cost
    plus a 10% royalty, based on Mutuals net sales of the
    licensed product; and Mutual may begin selling such product
    90 days after the first sale by the third party.
    If Mutual receives FDA approval to market certain 1200 mg
    single-ingredient, extended-release guaifenesin products or the
    600 mg or 1200 mg combination extended-release
    guaifenesin products, which we refer to as the combination
    products, we will grant Mutual a license to sell such products,
    upon the occurrence of the following events: (i) if Mutual
    has final FDA approval for the 1200 mg single-ingredient
    product or a combination product, a third party files an ANDA,
    certifies against and successfully challenges our patents, and
    gains FDA approval for the 1200 mg single-ingredient
    product or a combination product, as the case may be, Mutual may
    begin selling its product 60 days prior to the date of
    first sale by the third party; or (ii) if Mutual has not
    received FDA approval to market the 1200 mg
    single-ingredient product or a combination product, as the case
    may be, at the time the third party commences sale of such an
    FDA-approved product, Mutual may enter into a supply agreement
    with us to purchase tablets at full cost plus a 10% royalty,
    based on Mutuals net sales of the licensed product; and
    Mutual may begin selling product 90 days after the first
    sale by the third party.  Form 10-K.
  Perrigo ANDA Filing.
   13




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Government
    Regulation
    FDA
    Approval Process
    
    New Drug Applications.  NDAs are the standard
    applications required for new drug products and require
    extensive original clinical data demonstrating the safety and
    efficacy of the product candidate. Typically, NDAs require three
    phases of human clinical trials. In Phase I, the product
    candidate is introduced into humans and tested for safety, dose
    ranges and pharmacokinetics. In Phase II, the product candidate
    is introduced into a slightly larger patient population to
    assess efficacy for specific indications, assess response rates
    tolerance, determine optimal dose, and identify safety risks and
    adverse effects. In Phase III, the product candidate is
    introduced in an expanded patient population at multiple
    geographically dispersed sites to further test for safety and
    clinical efficacy. In addition, prior to beginning the human
    clinical trial work required for either a NDA or
    Section 505(b)(2) NDA, an applicant must obtain approval to
    begin this clinical testing by submitting an Investigational New
    Drug application, or IND, which includes the results of
    preclinical animal studies, to the FDA.
    Abbreviated New Drug Applications.  An ANDA is
    a type of application in which approval is based on a showing of
    sameness to an already approved drug product. ANDAs
    do not contain full reports of safety and effectiveness as
    required in NDAs but rather demonstrate that their proposed
    products are the same as reference products with
    regard to their conditions of use, active ingredients, route of
    administration, dosage form, strength, and labeling. ANDA
    applicants must demonstrate the bioequivalence of their products
    to the reference product. Bioequivalence generally means that no
    significant 14




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difference exists in the rate and extent to which the active
    ingredients enter the blood-stream and become available at the
    site of drug action. Bioequivalence, however, does not mean that
    the products must be identical in all respects. Furthermore, the
    FDA has broad discretion to determine whether a product meets
    the ANDA approval standards.  
    505(b)(2) Applications.  If a proposed product
    represents a change from an already approved product, and
    therefore does not qualify for an ANDA, the applicant may be
    able to submit a Section 505(b)(2) NDA or 505(b)(2)
    application. A 505(b)(2) application is made pursuant to
    Section 505(b)(2) of the FDCA and relies on one or more
    investigations conducted by a party other than the applicant in
    connection with an existing approved product. The FDA has
    determined that 505(b)(2) applications may be submitted for
    products that represent changes from approved products in
    conditions of use, active ingredients, route of administration,
    dosage form, strength, or bioavailability. A 505(b)(2) applicant
    must reference an approved product as well as the related safety
    data on which it proposes to rely. The applicant must also
    provide the FDA with any additional clinical data necessary to
    demonstrate the safety and effectiveness of the product with the
    proposed changes. Consequently, while an applicant avoids
    duplication of preclinical and certain clinical safety and
    efficacy studies through the use of a 505(b)(2) application, the
    FDA usually requires the applicant to perform at least one
    additional human clinical study in support of the application.         15




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Approval of Our Existing Long-Acting Guaifenesin
    Products.
  505(b)(2)Application orSupplementProduct

IND Filing

Submission

FDA ApprovalMucinex SE

June 1998

June 2000

July 2002Maximum Strength Mucinex SE

June 1998

August 2002

December 2002Mucinex DM

September 2000

June 2003

April 2004Maximum Strength Mucinex DM

September 2000

June 2003

April 2004Mucinex D

September 2000

January 2003

June 2004Maximum Strength Mucinex D

September 2000

January 2003

June 2004       
    the FDA required that the warning letter recipients cease
    manufacturing unapproved single-ingredient guaifenesin
    extended-release products no later than May 21, 2003;
    no distribution (including distribution by secondary wholesalers
    or other distributors) could occur after October 23,
    2003; and
    no retail sales could occur after November 30, 2003.   16




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Other
    Regulation
      Reimbursement
      Manufacturing
  Manufacture and Packaging.
 17




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Raw Material Sourcing Arrangements.
     18




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Intellectual
    Property
    12-hour
     19




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tm
  tm tm tm
  Employees
    Access to
    Our Filings with the Securities and Exchange
    Commission
  www.adamsrt.com Form 10-K. Form 10-K, Form 10-Q, Form 8-K,
 20




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1-800-SEC-0330. www.sec.gov
  Item 1A.  Risk
    Factors
  Risks
    Relating to Our Business
  Mutual
    and Perrigo have filed ANDAs for single-ingredient,
    extended-release formulations of guaifenesin with the FDA. If
    the FDA approves either of these ANDAs or another ANDA filed by
    a third party for generic versions of our products, we may face
    more direct competition, which could negatively impact our
    sales.
             21




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If the
    FDA approves generic products that compete with any of our
    products, sales of our products may be adversely
    affected.
        We
    face substantial competition that may prevent us from
    maintaining or increasing market share for our existing products
    and gaining market acceptance of our future products. Our
    competitors may develop or commercialize products before or more
    successfully than us.
    
    The Procter & Gamble Company
    (Dayquil®,
    Nyquil®,
    Vicks
    44®,
    and Vicks
    Sinex®);
    McNeil Consumer and Specialty Pharmaceuticals, a division of
    McNeil-PPC, Inc., which is an operating company of
    Johnson & Johnson
    (Tylenol®,
    Childrens
    Motrin®,
    Sudafed®,
    Benadryl®,
    PediaCare®
    and Childrens
    Tylenol®);
    Wyeth
    (Robitussin®,
    Dimetapp®
    and Advil Cold and
    Sinus®);
    Novartis Consumer Health, a division of Novartis AG
    (Theraflu®,
    Triaminic®,
    Comtrex®
    and
    4Way®);
    Schering-Plough Corp.
    (Claritin®,
    Coricidin®
    HBP,
    Drixoral®
    and
    Afrin®);
    Bayer AG (Alka Seltzer
    Plus®
    and Aleve Cold and
    Sinus®);
    Matrixx Initiatives, Inc.
    (Zicam®
    and Nasal
    Comforttm); and
    Airborne, Inc.
    (Airborne®).   22




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##### Table of Contents



We
    depend heavily on the success of two of our existing products,
    Mucinex SE and Mucinex DM, and the strength of the Mucinex
    brand. If we are unable to continue to successfully
    commercialize Mucinex SE and Mucinex DM and build the Mucinex
    and Delsym brands with the introduction of new products, our
    results of operations and future prospects will
    suffer.
    We
    rely on two suppliers for guaifenesin, the active ingredient we
    require to manufacture Mucinex SE, Mucinex DM, Mucinex D,
    and the maximum strength versions of these products, and we have
    historically had difficulty obtaining the amount of guaifenesin
    we have required. We also rely on two suppliers for
    dextromethorphan, the additional active ingredient in Mucinex
    DM.
  12-month
 23




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We
    rely on one manufacturing facility to manufacture most aspects
    of our adult oral-solid Mucinex products. We have limited
    experience manufacturing our own products and may experience
    difficulties with our manufacturing operations.
      
    maintaining production yields;
    maintaining quality control;
    maintaining costs;
    hiring and retaining qualified personnel; and
    complying with the FDAs cGMP regulations and guidelines.   24




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We
    recently acquired the Delsym product line. If we are unable to
    effectively integrate and market products under the Delsym
    brand, our results of operations could suffer.
    
    difficulties in integrating the Delsym product line into our
    existing business;
    delays in realizing the benefits of the Delsym product line
    acquisition;
    diversion of our managements time and attention from other
    business concerns;
    higher costs of integration than we anticipated;
    difficulties in retaining key employees who are necessary to
    manage the Delsym product line; or
    difficulties in maintaining uniform standards, controls,
    procedures and policies throughout our product lines.      We
    rely on Catalent to perform certain aspects of the manufacture
    and packaging of Mucinex SE, Mucinex DM, Mucinex D, and the
    maximum strength versions of these products. We do not have the
    manufacturing capacity to manufacture our Delsym products, our
    Mucinex line of products for children or our Mucinex nasal spray
    products and rely on other manufacturers to manufacture those
    products. If those manufacturers are unable to supply enough
    product to meet our customers demand, our results of
    operations may suffer.
        
    the possibility that third parties may not comply with the
    FDAs cGMP regulations, other regulatory requirements and
    quality assurance;
    the possible breach of manufacturing agreements by third parties
    due to factors beyond our control; and
    the possibility of termination or nonrenewal of an agreement by
    a third party manufacturer, based on its own business
    priorities, at a time that is costly or inconvenient for us.   25




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We
    cannot ensure that the FDAs removal from the market of the
    existing prescription long-acting guaifenesin combination
    products similar to Mucinex DM and Mucinex D will result in
    increased sales of Mucinex DM or Mucinex D. Additionally, other
    companies may receive FDA approval and introduce products into
    the OTC market containing long-acting guaifenesin that are
    competitive with our products.
  Form 10-K,
  Form 10-K,
  Many
    of our products and product candidates rely on guaifenesin,
    which is an expectorant. If our competitors develop a superior
    expectorant, our products and our patented technology may be
    rendered obsolete.
    We
    depend on a limited number of customers for a large portion of
    our sales, and demands made by, or the loss of, one or more of
    these customers could significantly reduce our margins or sales
    and adversely affect our business and financial
    results.
   26




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##### Table of Contents



Adverse
    publicity associated with us or our products could have a
    material adverse effect on us.
    Product
    liability lawsuits could divert our resources, result in
    substantial liabilities and reduce the commercial potential of
    our products.
    If we
    fail to obtain an adequate level of reimbursement for our
    products by Medicaid, our business may be adversely affected.
    Additionally, many state Medicaid programs do not cover the
    costs of our products and we cannot ensure that any Medicaid
    programs will continue to reimburse us for our
    products.
     27




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##### Table of Contents



Seasonal
    fluctuations in demand for our products may cause our operating
    results to vary significantly from quarter to
    quarter.
    Risks
    Related to Product Development
  We
    recently completed our phase IIb erdosteine clinical trial and
    are reviewing the final results of this trial. If we determine
    the results were unsuccessful, or if the FDA or other regulatory
    agencies do not accept or approve the results of such studies,
    our erdosteine product may not successfully come to market and
    our business prospects may suffer.
    We may
    not be successful in our efforts to expand our portfolio of
    products.
    
    developing and commercializing line extensions of Mucinex by
    combining long-acting guaifenesin with other ingredients to
    address various respiratory conditions;
    developing and commercializing our Mucinex products for children;
    developing and commercializing line extensions of Delsym;
    developing and commercializing prescription products to address
    additional segments of the respiratory market using our platform
    technology for extended-release guaifenesin; and
    acquiring or in-licensing additional technologies and additional
    pharmaceutical products or product candidates in the respiratory
    therapeutics market.   28




---



##### Table of Contents



We
    intend to conduct clinical trials on product candidates we
    develop or acquire in the future, which will be costly, take
    years to complete and may not ultimately be
    successful.
    
    our inability to obtain materials sufficient for use in
    preclinical studies and clinical trials;
    delays in patient enrollment and variability in the number and
    types of patients available for clinical trials;
    difficulty in maintaining contact with patients after treatment,
    resulting in incomplete data;
    inability to demonstrate effectiveness of product candidates
    during clinical trials;
    unforeseen safety issues or side effects;
    governmental or regulatory delays and changes in regulatory
    requirements, policy and guidelines; or
    varying interpretation of data by the FDA.    Regulatory
    Risks
  Our
    products are subject to recalls even after receiving FDA
    regulatory clearance or approval. Recalls could harm our
    reputation and business.
      Products
    approved for marketing remain subject to regulation. Complying
    with such regulation can be costly, and failure to comply could
    result in a loss of approvals or suspension of product
    sales.
   29




---



##### Table of Contents




    suspend manufacturing operations;
    change product formulations;
    suspend the sale of products with non-complying specifications;
    initiate product recalls; or
    change product labeling, packaging or advertising or take other
    corrective action.      We may
    not be able to obtain marketing approval for any of the products
    resulting from our development efforts and failure to obtain
    these approvals could materially harm our
    business.
  Form 10-K.
       30




---



##### Table of Contents



The
    manufacture and packaging of pharmaceutical products such as our
    Mucinex and Delsym products are subject to FDA requirements. If
    we or our third party manufacturers fail to satisfy these
    requirements, our product development and commercialization
    efforts may be materially harmed.
      Our
    current and future products may be associated with certain
    transient side effects. If we or others identify additional,
    more severe side effects associated with our current or future
    products, we may be required to withdraw our products from the
    market, perform lengthy additional clinical trials or change the
    labeling of our products, any of which would hinder or preclude
    our ability to generate revenues.
      
    regulatory authorities may withdraw their approvals;
    we may be required to reformulate our products, conduct
    additional clinical trials, change the labeling of our products,
    or implement changes to obtain new approvals of
    manufacturers facilities;
    we may recall the affected products from the market;
    we may experience a significant drop in sales of the affected
    products; 31




---



##### Table of Contents




    our reputation in the marketplace may suffer;
    we may become the target of lawsuits, including class action
    suits; and
    we may be required to withdraw our products from the market and
    not be able to re-introduce them into the market.    The
    sale of products containing pseudoephedrine is restricted by
    additional federal and state government regulations, which may
    negatively impact our sales of Mucinex D. If the sale of
    dextromethorphan undergoes similar restrictions, it could
    negatively impact sales of our products containing
    dextromethorphan.
    Risks
    Related to Managing Growth
  We
    depend on our key personnel, and if we are not able to retain
    those individuals or recruit additional technical personnel, our
    business will suffer.
       32




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##### Table of Contents



We may
    undertake strategic acquisitions of technologies and products.
    Integration of such technologies and products will involve a
    variety of costs, and we may never realize the anticipated
    benefits of such acquisitions.
      Risks
    Related to Intellectual Property
  Our
    U.S. patent no. 6,372,252 is the subject of a request for
    reexamination, which the United States Patent and Trade Mark
    Office, or USPTO, granted upon petition to the USPTO Director.
    If the USPTO cancels our patent or substantially narrows the
    claims of our patent such that it no longer protects our
    products from competition, our business will be materially
    harmed.
     33




---



##### Table of Contents



If our
    patent position does not adequately protect our products and
    future products, others will be able to compete against us more
    directly, which may harm our business.
      If we
    are unable to protect the intellectual property rights related
    to our brands, our ability to compete effectively in the markets
    for our products could be negatively impacted.
   34




---



##### Table of Contents



If we
    are unable to protect the confidentiality of our trade secrets
    and proprietary information, our technology and information may
    be used by others to compete against us.
    Legal
    proceedings or third party claims of intellectual property
    infringement may require us to spend time and money and could
    prevent us from developing or commercializing
    products.
       35




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##### Table of Contents



Risks
    Relating to Future Financing Needs
  We may
    need additional financing, which may be difficult to obtain. Our
    failure to obtain necessary financing or doing so on
    unattractive terms could adversely affect our marketing and
    development programs and other operations.
    
    the success of our commercialization of our products and the
    costs associated with related marketing, promotional and sales
    efforts;
    the timing of new product launches, product development and
    advancement of other product candidates into development;
    potential acquisitions or in-licensing of other products or
    technologies;
    the timing of, and the costs involved in, obtaining regulatory
    approvals;
    the cost of manufacturing activities, including raw material
    sourcing and regulatory compliance; and
    the costs involved in establishing and protecting our patent,
    trademark and other intellectual property rights.    Risks
    Related to Our Common Stock
  Our
    stock price is volatile and purchasers of our common stock could
    incur substantial losses.
    
    the regulatory status of potentially competitive products;
    regulatory developments;
    developments or disputes concerning patents or other proprietary
    rights;
    our ability to manufacture products to commercial standards;
    public concern over our drugs;
    litigation;
    the departure of key personnel; 36




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##### Table of Contents




    future sales of our common stock;
    variations in our financial results or those of companies that
    are perceived to be similar to us;
    investors perceptions and expectations of us; and
    general economic, industry and market conditions.  If
    there are substantial sales of our common stock, our stock price
    could decline.
    Form S-3 Form S-3,
    Our
    executive officers, directors and major stockholders have the
    ability to control all matters submitted to stockholders for
    approval.
    Provisions
    in our certificate of incorporation and under Delaware law may
    prevent or frustrate attempts by our stockholders to change our
    management and hinder efforts to acquire a controlling interest
    in us.
    
    a classified board of directors;
    limitations on the removal of directors; 37




---



##### Table of Contents




    advance notice requirements for stockholder proposals and
    nominations;
    the inability of stockholders to act by written consent or to
    call special meetings; and
    the ability of our board of directors to designate the terms of
    and issue new series of preferred stock without stockholder
    approval.  2 3 2 3
    Other
    than the $45 million cash dividend declared by our board of
    directors on June 2, 2005, we have not paid cash dividends
    and do not expect to pay dividends in the future, which means
    that our stockholders may not be able to realize the value of
    our shares except through sale.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties       38




---



##### Table of Contents



Item 3.
    Legal
    Proceedings  No. 2:06-cv-04418-PD,
        Form 10-Q
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   39




---



##### Table of Contents



PART II
  Item 5.
    Market
    For Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information and Holders
    Fiscal 2007



High Close


Low CloseFirst Quarter

July 1- September 30, 2006

$
45.10


$
36.59Second Quarter

October 1- December 31, 2006

$
43.93


$
35.16Third Quarter

January 1- March 31, 2007

$
46.27


$
28.22Fourth Quarter

April 1- June 30, 2007

$
45.95


$
33.44   Fiscal 2006



High Close


Low CloseFirst Quarter

July 21- September 30, 2005

$
34.32


$
25.75Second Quarter

October 1- December 31, 2005

$
48.54


$
32.95Third Quarter

January 1- March 31, 2006

$
46.05


$
35.13Fourth Quarter

April 1- June 30, 2006

$
49.05


$
38.97     Dividends
   40




---



##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number ofSecuritiesNumber of


Weighted-


Remaining AvailableSecurities to be


Average Exercise


for Future IssuanceIssued Upon


Price of


Under EquityExercise of


Outstanding


Compensation PlansOutstanding


Options,


(ExcludingOptions, Warrants


Warrants and


Securities ReflectedPlan Category

and Rights


Rights


in Second Column)Equity compensation plans approved
    by security holders


2,430,725


$
12.94



1,454,881
(1)Equity compensation plans not
    approved by security holders










Total


2,430,725


$
12.94



1,454,881     (1)
    
    Securities available for issuance under the 2005 Incentive Plan.
    No awards are available for issuance under the 1999 Long-Term
    Incentive Plan.  Use of
    Proceeds from Registered Securities
    Recent
    Sales of Unregistered Securities
      tm tm tm tm tm
   41




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##### Table of Contents



Performance
    Graph
  The following performance graph and related information shall
    not be deemed soliciting material or to be
    filed with the Securities and Exchange Commission,
    nor shall such information be incorporated by reference into any
    future filing under the Securities Act of 1933 or Securities
    Exchange Act of 1934, each as amended, except to the extent that
    the Company specifically incorporates it by reference into such
    filing.
        
  07/21/05


12/30/05


06/30/06


12/29/06


06/29/07Adams Respiratory Therapeutics,
    Inc.


100.0



157.9



173.3



158.5



153.0NASDAQ Stock Market (U.S.
    Companies) Index


100.0



101.4



100.3



111.4



119.5NASDAQ Pharmaceutical Index


100.0



103.6



95.2



101.4



103.6  42




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Years Ended June 30,2007


2006


2005


2004


2003(In thousands, except per share amounts)Statements of Operations
    DataNet sales

$
331,603


$
239,105


$
160,210


$
61,295


$
14,038Cost of goods sold


95,799



49,358



31,126



11,928



5,252Gross margin


235,804



189,747



129,084



49,367



8,786Selling, marketing and
    administrative(1)


162,861



98,998



78,044



23,286



23,310Product development


23,855



18,904



7,392



3,181



4,542AlleRxtmcharge


2,699















Other, net


(1,187
)


(4,307
)


(789
)


3,198



3,572Income/(loss) before income taxes


47,576



76,152



44,437



19,702



(22,638
)Provision for/ (benefit from) for
    income taxes


17,047



29,801



17,438



(16,124
)


Net income/ (loss)


30,529



46,351



26,999



35,826



(22,638
)Accretion of preferred stock










(202,566
)


(28,100
)


8,204Dividend paid to preferred
    stockholders










(30,033
)






Net income/ (loss) applicable to
    common stockholders

$
30,529


$
46,351


$
(205,600
)

$
7,726


$
(14,434
)Income/ (loss) per common share
    Basic

$
0.86


$
1.42


$
(32.97
)

$
1.64


$
(4.66
)Diluted

$
0.82


$
1.28


$
(32.97
)

$
0.90


$
(4.66
)     (1)
    
    Selling, marketing and administrative expenses includes non-cash
    stock-based compensation expense as follows:  Years Ended June 30,2007


2006


2005


2004


2003(In thousands)$
4,378


$
4,134


$
477


$
686


$
880  43




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##### Table of Contents



At June 30,2007


2006


2005


2004


2003(In thousands)Balance Sheet DataCash and cash equivalents

$
46,809


$
40,320


$
28,024


$
44,422


$
9,405Working capital


124,928



72,870



34,787



47,360



5,538Total assets


318,465



258,095



67,209



72,066



20,382Long-term liabilities


706



2,010



2,281



2,731



14,873Redeemable convertible preferred
    stock










316,455



110,851



60,647Accumulated deficit


(212,313
)


(242,842
)


(289,193
)


(68,626
)


(76,352
)Total stockholders
    equity/(deficit)


275,348



222,273



(273,625
)


(56,997
)


(64,169
)  44




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  You should read the following discussion and analysis of our
    financial condition and results of operations together with our
    financial statements and related notes appearing elsewhere in
    this Annual Report on
    Form 10-K.
    Some of the information contained in this discussion and
    analysis or set forth elsewhere in this Annual Report on
    Form 10-K,
    including information with respect to our plans and strategy for
    our business and related financing, includes forward-looking
    statements that involve risks and uncertainties. You should
    review Item 1A. Risk Factors of this Annual Report on
    Form 10-K
    for a discussion of important factors that could cause our
    actual results to differ materially from the results described
    in or implied by the forward-looking statements contained in the
    following discussion and analysis.
  Overview
    Products
  Mucinex SE.
  Mucinex DM.
  Mucinex D.
  Maximum Strength Mucinex.
  Delsym.
  Mucinex Products for Children.
 45




---



##### Table of Contents



Mucinex Nasal Sprays.
  Other Products.
  Future Products.
  Revenue
    Growth
    
    Consumer advertising campaigns.  Prior to the
    FDAs approval of Mucinex SE as an OTC drug, long-acting
    single-ingredient guaifenesin and long-acting guaifenesin
    combination products were available only by prescription. We
    launched our initial Mucinex and Delsym consumer advertising
    campaigns in November 2004 and 2006, respectively, and our
    strategy has been to educate consumers about the unique benefits
    of Mucinex and Delsym to encourage trial of our products.
    Our professional marketing efforts to physicians, pharmacists
    and other healthcare professionals.Our
    professional sales force targets high prescribers of long-acting
    guaifenesin products and encourages them to recommend Mucinex
    SE, Mucinex DM and Mucinex D to their patients. Our professional
    sales force also educates physicians, pharmacists and other
    healthcare professionals about the benefits of long-acting
    guaifenesin. Since December 2004, we have expanded our sales
    force from 50 to 125 representatives.
    Expansion of our trade sales department and trade development
    efforts.Our trade sales force calls on national
    and regional retail accounts and wholesale distribution
    companies. The primary focus of our trade sales force is to
    maximize our shelf presence at retail drug, food and mass
    merchandise stores to support the efforts of our professional
    sales representatives and consumer advertising campaigns. Since
    December 2003, we have grown our trade sales force from one to
    12 professionals.
    The FDAs removal of competitive long-acting,
    single-ingredient guaifenesin products after November
    2003.The FDAs removal from the market of
    all other long-acting single-ingredient guaifenesin products
    resulted in Mucinex SEs status as the only long-acting,
    single-ingredient guaifenesin product available in the United
    States. Based on data from IMS Health 
    NPAtm,
    we estimate that, for the 12 months ended June 30,
    2003, approximately 10.5 million prescriptions were filled
    for long-acting, single-ingredient guaifenesin products. After
    November 2003, we believe that a majority of prescriptions
    written for long-acting, single-ingredient guaifenesin resulted
    in OTC sales of our Mucinex SE.  Results
    of Operations
   46




---



##### Table of Contents



Seasonality
    Future
    Growth
      Critical
    Accounting Policies and Estimates
    Form 10-K,
  Revenue Recognition.
  Sales Returns and Allowances.
 47




---



##### Table of Contents



June 30,2007


2006(In thousands)Product returns

$
6,152


$
3,150Chargebacks


577



941Rebates and other


1,205



1,610Accrued returns, chargebacks,
    rebates and other(1)

$
7,934


$
5,701Cash discounts(2)

$
336


$
495Trade promotions(2)

$
2,830


$
2,796     (1)
    
    Accrued returns, chargebacks, rebates and other sales allowances
    are reported under current liabilities on the consolidated
    balance sheets.(2)
    
    Cash discounts and trade promotions are reported as valuation
    allowances against accounts receivable on the consolidated
    balance sheets.    Rebates and


Total AccruedOther Sales


Returns and OtherReturns


Chargebacks


Allowances


Sales Allowances(In thousands)Balance at June 30, 2004

$
3,622


$
2,332


$
1,000


$
6,954Assumed liability for Humibid
    returns


3,000











3,000Provision made to sales during the
    period


1,054



3,443



3,205



7,702Provision/(benefit) related to
    sales made during prior periods


649



(635
)


(410
)


(396
)Payments/credits


(2,441
)


(2,667
)


(2,205
)


(7,313
)Balance at June 30, 2005


5,884



2,473



1,590



9,947Provision made to sales during the
    period


2,643



3,028



3,212



8,883Benefit related to sales made
    during prior periods


(188
)


(2,226
)


(365
)


(2,779
)Payments/credits


(5,189
)


(2,334
)


(2,827
)


(10,350
)Balance at June 30, 2006


3,150



941



1,610



5,701Provision made to sales during the
    period


9,749



2,402



2,840



14,991Benefit related to sales made
    during prior periods


(1,012
)






(731
)


(1,743
)Payments/credits


(5,735
)


(2,766
)


(2,514
)


(11,015
)Balance at June 30, 2007

$
6,152


$
577


$
1,205


$
7,934  48




---



##### Table of Contents



Product Returns. tm tm 18-month Form 10-K.
  tm tm
      Chargebacks.
 49




---



##### Table of Contents



Rebates and Other Sales Allowances.
    Reserve


Reservefor Cash


for TradeDiscounts


Promotions(In thousands)Balance at June 30, 2004

$
143


$
988Provision made to sales during the
    period


3,441



6,611Provision/(benefit) related to
    sales made in prior periods






(613
)Deductions from reserves


(3,414
)


(4,878
)Balance at June 30, 2005


170



2,108Provision made to sales during the
    period


5,196



6,786Provision/(benefit) related to
    sales made in prior periods






111Deductions from reserves


(4,871
)


(6,209
)Balance at June 30, 2006


495



2,796Provision made to sales during the
    period


7,144



11,525Provision/(benefit) related to
    sales made in prior periods






(331
)Deductions from reserves


(7,303
)


(11,160
)Balance at June 30, 2007

$
336


$
2,830  50




---



##### Table of Contents



Cash Discounts. net 30-day
  Trade Promotions.
  Cardinal Health Profit Share. mark-up. mark-up mark-up
  mark-up
      Form 10-K
 51




---



##### Table of Contents



Contract Year Ended


Contract Year EndedMarch 31, 2006


March 31, 2007(In millions)Total profit share payments to
    Cardinal Health

$
17.6


$
3.8Profit share earned by Cardinal
    Health  FY 2004(1)






Profit share earned by Cardinal
    Health  FY 2005(1)


1.9



Profit share earned by Cardinal
    Health  FY 2006(1)


8.3



1.9Profit share included in ending
    inventory(2)


0.7



1.5Excess profit share payments made
    to Cardinal Health


6.7



0.4Payments made by Cardinal Health


(6.7
)


Balance due from Cardinal Health
    June 30, 2006(3)

$



$
0.4     (1)
    
    Earned profit share is included in cost of goods sold. For the
    2007 contract year, the estimated effective profit share for the
    fourth quarter of fiscal 2006 was used to record the profit
    share earned.(2)
    
    Amounts included in ending inventory at March 31, 2006 for
    the 2006 contract year and at June 30, 2006 for the 2007
    contract year.(3)
    
    Excess profit share payments due from Cardinal Health were
    included in prepaid expenses and other assets at June 30,
    2006. This balance was eliminated in conjunction with the
    manufacturing assets repurchase.  Stock-Based Compensation. Share-Based Payment Accounting for Stock-Based
    Compensation, Accounting for Stock-Based
    Compensation  Transition and Disclosure.
    Income Taxes. Accounting for
    Income Taxes
 52




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes
  Inventories. first-in, work-in-progress
  Accretion of Preferred Stock.
     53




---



##### Table of Contents



Operating
    Expenses
  Product Development. scale-up
      Selling, Marketing and
    Administrative.
          Results
    of Operations
  Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
  Net Sales. 2006-2007
 54




---



##### Table of Contents



Year Ended June 30,IncreaseProduct

2007


2006


(Decrease)(In thousands)Mucinex SE

$
131,871


$
158,575


$
(26,704
)Mucinex DM


94,633



59,235



35,398Mucinex D


28,204



19,347



8,857Delsym


48,344



652



47,692Mucinex products for children


29,190







29,190Humibid SE(1)


(639
)


1,296



(1,935
)Net Sales

$
331,603


$
239,105


$
92,498     (1)
    
    Humibid SEs sales for fiscal 2007 includes an allowance
    for sales returns of $0.9 million relating to retail
    inventory of Humibid that has expired or is approaching
    expiration.  Cost of Goods Sold.
  Selling, Marketing and
    Administrative.
  Product Development.
 55




---



##### Table of Contents



AlleRx tm Charge. tm tm tm tm
  tm tm tm
  Other, net. tm
  Income Taxes.
 56




---



##### Table of Contents



Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  Net Sales.
  tm
    Year Ended June 30,Increase/Product

2006


2005


(Decrease)(In thousands)Mucinex SE

$
158,575


$
117,369


$
41,206Mucinex DM


59,235



38,278



20,957Mucinex D


19,347







19,347Delsym


652







652Humibid SE


1,296







1,296Other products






4,563



(4,563
)Net sales

$
239,105


$
160,210


$
78,895   Cost of Goods Sold.
  Selling, Marketing and
    Administrative.
 57




---



##### Table of Contents



Product Development. start-up
  Other, net.
  Income Taxes.
  Accretion of Preferred Stock.
  Dividend Paid to Preferred Stockholders.
  Cash
    Flows
  Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
    12-Hour
 58




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##### Table of Contents



Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
    12-Hour
    Liquidity
    and Capital Resources
      mark-up. mark-up mark-up
   59




---



##### Table of Contents



60




---



##### Table of Contents



Commitments
    and Contractual Obligations
    Less Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands)Operating leases(1)

$
19,252


$
3,091


$
4,896


$
3,700


$
7,565Purchase obligationsManufacturing contracts(2)


144,439



38,688



65,983



39,768



Marketing contracts


2,500



1,556



944







Research contracts(3)


440



440











Other purchase obligations(4)


577



532



45







Royalty payments(5)


3,500



500



1,000



1,000



1,000Consulting payments


59



48



11







Total

$
170,767


$
44,855


$
72,879


$
44,468


$
8,565     (1)
    
    Includes minimum rental payments for our corporate office
    buildings in Chester, New Jersey, our manufacturing facility in
    Fort Worth, Texas and our warehouse facility in Irving,
    Texas; office equipment leases and automobile lease payments for
    the sales force.(2)
    
    Consists of commitments to purchase raw materials and finished
    products.(3)
    
    In addition to the amounts set forth in the table, we may be
    required to make potential future milestone payments to
    third-parties as part of its development programs. These amounts
    are only payable upon achievement of certain development,
    regulatory, and commercial milestones. Because such payments are
    contingent upon occurrence of certain events and are uncertain
    in nature, they have not been included in the above table.(4)
    
    Consists of commitments related to technology agreements.(5)
    
    Represents minimum royalty payments to CellTech relating to the
    April 2004 settlement. See below for a further discussion of the
    CellTech settlement.  11-year
  64-month
   61




---



##### Table of Contents



12-Hour
 62




---



##### Table of Contents



12-year
  tm tm
    Legal
    Proceedings
  No. 2:06-cv-04418-PD, Form 10-K.
  Subsequent
    Events
     63




---



##### Table of Contents



Inflation
    Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk      Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15.
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f)
   64




---



##### Table of Contents



Internal Control  Integrated
    Framework
    Changes
    in Internal Control Over Financial Reporting
    Report of
    Independent Registered Public Accounting Firm
          65




---



##### Table of Contents



Item 9B.
    Other
    Information    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Form 10-K.
    Item 11.
    Executive
    Compensation   66




---



##### Table of Contents



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
    Accountant Fees and Services    PART IV
  Item 15.
    Exhibits,
    and Consolidated Financial Statement Schedules  Financial Statements and Schedules.
  (1)
    The following consolidated financial statements of the Company
    and Report of Ernst & Young LLP are included in this
    report:  Report of
    Independent Registered Public Accounting Firm


F-2Consolidated
    Balance Sheets as of June 30, 2007 and 2006


F-3Consolidated
    Statements of Operations for the years ended June 30, 2007,
    2006 and 2005


F-4Consolidated
    Statements of Stockholders Equity/(Deficit) for the years
    ended June 30, 2007, 2006 and 2005


F-5Consolidated
    Statements of Cash Flows for the years ended June 30, 2007,
    2006 and 2005


F-6Notes to
    Consolidated Financial Statements


F-8(2) Schedule
    of Valuation and Qualifying Accounts


F-34   Form 10-K Form 10-K.
    Form 10-K.
  Exhibits.
    Financial Statement Schedules.
   67




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##### Table of Contents



SIGNATURES
      /s/  Michael
    J. Valentino   Its:
    Chief Executive Officer    Name

Title

Date/s/  Michael
    J.
    ValentinoMichael
    J. Valentino

Chief Executive Officer and
    Director (principal executive officer)

August 29, 2007/s/  Rita
    M.
    OConnorRita
    M. OConnor

Chief Financial Officer (principal
    financial and accounting officer)

August 29, 2007/s/  Kirk
    K. CalhounKirk
    K. Calhoun

Director

August 29, 2007/s/  Jane
    Delgado, Ph.D.,
    M.S.Jane
    Delgado, Ph.D., M.S.

Director

August 29, 2007/s/  Dr. Alan
    W. DuntonDr. Alan
    W. Dunton

Director

August 29, 2007/s/  Donald
    J.
    LiebentrittDonald
    J. Liebentritt

Director

August 29, 2007John
    N. Lilly

Director/s/  Joan
    P.
    NeuschelerJoan
    P. Neuscheler

Director

August 29, 2007/s/  Harold
    F.
    OberkfellHarold
    F. Oberkfell

Director

August 29, 2007/s/  Mark
    R. SotirMark
    R. Sotir

Director

August 29, 2007  68




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber



Description2.1



Agreement of Merger between Adams
    Respiratory Therapeutics, Inc. and Adams Merger Sub, Inc. dated
    June 1, 2005, filed as Exhibit 2.1 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.2.2



Product Purchase Agreement, dated
    May 24, 2006, among UCB, Inc., UCB Manufacturing, Inc.,
    Adams Respiratory Operations Sub, Inc. and Adams Respiratory
    Therapeutics, Inc., filed on May 31, 2006 as
    Exhibit 2.1 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.2.3



Asset Purchase Agreement, dated
    July 27, 2006, by and between Cardinal Health PTS, LLC and
    Adams Respiratory Operations, Inc., filed on August 2, 2006
    as Exhibit 2.1 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.3.1



Certificate of Incorporation of
    Adams Respiratory Therapeutics, Inc., as amended, filed as
    Exhibit 3.1 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2005, and incorporated
    herein by reference.3.2



Amended and Restated Bylaws of
    Adams Respiratory Therapeutics, Inc.*4.1



Specimen Stock Certificate of
    Adams Respiratory Therapeutics, Inc.s Common Stock, par
    value $0.01 per share, filed as Exhibit 4.1 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.4.2



Reference is made to
    Exhibits 3.1 and 3.2.10.1



Lease Agreement dated
    April 1, 2004 between Adams Laboratories, Inc. and William
    J. Adams, Jr. for Adams Respiratory Therapeutics, Inc.s
    office in Chester, New Jersey, filed as Exhibit 10.1 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.2



Exclusive Distribution Agreement
    dated April 1, 2004 between Adams Laboratories, Inc. and
    Cardinal Health PTS, LLC, filed as Exhibit 10.3 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.3



1999 Long-Term Incentive Plan,
    filed as Exhibit 10.6 to the Companys Registration
    Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.4



Form of Award under the 1999
    Long-Term Incentive Plan, filed as Exhibit 10.7 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.5



Amendment to the Adams
    Laboratories, Inc. 1999 Long-Term Incentive Plan, filed on
    August 28, 2006 as Exhibit 99.4 to the Companys
    Current Report on
    Form 8-K,
    and incorporated herein by reference.10.6



Adams Respiratory Therapeutics,
    Inc. 2005 Incentive Plan, filed as Exhibit 10.21 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.7



Amendment to the Adams Respiratory
    Therapeutics 2005 Incentive Plan, filed on August 28, 2006
    as Exhibit 99.3 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.8



Form of Restricted Stock Award
    under Adams Respiratory Therapeutics, Inc. 2005 Incentive Plan,
    filed as Exhibit 10.22 to the Companys Registration
    Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.9



Form of Incentive Stock Option
    Award under Adams Respiratory Therapeutics, Inc. 2005 Incentive
    Plan, filed as Exhibit 10.23 to the Companys
    Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.10



Form of Non-Statutory Stock Option
    Award under Adams Respiratory Therapeutics, Inc. 2005 Incentive
    Plan, filed as Exhibit 10.24 to the Companys
    Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference. 69




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##### Table of Contents



ExhibitNumber



Description10.11



Form of Non-Statutory Stock Option
    Award under Adams Respiratory Therapeutics, Inc. 2005 Incentive
    Plan, filed on August 28, 2006 as Exhibit 99.1 to the
    Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.12



Form of Performance-Based
    Restricted Stock Unit Certificate, filed on August 28, 2006
    as Exhibit 99.2 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.13



Adams Respiratory Therapeutics,
    Inc. Director Compensation Plan, filed as Exhibit 10.8 to
    the Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.14



Forms of Awards under Adams
    Respiratory Therapeutics, Inc. Director Compensation Plan, filed
    as Exhibit 10.9 to the Companys Registration
    Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.15



Adams Laboratories, Inc.
    Retirement Savings Plan, filed as Exhibit 10.10 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.16



Employment Agreement with Michael
    J. Valentino dated August 7, 2003, filed as
    Exhibit 10.11 to the Companys Registration Statement
    on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.17



Separation and Independent
    Consulting Agreement, dated March 1, 2007, by and between
    the Company and David P. Becker, filed on March 7, 2007 as
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.18



Form Change in Control
    Agreement, filed on June 13, 2007 as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.19



Adams Respiratory Therapeutics,
    Inc. Severance Pay Plan, filed on June 13, 2007 as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K,
    and incorporated herein by reference.10.20



Form of Indemnity Agreement
    between Adams Respiratory Therapeutics, Inc. and Directors and
    Certain Officers, filed as Exhibit 10.18 to the
    Companys Registration Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.21



Lease Agreement, dated
    October 31, 2005, by and between WR&E 
    Chester, LLC and Adams Respiratory Therapeutics, Inc., filed on
    November 3, 2005 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K,
    and incorporated herein by reference.10.22



Settlement Agreement dated
    January 14, 2005 by and among Adams Laboratories, Inc.,
    Carolina Pharmaceuticals, Inc. and Cornerstone Biopharma, Inc.,
    filed as Exhibit 10.20 to the Companys Registration
    Statement on
    Form S-1
    (Registration
    No. 333-123585),
    and incorporated herein by reference.10.23



Senior Revolving Credit Agreement,
    dated September 26, 2006, among Adams Respiratory
    Therapeutics, Inc., the Subsidiary Guarantors named therein, the
    Initial Lenders named therein, the Issuing Bank named therein
    and Royal Bank of Canada, filed on September 28, 2006 as
    Exhibit 10.27 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2006, and incorporated
    herein by reference.10.24



Security Agreement, dated
    July 11, 2006, from Adams Respiratory Therapeutics and the
    other Grantors named therein to Royal Bank of Canada, filed on
    July 17, 2006 as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K,
    and incorporated herein by reference.10.25



Security Agreement Supplement,
    dated September 26, 2006, among Adams Respiratory Products,
    Inc., Adams Respiratory Operations, Inc., Adams Respiratory
    Operations Sub, Inc., and Royal Bank of Canada, filed on
    September 28, 2006 as Exhibit 10.29 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2006, and incorporated
    herein by reference.10.26



Settlement Agreement, dated
    March 21, 2007, between Adams Respiratory Therapeutics,
    Inc. and Mutual Pharmaceutical Co. and United Research
    Laboratories, Inc., wholly owned subsidiaries of Pharmaceutical
    Holdings Corp., filed on May 15, 2007 as Exhibit 10.1
    to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 30, 2007, and incorporated
    herein by reference. 70




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##### Table of Contents



ExhibitNumber



Description14



Code of Business Conduct and
    Ethics, filed as Exhibit 14 to the Companys Annual
    Report on
    Form 10-K
    for the fiscal year ended June 30, 2005, and incorporated
    herein by reference.21*



Subsidiaries.23*



Consent of Ernst & Young
    LLP.31.1*



Certification of the Chief
    Executive Officer of Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31.2*



Certification of the Chief
    Financial Officer of Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32.1*



Certification of the Chief
    Executive Officer Pursuant to 18 U.S.C. Section 1350,
    As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.32.2*



Certification of the Chief
    Financial Officer Pursuant to 18 U.S.C. Section 1350,
    As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.     *
    Filed with this Annual Report.
    Portions of the exhibit have been omitted pursuant to a request
    for confidential treatment. The confidential portions have been
    filed with the SEC.
    Management compensation contract or plan. 71




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##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Index to Consolidated Financial Statements and Schedule
  Report of
    Independent Registered Public Accounting Firm


F-2Consolidated
    Balance Sheets as of June 30, 2007 and 2006


F-3Consolidated
    Statements of Operations for the years ended June 30, 2007,
    2006 and 2005


F-4Consolidated
    Statements of Stockholders Equity (Deficit) for the years
    ended June 30, 2007, 2006 and 2005


F-5Consolidated
    Statements of Cash Flows for the years ended June 30, 2007,
    2006 and 2005


F-6Notes to
    Consolidated Financial Statements


F-8Schedule of
    Valuation and Qualifying Accounts


F-34  F-1




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##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
                 F-2




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.



Consolidated
    Balance Sheets

(Amounts
    in thousands, except per share amounts)  June 30,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
46,809


$
40,320Short-term investments


32,972



22,223Accounts receivable, net of
    allowances for doubtful accounts of $54 at June 30, 2007
    and 2006


15,936



19,444Inventories, net


52,875



10,603Prepaid expenses and other assets


3,335



4,857AlleRxtmroyalty interest held-for-sale


3,771



1,531Income taxes receivable


3,463



4,045Deferred tax assets


8,178



3,659Total current assets


167,339



106,682Property, plant and equipment, net
    of accumulated depreciation


19,763



7,388Deferred tax assets


5,041



2,545Intangible assets, net of
    accumulated amortization of $490 and $565 at June 30, 2007
    and 2006, respectively


122,864



125,597Other assets


3,458



15,883Total assets

$
318,465


$
258,095LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued
    expenses

$
24,010


$
20,694Accrued compensation and related
    items


8,218



5,769Accrued returns, chargebacks,
    rebates and other sales allowances


7,934



5,701Other current liabilities


2,249



1,648Total current liabilities


42,411



33,812Long-term liabilities:Deferred gain on sale of plant
    assets






1,309Accrued royalties


706



701Total liabilities


43,117



35,822Commitments and contingencies
    (Note 14)Stockholders equity:Preferred stock, $0.01 par
    value: Authorized shares  50,000, Issued and
    outstanding  none






Common stock, Class A,
    $0.01 par value:Authorized shares 
    100,000, Issued and outstanding shares 35,695 and 34,874 at
    June 30, 2007 and 2006, respectively


357



349Additional paid-in capital


487,322



464,877Accumulated deficit


(212,313
)


(242,842
)Accumulated other comprehensive loss


(18
)


(111
)Total stockholders equity


275,348



222,273Total liabilities and
    stockholders equity

$
318,465


$
258,095    F-3




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Consolidated
    Statements of Operations
 (Amounts
    in thousands, except per share amounts)
  Year Ended June 30,2007


2006


2005Net sales

$
331,603


$
239,105


$
160,210Cost of goods sold


95,799



49,358



31,126Gross margin


235,804



189,747



129,084Selling, marketing and
    administrative


162,861



98,998



78,044Product development


23,855



18,904



7,392AlleRxtmcharge


2,699







Other, net


(1,187
)


(4,307
)


(789
)188,228



113,595



84,647Income before income taxes


47,576



76,152



44,437Provision for income taxes


17,047



29,801



17,438Net income


30,529



46,351



26,999Accretion of preferred stock










(202,566
)Dividend paid to preferred
    stockholders










(30,033
)Net income/(loss) applicable to
    common stockholders

$
30,529


$
46,351


$
(205,600
)Income/(loss) per common shareBasic

$
0.86


$
1.42


$
(32.97
)Diluted

$
0.82


$
1.28


$
(32.97
)Weighted-average of common shares
    used in income/(loss) per share calculationBasic


35,340



32,616



6,236Diluted


37,113



36,349



6,236    F-4




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##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Consolidated
    Statements of Stockholders Equity/(Deficit)
 (Amounts
    in thousands)
  Accumulated


TotalAdditional





Other


StockholdersCommon Stock


Paid-In


Accumulated


Comprehensive


Equity/Shares


Amount


Capital


Deficit


Loss


(Deficit)Balance as of June 30, 2004


5,210


$
52


$
11,577


$
(68,626
)





$
(56,997
)Stock compensation expense










477











477Exercise of stock options


384



4



1,200











1,204Exercise of warrants


3,143



31



1,164











1,195Dividend














(45,000
)






(45,000
)Tax benefit of stock options










1,063











1,063Accretion of preferred stock














(202,566
)






(202,566
)Comprehensive and net income














26,999







26,999Balance as of June 30, 2005


8,737



87



15,481



(289,193
)






(273,625
)Comprehensive income:Net income














46,351







46,351Unrealized loss on marketable
    securities, net of tax of $65


















(111
)


(111
)Total comprehensive income






















46,240Stock compensation expense










4,549











4,549Restricted stock units










255











255Exercise of stock options


1,340



14



2,034











2,048Exercise of warrants


373



3



714











717Tax benefit of stock options










19,036











19,036Conversion of preferred stock


17,534



176



316,279











316,455Initial public offering


6,890



69



106,529











106,598Balance as of June 30, 2006


34,874



349



464,877



(242,842
)


(111
)


222,273Comprehensive income:Net income














30,529







30,529Unrealized gain on marketable
    securities, net of tax of $55


















93



93Total comprehensive income






















30,622Stock compensation expense










5,523











5,523Exercise of stock options and
    warrants


674



7



3,101











3,108Tax benefit of stock options










8,623











8,623AlleRxtmconversion


147



1



5,198











5,199Balance as of June 30, 2007


35,695


$
357


$
487,322


$
(212,313
)

$
(18
)

$
275,348    F-5




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Consolidated
    Statements of Cash Flows
 (Amounts
    in thousands)
  Year Ended June 30,2007


2006


2005Operating ActivitiesNet income

$
30,529


$
46,351


$
26,999Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


3,210



1,259



978Stock compensation expense


5,523



4,804



477AlleRxtmcharge


2,699







Impairment of intangible assets


2,542







900Loss on disposal of property, plant
    and equipment


371



926



9Loss on lease, net of sublease
    income






631



Deferred tax assets


(6,960
)


2,040



8,549Changes in operating assets and
    liabilities:Accounts receivable


3,508



(10,913
)


(4,357
)Inventories


(42,272
)


(7,496
)


(591
)Prepaid expenses and other current
    assets


1,522



(130
)


(3,544
)Intangible and other assets


(2,283
)






Accounts payable


3,316



10,507



4,591Income taxes payable (receivable)


582



945



(4,195
)Accrued expenses and other
    liabilities


3,979



828



(1,679
)Net cash provided by operating
    activities


6,266



49,752



28,137Investing ActivitiesPurchases of property, plant and
    equipment


(15,314
)


(6,812
)


(1,731
)Proceeds from disposal of property,
    plant and equipment










33Purchases of investments and
    increase in restricted cash


(28,000
)


(474,861
)


Maturities of investments


32,173



436,644



Purchases of intangible assets






(122,000
)


(2,100
)Net cash used in investing
    activities


(11,141
)


(167,029
)


(3,798
)Financing ActivitiesBorrowings on line of credit


20,000







Repayments of line of credit


(20,000
)






Debt issuance costs


(367
)






Proceeds from exercise of warrants






717



4,233Proceeds from exercise of stock
    options


3,108



2,048



1,204Excess tax benefit from exercise of
    stock options


8,623



19,036



Proceeds from issuance of common
    stock






107,772



Payments of initial public offering
    costs










(1,174
)Dividend payments










(45,000
)Net cash provided by/(used in)
    financing activities


11,364



129,573



(40,737
)Net increase/(decrease) in cash
    and cash equivalents


6,489



12,296



(16,398
)Cash and cash equivalents at
    beginning of year


40,320



28,024



44,422Cash and cash equivalents at end
    of year

$
46,809


$
40,320


$
28,024Supplemental Disclosure of Cash
    Flow InformationCash paid during the year for
    interest

$
264


$



$
Cash paid during the year for
    income taxes

$
15,935


$
10,732


$
13,084  F-6




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##### Table of Contents



Supplemental
    Schedule of Noncash Financing Activity
  tm
  Fair value of restricted common
    stock issued to JMED

$
5,199AlleRxtmcharge recorded in the Companys Consolidated Statement of
    Income


2,699Increase in
    AlleRxtmroyalty interest held-for sale

$
2,500    F-7




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial Statements
 ($ in
    thousands, except per share amounts)
  1.
    Nature of
    Operations and Summary of Significant Accounting
    Policies  Nature
    of Operations
    Basis
    of Presentation
    Principles
    of Consolidation
    Use of
    Estimates
    Cash
    Equivalents
    Investments
    Accounting for Certain
    Investments in Debt and Equity Securities
 F-8




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##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Derivative
    Financial Instruments
    Accounts
    Receivable
  net 30-day
  Inventories
  first-in,
  Cardinal Health Profit Share. mark-up. mark-up mark-up mark-up
 F-9




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Property,
    Plant and Equipment
  98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
    YearsMachinery and equipment


7-10Furniture and fixtures


5-7Software


3-5   Intangible
    Assets
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
  , Goodwill and Other Intangible Assets non-amortizable
  Revenue
    Recognition
   F-10




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Sales
    Returns and Allowances
             F-11




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Advertising
    Shipping
    and Handling Costs
    Accounting
    for Stock-Based Compensation
  Share-Based Payment Accounting for Stock-Based
    Compensation Accounting for Stock-Based
    Compensation  Transition and Disclosure.
   F-12




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   Product
    Development
  scale-up
      Income
    Taxes
  Accounting for Income Taxes
  Accounting for Uncertainty in Income Taxes
 F-13




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Accretion
    of Preferred Stock
      Income/(Loss)
    per Common Share
    2.
    Manufacturing
    Assets Repurchase   F-14




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     3.
    Supplementary
    Financial Information  Inventories
      June 30,


June 30,2007


2006Raw materials

$
8,033


$
Work in progress


12,443



Finished goods


36,253



10,62756,729



10,627Less: reserve for obsolescence(1)


(3,854
)


(24
)Inventories, net

$
52,875


$
10,603     (1)
    
    The June 30, 2007 balance primarily relates to
    Childrens Mini-Melts inventory approaching expiration.  Other
    Assets
    Accrued
    Compensation and Related Items
    Other,
    net
  tm
 F-15




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     4.
    Investments    As of June 30,


As of June 30,2007


2006Government








GovernmentU.S. State


Sponsored





U.S. State


SponsoredAgency Bonds


Bonds


Total


Agency Bonds


Bonds


TotalAmortized cost

$
18,000


$
15,000


$
33,000


$
12,282


$
25,000


$
37,282Gross unrealized losses






28



28



13



163



176Estimated fair market value

$
18,000


$
14,972


$
32,972


$
12,269


$
24,837


$
37,106     5.
    Property,
    Plant and Equipment    June 30,2007


2006Property, plant and equipment:Machinery and equipment

$
10,764


$
390Software


2,991



274Leasehold improvements


4,210



2,360Furniture and fixtures


3,719



2,760Construction in progress


1,354



2,31123,038



8,095Less: accumulated depreciation and
    amortization


(3,275
)


(707
)$
19,763


$
7,388  F-16




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     6.
    Intangible
    Assets  Indefinite
    Life Asset  Delsym Trademark
  12-Hour
    Amortizable
    Intangible Assets
    June 30,


June 30,2007


2006Amortizable intangible assets

$
1,354


$
4,162Accumulated amortization


(490
)


(565
)Net balance

$
864


$
3,597    F-17




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Fiscal 2008

$
155Fiscal 2009


155Fiscal 2010


155Fiscal 2011


155Fiscal 2012


155Thereafter


89$
864   tm tm 18-month 18-month tm
         F-18




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     AlleRxtmRoyalty Interest Held-For-Sale
  tm tm
  tm tm tm tm
  7.
    Redeemable
    Convertible Preferred Stock      Series A


Series B


Series CBalance at June 30, 2005


98,705



98,251



119,499Conversion to common stock


(98,705
)


(98,251
)


(119,499
)Balance at June 30, 2006

$



$



$
  F-19




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   8.
    Stockholders
    Equity (Deficit)  Initial
    Public Offering
    Secondary
    Offering
        9.
    Benefit
    Plan      10.
    Stock
    Compensation Plan   F-20




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
             Stock
    Options
   F-21




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
       Year Ended June 30,2007


2006


2005Expected life of the option (in
    years)


3



5



6Risk-free interest rate


4.9
%


4.1
%


3.4
%Volatility


42.8
%


65.3
%


0
%Expected dividend yield


0
%


0
%


0
%Weighted-average fair value of
    stock options granted

$
15.09


$
11.84


$
1.14     Weighted-AverageExerciseShares


Price(Shares in thousands)Options outstanding at
    June 30, 2005


3,247


$
1.68Granted


955



20.74Canceled


(26
)


11.15Exercised


(1,338
)


1.53Options outstanding at
    June 30, 2006


2,838



8.08Granted


349



42.70Canceled


(183
)


17.76Exercised


(672
)


4.63Options outstanding at
    June 30, 2007


2,332


$
13.48  F-22




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Options Outstanding


Options ExercisableWeighted-











Weighted-Average











AverageYears


Weighted-








Years


Weighted-Remaining


Average








Remaining


Averageon


Exercise


Aggregate





on


Exercise


AggregateRanges of Exercise

Number


Contractual


Price per


Intrinsic


Number


Contractual


Price


IntrinsicPrices

Outstanding


Life


Option


Value


Exercisable


Life


per Option


Value(Shares in thousands)$0.40


805



6.1


$
0.40


$
31,386



705



6.0


$
0.40


$
27,484$1.42  $2.22


208



6.7



1.64



7,856



33



6.8



1.95



1,220$3.02  $4.56


107



6.7



3.17



3,892



27



4.8



3.62



981$5.01  $11.40


160



7.3



7.51



5,093



13



6.3



8.42



389$17.00


593



8.1



17.00



13,291



44



8.1



17.00



993$28.50-42.73


169



8.8



38.13



439



40



8.4



40.65



46$42.96


188



9.1



42.96



















$43.10-48.00


102



9.2



45.58







6



8.9



47.98



2,332










$
61,957



868










$
31,113       Weighted AverageNumber of


Grant DateOptions


Fair Value per Option(Shares in thousands)Nonvested options at June 30,
    2006


2,022


$
5.72Granted


349



15.09Vested


(724
)


3.91Forfeited


(182
)


7.65Nonvested options at June 30,
    2007


1,465


$
8.60     Performance
    Shares
   F-23




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
       Weighted AverageNumber of


Grant DateOptions


Fair Value per Option(Shares in thousands)Nonvested performance shares at
    June 30, 2006





$
Granted


185



44.70Vested






Forfeited


(21
)


43.91Nonvested performance shares at
    June 30, 2007


164


$
44.80   Restricted
    Stock Units
    Warrants
    As of June 30,2007

2006Outstanding

Exercise

Outstanding

ExerciseWarrants

Price

Warrants

Price324


$
4.56



324


$
4.56


$
0.03



1,020


$
0.03324







1,344     11.
    Income
    Taxes   F-24




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
       June 30,2007


2006


2005Current provision:Federal

$
20,278


$
25,450


$
6,743State


3,837



2,248



2,146Deferred:Federal


(4,952
)


1,457



7,767State


(2,116
)


646



782Total provision

$
17,047


$
29,801


$
17,438     June 30,2007


2006


2005Provision at Federal statutory rate


35.0
%


35.0
%


35.0
%State income taxes, net of Federal
    benefit


2.4



2.6



4.3Section 199 deduction


(0.9
)






Tax-exempt interest


(0.6
)






Research credit


(0.2
)


(0.1
)


(0.4
)Incentive stock options


0.4



1.4



0.3Other


(0.3
)


0.2



Effective tax rate


35.8
%


39.1
%


39.2
%  F-25




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     June 30,2007


2006Deferred tax assets 
    current:Federal net operating loss
    carryforwards

$
151


$
151Sales returns and allowances


4,417



2,971Research credit






200Inventory


1,656



9Accrued bonuses


1,888



Other


66



328Total deferred tax
    assets  current


8,178



3,659Deferred tax assets 
    non-current:Federal net operating loss
    carryforwards


489



639State net operating loss
    carryforwards


964



Deferred compensation


639



Deferred gain on sale of plant
    assets






491Nonqualified stock options


2,608



1,292Patent defense costs


1,730



Humibid returns






400Intangibles


(1,429
)


(623
)Other


40



346Total deferred tax
    assets  non-current


5,041



2,545Total net deferred tax assets

$
13,219


$
6,204  F-26




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   12.
    Income/(Loss)
    per Common Share    June 30,2007


2006


2005(Shares in thousands)Net income

$
30,529


$
46,351


$
26,999Accretion of preferred stock










(202,566
)Dividend paid to preferred
    stockholders










(30,033
)Net income/(loss) applicable to
    common stockholders

$
30,529


$
46,351


$
(205,600
)Average shares
    outstanding  basic


35,340



32,616



6,236Weighted-average dilutive stock
    options


1,682



2,571



Weighted-average assumed
    conversion of redeemable convertible preferred stock






961



Weighted-average dilutive warrants
    and restricted stock units


13



201



Weighted-average dilutive JMED
    rights (see Note 6)


78







Average shares
    outstanding  diluted


37,113



36,349



6,236Income/(loss) per common share:Basic

$
0.86


$
1.42


$
(32.97
)Diluted


0.82


$
1.28


$
(32.97
)     June 30,2007


2006


2005(Shares in thousands)Warrants










2,713Stock options


424



135



2,703424



135



5,416   13.
    Senior
    Revolving Credit Facility     F-27




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
         14.
    Commitments
    and Contingencies    11-year
  64-month
    12-year
 F-28




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     Fiscal 2008

$
3,091Fiscal 2009


2,654Fiscal 2010


2,242Fiscal 2011


2,021Fiscal 2012


1,679Thereafter


7,565$
19,252          F-29




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
     12-Hour
      No. 2:06-cv-04418-PD,
   F-30




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   tm
  tm tm
      15.
    Dividend   F-31




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   16.
    Net Sales
    Information  Net
    Sales by Product
    Year Ended June 30,Product

2007


2006


2005(In thousands)Mucinex SE

$
131,871


$
158,575


$
117,369Mucinex DM


94,633



59,235



38,278Mucinex D


28,204



19,347



Mucinex products for children


29,190







Humibid SE(1)


(639
)


1,296



Delsym


48,344



652



Other products










4,563Net sales

$
331,603


$
239,105


$
160,210     (1)
    
    Humibid SEs sales for fiscal 2007 include allowance for
    sales returns of $874 relating to retail inventory of Humibid
    that has expired or is approaching expiration.  Concentration
    of Credit Risk
    Year Ended June 30,2007


2006


2005Wal-Mart Stores, Inc./Sams
    Club


25
%


19
%


16
%Walgreen Co.


13
%


12
%


14
%CVS Caremark Corporation


13
%


10
%


11
%McKesson Corp.


6
%


11
%


14
%  F-32




---



##### Table of Contents



Adams
    Respiratory Therapeutics, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
 ($ in
    thousands, except per share amounts)
   17.
    Quarterly
    Results  First Quarter


Second Quarter


Third Quarter


Fourth Quarter2007


2006


2007


2006


2007


2006


2007


2006(Unaudited)Net sales

$
90,142


$
47,017


$
110,576


$
63,247


$
84,024


$
76,002


$
46,861


$
52,839Cost of goods sold


29,358



8,521



26,598



13,920



23,691



16,166



16,152



10,751Gross margin


60,784



38,496



83,978



49,327



60,333



59,836



30,709



42,088Selling, marketing and
    administrative


29,983



15,869



55,963



29,693



52,629



28,440



24,286



24,996Product development


6,287



3,426



6,727



4,096



5,043



3,837



5,798



7,545AlleRxtmcharge










2,699



















Other, net


(879
)


(926
)


(823
)


(1,862
)


(1,165
)


(80
)


1,680



(1,439
)Income/(loss) before income taxes


25,393



20,127



19,412



17,400



3,826



27,639



(1,055
)


10,986Provision/(benefit) for income taxes


9,215



7,739



6,889



6,734



962



10,696



(19
)


4,632Net income/(loss)

$
16,178


$
12,388


$
12,523


$
10,666


$
2,864


$
16,943


$
(1,036
)

$
6,354Income/(loss) per common
    share  diluted

$
0.44


$
0.36


$
0.34


$
0.29


$
0.08


$
0.46


$
(0.03
)

$
0.17   18.
    Subsequent
    Events     F-33




---



##### Table of Contents



Schedule II
    Adams Respiratory Therapeutics, Inc.
    Valuation and Qualifying Accounts
    ($ in thousands)
    Allowance for Accounts ReceivableReserve for


Reserve


Reserve forDoubtful


for Cash


TradeAccounts


Discounts


PromotionsFor year ended June 30, 2005:Balance at the beginning of the
    year

$
203


$
143


$
988Provision made to sales during the
    period


(4
)


3,441



6,611Benefit related to sales made in
    prior periods










(613
)Deductions from reserves


(33
)


(3,414
)


(4,878
)Balance at the end of period

$
166


$
170


$
2,108For year ended June 30, 2006:Balance at the beginning of the
    year

$
166


$
170


$
2,108Provision made to sales during the
    period


(112
)


5,196



6,786Provision related to sales made in
    prior periods










111Deductions from reserves






(4,871
)


(6,209
)Balance at the end of period

$
54


$
495


$
2,796For year ended June 30, 2007:Balance at the beginning of the
    year

$
54


$
495


$
2,796Provision made to sales during the
    period






7,144



11,525Benefit related to sales made in
    prior periods










(331
)Deductions from reserves






(7,303
)


(11,160
)Balance at the end of period

$
54


$
336


$
2,830     (1)
    
    Charges related to cash discounts and trade promotions are
    reflected as reductions of sales to customers. F-34