<PAGE>


                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                                  FORM 10-Q

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

                        COMMISSION FILE NUMBER 1-9601
                                              --------

                         K-V PHARMACEUTICAL COMPANY
-------------------------------------------------------------------------------
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                     43-0618919
-------------------------------            ------------------------------------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

              2503 SOUTH HANLEY ROAD, ST. LOUIS, MISSOURI 63144
-------------------------------------------------------------------------------
                  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                 (ZIP CODE)

                               (314) 645-6600
-------------------------------------------------------------------------------
            (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 DURING THE PRECEDING 12 MONTHS (OR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X   NO
                                                  ---    ---

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER,
AN ACCELERATED FILER, OR A NON-ACCELERATED FILER (AS DEFINED IN RULE 12b-2
OF THE ACT).

LARGE ACCELERATED FILER [ ] ACCELERATED FILER [ X ] NON-ACCELERATED FILER [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED
IN RULE 12b-2 OF THE ACT).

YES [ ] NO [X]

               TITLE OF CLASS OF                       NUMBER OF SHARES
                  COMMON STOCK                  OUTSTANDING AS OF JULY 31, 2006
                  ------------                  -------------------------------

CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE            37,032,769
CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE            12,497,121


                                     1

<PAGE>
<PAGE>

PART I. - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
                                K-V PHARMACEUTICAL COMPANY AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF INCOME
                             (Unaudited; in thousands, except per share data)

<CAPTION>
                                                                               THREE MONTHS ENDED,
                                                                                     JUNE 30,
                                                                       -----------------------------------
                                                                           2006                  2005
                                                                       -------------         -------------

<C>                                                                    <C>                   <C>
Net revenues...................................................        $      98,383         $      85,475
Cost of sales..................................................               33,821                26,202
                                                                       -------------         -------------
Gross profit...................................................               64,562                59,273
                                                                       -------------         -------------

Operating expenses:
    Research and development...................................                7,890                 7,632
    Purchased in-process research and development
     and transaction costs.....................................                    -                30,441
    Selling and administrative.................................               39,283                37,360
    Amortization of intangible assets..........................                1,197                 1,180
                                                                       -------------         -------------
Total operating expenses.......................................               48,370                76,613
                                                                       -------------         -------------

Operating income (loss)........................................               16,192               (17,340)
                                                                       -------------         -------------

Other expense (income):
    Interest expense...........................................                2,236                 1,377
    Interest and other income..................................               (2,058)               (1,053)
                                                                       -------------         -------------
Total other expense, net.......................................                  178                   324
                                                                       -------------         -------------

Income (loss) before income taxes..............................               16,014               (17,664)
Provision for income taxes.....................................                6,136                 4,280
                                                                       -------------         -------------

Net income (loss)..............................................        $       9,878         $     (21,944)
                                                                       =============         =============

Earnings (loss) per common share:
    Basic Class A common.......................................              $  0.21               $ (0.45)
    Basic Class B common.......................................                 0.17                 (0.45)

    Diluted....................................................              $  0.18               $ (0.45)
                                                                             =======               =======


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>

                                     2

<PAGE>
<PAGE>

<TABLE>
                                    K-V PHARMACEUTICAL COMPANY AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
                                        (In thousands, except share data)

<CAPTION>
                                                                                             JUNE 30,      MARCH 31,
                                                                                               2006          2006
                                                                                               ----          ----
                                                                                            (unaudited)

<C>                                                                                      <C>             <C>
                                            ASSETS
                                            ------
CURRENT ASSETS:
Cash and cash equivalents............................................................    $    58,216     $   100,706
Marketable securities................................................................        152,111         106,763
Receivables, less allowance for doubtful accounts of $396 and $397
 at June 30, 2006 and March 31, 2006, respectively...................................         51,574          54,746
Inventories, net.....................................................................         75,058          70,778
Prepaid and other assets.............................................................          6,264           6,963
Deferred tax asset...................................................................          7,463           8,034
                                                                                         -----------     -----------
  Total Current Assets...............................................................        350,686         347,990
Property and equipment, less accumulated depreciation................................        189,380         178,042
Intangible assets and goodwill, net..................................................         72,010          72,955
Other assets.........................................................................         18,967          19,026
                                                                                         -----------     -----------
TOTAL ASSETS.........................................................................    $   631,043     $   618,013
                                                                                         ===========     ===========

                                         LIABILITIES
                                         -----------
CURRENT LIABILITIES:
Accounts payable.....................................................................    $    17,877     $    17,975
Accrued liabilities..................................................................         17,614          17,100
Current maturities of long-term debt.................................................          1,820           1,681
                                                                                         -----------     -----------
  Total Current Liabilities..........................................................         37,311          36,756
Long-term debt.......................................................................        240,888         241,319
Other long-term liabilities..........................................................          5,630           5,442
Deferred tax liability...............................................................         27,216          25,221
                                                                                         -----------     -----------
TOTAL LIABILITIES....................................................................        311,045         308,738
                                                                                         -----------     -----------

COMMITMENTS AND CONTINGENCIES
                                     SHAREHOLDERS' EQUITY
                                     --------------------

7% cumulative convertible Preferred Stock, $.01 par value; $25.00 stated and
 liquidation value; 840,000 shares authorized; issued and outstanding --
 40,000 shares at June 30, 2006 and March 31, 2006 (convertible into Class A
 shares at a ratio of 8.4375 to one).................................................              -               -
Class A and Class B Common Stock, $.01 par value;150,000,000 and
 75,000,000 shares authorized, respectively;
   Class A - issued 40,128,215 and 39,984,919 at June 30, 2006
    and March 31, 2006, respectively.................................................            401             400
   Class B - issued 12,618,473 and 12,695,561 at June 30, 2006 and March 31, 2006,
    respectively (convertible into Class A shares on a one-for-one basis)............            126             127
Additional paid-in capital...........................................................        130,293         129,367
Retained earnings....................................................................        243,356         233,496
Accumulated other comprehensive loss.................................................           (243)           (211)
Less: Treasury stock, 3,125,590 shares of Class A and 92,902 shares of Class B
 Common Stock at June 30, 2006, respectively, and 3,123,975 shares of Class A and
 92,902 shares of Class B Common Stock at March 31, 2006, respectively, at cost......        (53,935)        (53,904)
                                                                                         -----------     -----------
TOTAL SHAREHOLDERS' EQUITY...........................................................        319,998         309,275
                                                                                         -----------     -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...........................................    $   631,043     $   618,013
                                                                                         ===========     ===========

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>


                                     3

<PAGE>
<PAGE>

<TABLE>
                                  K-V PHARMACEUTICAL COMPANY AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (Unaudited; in thousands)

<CAPTION>
                                                                                       THREE MONTHS ENDED
                                                                                            JUNE 30,
                                                                                -------------------------------
                                                                                     2006              2005
                                                                                -------------      ------------
<C>                                                                             <C>                <C>
OPERATING ACTIVITIES:
Net income (loss)......................................................         $       9,878      $    (21,944)
Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:
   Acquired in-process research and development........................                     -            29,570
   Depreciation, amortization and other non-cash charges...............                 5,368             3,891
   Deferred income tax provision.......................................                 2,582               727
   Deferred compensation...............................................                   188               340
   Stock-based compensation............................................                   494                 -
Changes in operating assets and liabilities:
   Decrease (increase) in receivables, net.............................                 3,172              (211)
   Increase in inventories, net........................................                (4,280)           (5,821)
   Decrease in prepaid and other assets................................                   197             4,777
   Increase (decrease) in accounts payable and accrued
      liabilities......................................................                   416            (4,869)
                                                                                -------------      ------------
Net cash provided by operating activities..............................                18,015             6,460
                                                                                -------------      ------------

INVESTING ACTIVITIES:
   Purchase of property and equipment, net.............................               (15,200)          (22,392)
   Purchase of marketable securities...................................               (45,396)          (10,235)
   Purchase of preferred stock.........................................                     -           (11,300)
   Product acquisition.................................................                     -           (25,219)
                                                                                -------------      ------------
Net cash used in investing activities..................................               (60,596)          (69,146)
                                                                                -------------      ------------

FINANCING ACTIVITIES:
   Principal payments on long-term debt................................                  (292)             (243)
   Dividends paid on preferred stock...................................                   (18)              (18)
   Purchase of common stock for treasury...............................                   (31)              (33)
   Proceeds from exercise of common stock options......................                   432                99
                                                                                -------------      ------------
Net cash provided by (used in) financing activities....................                    91              (195)
                                                                                -------------      ------------
Decrease in cash and cash equivalents..................................               (42,490)          (62,881)
Cash and cash equivalents:
   Beginning of year...................................................               100,706           159,825
                                                                                -------------      ------------
   End of period.......................................................         $      58,216      $     96,944
                                                                                =============      ============

SUPPLEMENTAL INFORMATION:
   Interest paid, net of capitalized interest..........................         $       2,929      $      2,194
   Income taxes paid...................................................                   129                 -


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>

                                     4

<PAGE>
<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                    (in thousands, except per share data)

1. BASIS OF PRESENTATION

K-V Pharmaceutical Company and its subsidiaries ("KV" or the "Company") are
primarily engaged in the development, acquisition, manufacture, marketing
and sale of technologically distinguished branded and generic/non-branded
prescription pharmaceutical products. The Company was incorporated in 1971
and has become a leader in the development of advanced drug delivery and
formulation technologies that are designed to enhance therapeutic benefits
of existing drug forms. Through internal product development and synergistic
acquisitions of products, KV has grown into a fully integrated specialty
pharmaceutical company. The Company also develops, manufactures and markets
technologically advanced, value-added raw material products for the
pharmaceutical, nutritional, food and personal care industries.

The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. generally accepted
accounting principles for complete financial statements. However, in the
opinion of management, all adjustments (consisting of only normal recurring
accruals) considered necessary for a fair presentation have been included.
The results of operations and cash flows for the three-month period ended
June 30, 2006 are not necessarily indicative of the results of operations and
cash flows that may be expected for the fiscal year ending March 31, 2007.
The interim consolidated financial statements should be read in conjunction
with the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2006. The balance sheet information as of March 31, 2006 has been derived
from the Company's audited consolidated balance sheet as of that date.

2. ACQUISITION AND LICENSE AGREEMENTS

In May 2005, the Company and FemmePharma, Inc. ("FemmePharma") mutually
agreed to terminate the license agreement between them entered into in April
2002. As part of this transaction, the Company acquired all of the common
stock of FemmePharma for $25,000 after certain assets of the entity had been
distributed to FemmePharma's other shareholders. Under a separate agreement,
the Company had previously invested $5,000 in FemmePharma's convertible
preferred stock. Included in the Company's acquisition of FemmePharma are
the worldwide marketing rights to an endometriosis product that has
successfully completed Phase II clinical trials. This product was originally
part of the licensing arrangement with FemmePharma that provided the
Company, among other things, marketing rights for the product principally in
the United States. In accordance with the new agreement, the Company
acquired worldwide licensing rights of the endometriosis product, no longer
is responsible for milestone payments and royalties specified in the
original licensing agreement, and secured exclusive worldwide rights for use
of the FemmePharma technology for vaginal anti-infective products. For the
three months ended June 30, 2005, the Company recorded expense of $30,441 in
connection with the FemmePharma acquisition that consisted of $29,570 for
acquired in-process research and development and $871 in direct expenses
related to the transaction. The acquired in-process research and development
charge represented the estimated fair value of the endometriosis product
being developed that, at the time of the acquisition, had no alternative
future use and for which technological feasibility had not been established.
The FemmePharma acquisition expense was determined by the Company to not be
deductible for tax purposes. The Company also allocated $375 of the purchase
price for a non-compete agreement and $300 of the purchase price for the
royalty-free worldwide license to use FemmePharma's technology for vaginal
anti-infective products acquired in the transaction.

In May 2005, the Company entered into a long-term product development and
marketing license agreement with Strides Arcolab Limited ("Strides"), an
Indian generic pharmaceutical developer and manufacturer, for exclusive
marketing rights in the United States and Canada for 10 new generic drugs.
Under the agreement, Strides will be


                                     5

<PAGE>
<PAGE>

responsible for developing, submitting for regulatory approval and
manufacturing the 10 products and the Company will be responsible for
exclusively marketing the products in the territories covered by the
agreement. Under a separate agreement, the Company invested $11,300 in
Strides redeemable preferred stock. This investment is denominated in the
Indian rupee and is subject to foreign currency transaction gains or losses
resulting from exchange rate changes. As a result of changes in the
exchange rate, the carrying value of this investment was $10,717 at June 30,
2006. This investment has been accounted for using the cost method and is
included in "Other assets" in the accompanying consolidated balance sheet at
June 30, 2006.

3. EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings (loss) per share:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                          JUNE 30,
                                                                --------------------------
                                                                   2006            2005
                                                                   ----            ----
<C>                                                             <C>             <C>
Undistributed earnings (loss):
  Net income (loss)........................................     $    9,878      $  (21,944)
  Less - preferred stock dividends.........................            (18)            (18)
                                                                ----------      ----------
  Undistributed earnings (loss) - basic EPS................          9,860         (21,962)
  Add - preferred stock dividends..........................             18               -
  Add - interest expense on convertible
   notes, net of tax.......................................            951               -
                                                                ----------      ----------
  Net income (loss) - diluted EPS..........................     $   10,829      $  (21,962)
                                                                ==========      ==========
Allocation of undistributed earnings (loss) - basic EPS:
  Class A common stock.....................................     $    7,684      $  (16,013)
  Class B common stock.....................................          2,176          (5,949)
                                                                ----------      ----------
    Total allocated earnings (loss) - basic EPS............     $    9,860      $  (21,962)
                                                                ==========      ==========
Weighted average shares outstanding - basic:
  Class A common stock.....................................         36,944          35,961
  Class B common stock.....................................         12,551          13,359
                                                                ----------      ----------
    Total weighted average shares
     outstanding - basic...................................         49,495          49,320
                                                                ----------      ----------
Effect of dilutive securities:
  Employee stock options...................................            951               -
  Convertible preferred stock..............................            338               -
  Convertible notes........................................          8,692               -
                                                                ----------      ----------
    Dilutive potential common shares.......................          9,981               -
                                                                ----------      ----------
    Total weighted average shares
     outstanding - diluted.................................         59,476          49,320
                                                                ==========      ==========
Basic earnings (loss) per share:
  Class A common stock.....................................     $     0.21      $    (0.45)
  Class B common stock.....................................           0.17           (0.45)
Diluted earnings (loss) per share(1) (2)...................     $     0.18      $    (0.45)
                                                                ==========      ==========

<FN>
(1)  For the three months ended June 30, 2006, excluded from the computation
     of diluted earnings per share were options to purchase 919 Class A and
     Class B common shares with exercise prices greater than the average
     market price of the common shares for the period reported.

(2)  For the three months ended June 30, 2005, there were stock options
     to purchase 3,227 shares of Class A and Class B common stock,
     preferred shares convertible into 338 shares of Class A common
     stock and $200,000 Convertible Subordinated Notes convertible into
     8,692 shares of Class A common stock that were excluded from the
     computation of diluted loss per share because their effect would
     have been anti-dilutive.
</TABLE>



                                     6

<PAGE>
<PAGE>

4. STOCK-BASED COMPENSATION

Effective April 1, 2006, the Company adopted Statement of Financial
Accounting Standards No. 123 (revised 2004), "Share-Based Payment ("SFAS
123R"), which requires the measurement and recognition of compensation
expense for all share-based compensation awards made to employees and
directors based on estimated fair values, using the modified prospective
method. SFAS 123R eliminates previously available alternatives to account
for share-based compensation transactions, formerly utilized by the Company,
using the recognition and measurement principles of Accounting Principles
Board Opinion No. 25 ("APB 25") and related interpretations. Under the
intrinsic value method of APB 25, no stock-based employee compensation
expense had been recognized for employee options in the Company's
Consolidated Statements of Income, as all employee options granted under the
Company's stock option plans had an exercise price equal to or greater than
the market value of the underlying common stock on the date of grant. In
accordance with the modified prospective method, the consolidated financial
statements for prior periods have not been restated to reflect, and do not
include, the share-based compensation impact of SFAS 123R.


On August 30, 2002, the Company's shareholders approved KV's 2001 Incentive
Stock Option Plan (the "2001 Plan"), which allows for the issuance of up to
4,500 shares of common stock. Under the Company's stock option plan, options
to acquire shares of common stock have been made available for grant to
certain employees. Each option granted has an exercise price of not less
than 100% of the market value of the common stock on the date of grant. The
contractual life of each option is generally 10 years and the options vest
at the rate of 10% per year from the date of grant. At June 30, 2006,
options to purchase 7 shares of stock were outstanding pursuant to an
employment agreement with Alan G. Johnson (Mr. Johnson was a director and
executive officer of the Company until his death in February 2006) that
expires 12 months after his death.

The Company estimates the fair value of stock options granted using the
Black-Scholes option pricing model (the "Option Model"). The Option Model
requires the use of subjective and complex assumptions, including the
option's expected term and the estimated future price volatility of the
underlying stock, which determine the fair value of the share-based awards.
The Company's estimate of expected term in fiscal 2007 was determined based
on the weighted average period of time that options granted are expected to
be outstanding considering current vesting schedules and the historical
exercise patterns of existing option plans. The expected volatility
assumption used in the Option Model is based on historical volatility over a
period commensurate with the expected term of the related options. The
risk-free interest rate used in the Option Model is based on the yield of
U.S. Treasuries with a maturity closest to the expected term of the
Company's stock options. The Company's stock option agreements prohibit the
sale of shares acquired on exercise for a two-year period from the date of
exercise. The Company has accounted for the impact of this post vesting
restriction on the value of the option by applying a 12% discount factor to
the current market price of the underlying shares used as an input factor in
the Black-Scholes formula.


The following weighted average assumptions were used for stock options
granted during the three months ended June 30, 2006 and 2005:

                                                     THREE MONTHS ENDED
                                                          JUNE 30,
                                                   ----------------------
                                                   2006            2005
                                                   ----            ----

     Dividend yield.............................     None            None
     Expected volatility........................      38%             46%
     Risk-free interest rate....................    4.99%           3.87%
     Expected term..............................  5 years         5 years
     Weighted average fair value per share
       at grant date............................ $   5.70        $   5.67

In accordance with the provisions of SFAS 123R, share-based compensation
expense recognized during a period is based on the value of the portion of
share-based awards that are expected to vest with employees. Accordingly,
the recognition of share-based compensation expense beginning April 1, 2006
has been reduced for estimated future forfeitures. SFAS 123R requires
forfeitures to be estimated at the time of grant with adjustments recorded
in subsequent period compensation expense if actual forfeitures differ from
those estimates. Prior to fiscal 2007, the Company accounted for forfeitures
as they occurred for the disclosure of pro forma information presented in
the Notes to Consolidated Financial Statements for prior periods.
Share-based compensation expense recognized under SFAS 123R includes
share-based awards granted subsequent to March 31, 2006, based on the grant
date fair value


                                     7

<PAGE>
<PAGE>

estimated in accordance with the provisions of SFAS 123R, as well as
share-based awards granted prior to, but not yet vested, as of March 31,
2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS 123.

As a result of adopting SFAS 123R on April 1, 2006, the Company's operating
income, income before income taxes and net income for the three months ended
June 30, 2006 were each reduced by $494, or $0.01 per diluted share for
stock-based compensation related to the Company's employee stock option
plan. There was no share-based employee compensation related expense
recognized in the three months ended June 30, 2005 and no stock option cost
was capitalized as part of inventory for the three months ended June 30,
2006 and 2005.

A summary of the changes in the Company's stock option plans during the
three months ended June 30, 2006 is presented below (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                                                       WEIGHTED
                                                                   WEIGHTED             AVERAGE
                                                                    AVERAGE            REMAINING     AGGREGATE
                                                                   EXERCISE           CONTRACTUAL    INTRINSIC
                                                  SHARES             PRICE               TERM          VALUE
                                                  ------           --------           -----------    ---------

<C>                                                <C>             <C>                    <C>         <C>
Balance, March 31, 2006....................        3,519           $  15.55
Options granted............................          229              18.66
Options exercised..........................          (60)              7.52
Options canceled...........................         (134)             12.45
                                                   -----
Balance, June 30, 2006.....................        3,554              15.95               6.6         $ 9,619
                                                   =====

Vested and expected to vest at
 June 30, 2006.............................        3,004           $  15.71               6.5         $ 8,862

Options exercisable at June 30, 2006.......        1,628           $  14.26               5.5         $ 7,209
</TABLE>


As of June 30, 2006, the Company had $7,435 of total unrecognized
compensation expense, net of estimated forfeitures, related to stock option
grants, which will be recognized over the remaining weighted average period
of 3.1 years.

Prior to April 1, 2006, the Company determined stock-based compensation
expense using the intrinsic value method of APB 25 and provided the
disclosures required by SFAS 123, as amended by SFAS 148. The following
table provides the pro forma effects on net (loss) and (loss) per share for
the three months ended June 30, 2005 as if the fair value recognition
provisions of SFAS 123 had been applied to options granted under the
Company's stock option plans:

                                                             THREE MONTHS ENDED
                                                                  JUNE 30,
                                                             ------------------
                                                               2006       2005


     Net income (loss), as reported.................         $9,878    $(21,944)
     Add: Stock-based employee compensation
       expense included in reported net income......            494           -

     Deduct: Total stock-based compensation expense
       determined under fair value based method for
       all awards...................................           (494)       (444)
                                                             ------    --------

     Pro forma net income (loss)....................         $9,878    $(22,388)
                                                             ======    ========

     Earnings (loss) per share:
        Basic Class A common - as reported..........         $ 0.21    $  (0.45)
        Basic Class A common - pro forma............           0.21       (0.45)

        Basic Class B common - as reported..........         $ 0.17    $  (0.45)
        Basic Class B common - pro forma............           0.17       (0.45)

        Diluted - as reported.......................         $ 0.18    $  (0.45)
        Diluted - pro forma.........................           0.18       (0.45)


                                     8

<PAGE>
<PAGE>

5. REVENUE RECOGNITION

Revenue is generally realized or realizable and earned when persuasive
evidence of an arrangement exists, delivery has occurred or services have
been rendered, the seller's price to the buyer is fixed or determinable, and
the customer's payment ability has been reasonably assured. Accordingly, the
Company records revenue from product sales when title and risk of ownership
have been transferred to the customer, which is typically upon shipment to
the customer. The Company also enters into long-term agreements under which
it assigns marketing rights for the products it has developed to
pharmaceutical marketers. Royalties under these arrangements are earned
based on the sale of products.

Concurrently with the recognition of revenue, the Company records estimated
sales provisions for product returns, sales rebates, payment discounts,
chargebacks, and other sales allowances. Sales provisions are established
based upon consideration of a variety of factors, including but not limited
to, historical relationship to revenues, historical payment and return
experience, estimated and actual customer inventory levels, customer rebate
arrangements, and current contract sales terms with wholesale and indirect
customers.

Actual product returns, chargebacks and other sales allowances incurred are,
however, dependent upon future events and may be different than the
Company's estimates. The Company continually monitors the factors that
influence sales allowance estimates and makes adjustments to these
provisions when management believes that actual product returns, chargebacks
and other sales allowances may differ from established allowances.

Accruals for sales provisions are presented in the consolidated financial
statements as reductions to net revenues and accounts receivable. Sales
provisions totaled $36,006 and $37,061 for the three months ended June 30,
2006 and 2005, respectively. The reserve balances related to the sales
provisions totaled $26,779 and $29,317 at June 30, 2006 and March 31, 2006,
respectively, and are deducted from "Receivables, less allowance for
doubtful accounts" in the accompanying Consolidated Balance Sheets.

6. INVENTORIES

     Inventories consist of the following:

                                          JUNE 30, 2006       MARCH 31, 2006
                                          -------------       --------------

        Finished goods..............       $   30,978           $  28,977
        Work-in-process.............            9,731               7,969
        Raw materials...............           34,349              33,832
                                           ----------           ---------
                                           $   75,058           $  70,778
                                           ==========           =========

Management establishes reserves for potentially obsolete or slow-moving
inventory based on an evaluation of inventory levels, forecasted demand, and
market conditions.

                                     9

<PAGE>
<PAGE>

7. INTANGIBLE ASSETS AND GOODWILL

     Intangible assets and goodwill consist of the following:

<TABLE>
<CAPTION>
                                                        JUNE 30, 2006                     MARCH 31, 2006
                                                 ---------------------------        ---------------------------
                                                   GROSS                             GROSS
                                                  CARRYING       ACCUMULATED        CARRYING       ACCUMULATED
                                                   AMOUNT       AMORTIZATION         AMOUNT        AMORTIZATION
                                                   ------       ------------         ------        ------------

<C>                                              <C>             <C>                <C>             <C>
Product rights - Micro-K(R)..................    $  36,140       $ (13,160)         $  36,140       $ (12,708)
Product rights - PreCare(R)..................        8,433          (2,916)             8,433          (2,811)
Trademarks acquired:
  Niferex(R).................................       14,834          (2,410)            14,834          (2,225)
  Chromagen(R)/StrongStart(R)................       27,642          (4,492)            27,642          (4,147)
License agreements...........................        4,400            (345)             4,400            (300)
Covenant not to compete......................          375             (44)               375             (34)
Trademarks and patents.......................        3,655            (659)             3,403            (604)
                                                 ---------        --------          ---------       ---------
  Total intangible assets....................       95,479         (24,026)            95,227         (22,829)
Goodwill.....................................          557               -                557               -
                                                 ---------        --------          ---------       ---------
                                                 $  96,036        $(24,026)         $  95,784       $ (22,829)
                                                 =========        ========          =========       =========
</TABLE>


As of June 30, 2006, the Company's intangible assets have a weighted average
useful life of approximately 19 years. Amortization expense for intangible
assets was $1,197 and $1,180 for the three months ended June 30, 2006 and
2005, respectively.

Assuming no additions, disposals or adjustments are made to the carrying
values and/or useful lives of the intangible assets, annual amortization
expense on product rights, trademarks acquired and other intangible assets
is estimated to be approximately $3,591 for the remainder of fiscal 2007 and
approximately $4,788 in each of the four succeeding fiscal years.

8. REVOLVING CREDIT AGREEMENT

On June 9, 2006, the Company replaced its $140,000 credit line by entering
into a new credit agreement with ten banks that provides for a revolving
line of credit for borrowing up to $320,000. The new credit agreement also
includes a provision for increasing the revolving commitment, at the
lenders' sole discretion, by up to an additional $50,000. The new credit
facility is unsecured unless the Company, under certain specified
circumstances, utilizes the facility to redeem part or all of its
outstanding Convertible Subordinated Notes. Interest is charged under the
facility at the lower of the prime rate or LIBOR plus 62.5 to 150 basis
points depending on the ratio of senior debt to EBITDA. The new credit
agreement contains financial covenants that impose limits on dividend
payments, require minimum equity, a maximum senior leverage ratio and
minimum fixed charge coverage ratio. The new credit facility has a five-year
term expiring in June 2011. As of June 30, 2006, there were no borrowings
outstanding under the new credit facility.

                                     10

<PAGE>
<PAGE>

9. LONG-TERM DEBT

     Long-term debt consists of the following:

                                            JUNE 30, 2006      MARCH 31, 2006
                                            -------------      --------------

        Building mortgages................   $    42,708         $   43,000
        Convertible notes.................       200,000            200,000
                                             -----------         ----------
                                                 242,708            243,000
        Less current portion..............        (1,820)            (1,681)
                                             -----------         ----------
                                             $   240,888         $  241,319
                                             ===========         ==========

In March 2006, the Company entered into a $43,000 mortgage loan agreement
with one of its primary lenders, in part, to refinance $9,859 of existing
mortgages. The $32,764 of net proceeds the Company received from the new
mortgage loan will be used for working capital and general corporate
purposes. The new mortgage loan, which is secured by three of the Company's
buildings, bears interest at a rate of 5.91% and matures on April 1, 2021.

On May 16, 2003, the Company issued $200,000 of Convertible Subordinated
Notes (the "Notes") that are convertible, under certain circumstances, into
shares of Class A common stock at an initial conversion price of $23.01 per
share. The Notes, which are due May 16, 2033, bear interest that is payable
on May 16 and November 16 of each year at a rate of 2.50% per annum. The
Company also is obligated to pay contingent interest at a rate equal to 0.5%
per annum during any six-month period from May 16 to November 15 and from
November 16 to May 15, with the initial six-month period commencing May 16,
2006, if the average trading price of the Notes per $1,000 principal amount
for the five trading day period ending on the third trading day immediately
preceding the first day of the applicable six-month period equals $1,200 or
more. As of May 15, 2006, the average trading price of the Notes had not
reached the price that would result in the payment of contingent interest.

The Company may redeem some or all of the Notes at any time on or after May
21, 2006, at a redemption price, payable in cash, of 100% of the principal
amount of the Notes, plus accrued and unpaid interest, including contingent
interest, if any. Holders may require the Company to repurchase all or a
portion of their Notes on May 16, 2008, 2013, 2018, 2023 and 2028 or upon a
change in control, as defined in the indenture governing the Notes, at a
purchase price, payable in cash, of 100% of the principal amount of the
Notes, plus accrued and unpaid interest, including contingent interest, if
any. The Notes are subordinate to all of our existing and future senior
obligations.

The Notes are convertible, at the holders' option, into shares of the
Company's Class A common stock prior to the maturity date under the
following circumstances:

          o    during any quarter commencing after June 30, 2003, if the
               closing sale price of the Company's Class A common stock over
               a specified number of trading days during the previous
               quarter is more than 120% of the conversion price of the
               Notes on the last trading day of the previous quarter. The
               Notes are initially convertible at a conversion price of
               $23.01 per share, which is equal to a conversion rate of
               approximately 43.4594 shares per $1,000 principal amount of
               Notes;
          o    if the Company has called the Notes for redemption;
          o    during the five trading day period immediately following any
               nine consecutive trading day period in which the trading
               price of the Notes per $1,000 principal amount for each day
               of such period was less than 95% of the product of the
               closing sale price of our Class A common stock on that day
               multiplied by the number of shares of our Class A common
               stock issuable upon conversion of $1,000 principal amount of
               the Notes; or
          o    upon the occurrence of specified corporate transactions.

The Company has reserved 8,692 shares of Class A Common Stock for issuance
in the event the Notes are converted into the Company's common shares.

                                     11

<PAGE>
<PAGE>

Certain conversion features of the Notes and the contingent interest feature
meet the criteria of and qualify as embedded derivatives. Although these
features represent embedded derivative financial instruments, based on the
de minimis value of them at the time of issuance and at June 30, 2006, no
value has been assigned to these embedded derivatives.

The Notes, which are unsecured, do not contain any restrictions on the
payment of dividends, the incurrence of additional indebtedness or the
repurchase of the Company's securities, and do not contain any financial
covenants.

10. TAXABLE INDUSTRIAL REVENUE BONDS

In December 2005, the Company entered into a financing arrangement with St.
Louis County, Missouri related to expansion of its operations in St. Louis
County. Up to $135,500 of industrial revenue bonds may be issued to the
Company by St. Louis County relative to capital improvements made through
December 31, 2009. This agreement provides that 50% of the real and personal
property taxes on up to $135,500 of capital improvements will be abated for
a period of 10 years subsequent to the property being placed in service.
Industrial revenue bonds totaling $73,000 were outstanding at June 30, 2006.
The industrial revenue bonds are issued by St. Louis County to the Company
upon its payment of qualifying costs of capital improvements, which are then
leased by the Company for a period ending December 1, 2019, unless earlier
terminated. The Company has the option at any time to discontinue the
arrangement and regain full title to the abated property. The industrial
revenue bonds bear interest at 4.25% per annum and are payable as to
principal and interest concurrently with payments due under the terms of the
lease. The Company has classified the leased assets as property and
equipment and has established a capital lease obligation equal to the
outstanding principal balance of the industrial revenue bonds. Lease
payments may be made by tendering an equivalent portion of the industrial
revenue bonds. As the capital lease payments to St. Louis County may be
satisfied by tendering industrial revenue bonds (which is the Company's
intention), the capital lease obligation, industrial revenue bonds and
related interest expense and interest income, respectively, have been offset
for presentation purposes in the Consolidated Financial Statements.

11. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes all changes in equity during a period
except those that resulted from investments by or distributions to the
Company's shareholders. Other comprehensive income refers to revenues,
expenses, gains and losses that, under generally accepted accounting
principles, are included in comprehensive income, but excluded from net
income (loss) as these amounts are recorded directly as an adjustment to
shareholders' equity. For the Company, comprehensive income (loss) is
comprised of net income (loss) and the net changes in unrealized gains and
losses on available for sale marketable securities, net of applicable income
taxes. Total comprehensive income (loss) totaled $9,846 and $(21,944) for
the three months ended June 30, 2006 and 2005, respectively.

                                     12

<PAGE>
<PAGE>

12. SEGMENT REPORTING

The reportable operating segments of the Company are branded products,
specialty generics and specialty materials. The Company has aggregated its
branded product lines in a single segment because of similarities in
regulatory environment, manufacturing processes, methods of distribution and
types of customer. This segment includes patent-protected products and
certain trademarked off-patent products that the Company sells and markets
as brand pharmaceutical products. The specialty generics business segment
includes off-patent pharmaceutical products that are therapeutically
equivalent to proprietary products. The Company sells its brand and generic
products primarily to pharmaceutical wholesalers, drug distributors and
chain drug stores. The specialty materials segment is distinguished as a
single segment because of differences in products, marketing and regulatory
approval when compared to the other segments.

Accounting policies of the segments are the same as the Company's
consolidated accounting policies. Segment profits are measured based on
income before taxes and are determined based on each segment's direct
revenues and expenses. The majority of research and development expense,
corporate general and administrative expenses, amortization and interest
expense, as well as interest and other income, are not allocated to
segments, but included in the "all other" classification. Identifiable
assets for the three reportable operating segments primarily include
receivables, inventory, and property and equipment. For the "all other"
classification, identifiable assets consist of cash and cash equivalents,
corporate property and equipment, intangible and other assets and all income
tax related assets.

The following represents information for the Company's reportable operating
segments for the three months ended June 30, 2006 and 2005.

<TABLE>
<CAPTION>
                                THREE MONTHS
                                   ENDED         BRANDED     SPECIALTY      SPECIALTY      ALL
                                  JUNE 30,       PRODUCTS     GENERICS      MATERIALS     OTHER    ELIMINATIONS    CONSOLIDATED
                                  --------       --------     --------      ---------     -----    ------------    ------------

<C>                                 <C>          <C>         <C>            <C>         <C>         <C>              <C>
   Net revenues                     2006         $ 44,108    $ 48,789       $  4,882    $    604    $      -         $ 98,383
                                    2005           32,241      47,752          4,853         629           -           85,475

   Segment profit (loss)            2006           19,587      24,102          1,046     (28,721)          -           16,014
                                    2005           12,009      24,875          1,180     (55,728)          -          (17,664)

   Identifiable assets              2006           21,995      61,502          7,629     541,075      (1,158)         631,043
                                    2005           24,736      69,589          9,000     431,606      (1,158)         533,773

   Property and                     2006               93           -              -      15,107           -           15,200
    equipment additions             2005              121           -            191      22,080           -           22,392

   Depreciation and                 2006              177          84             41       5,066           -            5,368
    amortization                    2005              139          71             40       3,641           -            3,891
</TABLE>

       Consolidated revenues are principally derived from customers in North
       America and substantially all property and equipment is located in
       the St. Louis, Missouri metropolitan area.

                                     13

<PAGE>
<PAGE>

13. CONTINGENCIES - LITIGATION

The Company and ETHEX are named as defendants in a case brought by CIMA
LABS, Inc. and Schwarz Pharma, Inc. and styled CIMA LABS, Inc. et. al. v. KV
Pharmaceutical Company et. al. filed in U.S. District Court for the District
of Minnesota. It is alleged that the Company and ETHEX infringed on a CIMA
patent in connection with the manufacture and sale of Hyoscyamine Sulfate
Orally Dissolvable Tablets, 0.125 mg. The court has entered a stay pending
the outcome of the Patent and Trademark Office's reexamination of a patent
at issue in the suit. ETHEX will continue to market the product during the
stay. The Company intends to vigorously defend its interests when the stay
is lifted; however, it cannot give any assurance it will prevail.

The Company and ETHEX are named as defendants in a case brought by Solvay
Pharmaceuticals, Inc. and styled Solvay Pharmaceuticals, Inc. v. ETHEX
Corporation, filed in Federal District Court in Minnesota. In general,
Solvay alleges that ETHEX's comparative promotion of its Pangestyme(TM) CN
10 and Pangestyme(TM) CN 20 products to Solvay's Creon(R) 10 and Creon(R) 20
products resulted in false advertising and misleading statements under
various federal and state laws, and constituted unfair and deceptive trade
practices. Discovery has concluded. The court has entered an order granting
in part, and denying in part, the Company's motion for partial summary
judgment on certain of plaintiff's allegations of violations of the Lanham
Act. A second motion by the Company for partial summary judgment on
plaintiff's allegations is still pending. The case is expected to be tried
in 2006, but no trial date has been set. The Company intends to vigorously
defend its interests; however, it cannot give any assurance it will prevail.

KV previously distributed several pharmaceutical products that contained
phenylpropanolamine, or PPA, and that were discontinued in 2000 and 2001.
The Company is presently named a defendant in a product liability lawsuit in
Federal District Court in Mississippi involving PPA. The suit originated out
of a case, Virginia Madison, et al. v. Bayer Corporation, et al. The
original suit was filed in December 2002, but was not served on KV until
February 2003. The case was originally filed in the Circuit Court of Hinds
County, Mississippi, and was removed to the Federal District Court for the
Southern District of Mississippi by then co-defendant Bayer Corporation. The
case has been transferred to a Judicial Panel on Multi-District Litigation
for PPA claims sitting in the Western District of Washington. The claims
against the Company have been segregated into a lawsuit brought by Johnny
Fulcher individually and on behalf of the wrongful death beneficiaries of
Linda Fulcher, deceased, against the Company. It alleges bodily injury,
wrongful death, economic injury, punitive damages, loss of consortium and/or
loss of services from the use of the Company's distributed pharmaceuticals
containing PPA that have since been discontinued and/or reformulated to
exclude PPA. In May 2004, the case was dismissed with prejudice by the
Federal District Court for the Western District of Washington for a failure
to timely file an individual complaint as required by certain court orders.
The plaintiff filed a request for reconsideration which was opposed and
subsequently denied by the Court in June 2004. In July 2004, the plaintiff
filed a notice of appeal of the dismissal. The Company has opposed this
appeal. The Company intends to vigorously defend its interests; however, it
cannot give any assurance it will prevail.

The Company has also been advised that one of its former distributor
customers is being sued in Florida state court in a case captioned Darrian
Kelly v. K-Mart et. al. for personal injury allegedly caused by ingestion of
K-Mart diet caplets that are alleged to have been manufactured by the
Company and to contain PPA. The distributor has tendered defense of the case
to the Company and has asserted a right to indemnification for any financial
judgment it must pay. The Company previously notified its product liability
insurer of this claim in 1999 and again in 2004, and the Company has
demanded that the insurer assume the Company's defense. The insurer has
stated that it has retained counsel to secure additional factual information
and will defer its coverage decision until that information is received. The
Company intends to vigorously defend its interests; however, it cannot give
any assurance that it will not be impleaded into the action, or that, if it
is impleaded, that it would prevail.

KV's product liability coverage for PPA claims expired for claims made after
June 15, 2002. Although the Company renewed its product liability coverage
for coverage after June 15, 2002, that policy excludes future PPA claims in
accordance with the standard industry exclusion. Consequently, as of June
15, 2002, the Company will provide for legal defense costs and indemnity
payments involving PPA claims on a going forward basis as


                                     14

<PAGE>
<PAGE>

incurred, including the Madison/Fulcher lawsuit that was filed after June
15, 2002. Moreover, the Company may not be able to obtain product liability
insurance in the future for PPA claims with adequate coverage limits at
commercially reasonable prices for subsequent periods. From time to time in
the future, KV may be subject to further litigation resulting from products
containing PPA that it formerly distributed. The Company intends to
vigorously defend its interests; however, it cannot give any assurance it
will prevail.

After the Company filed ANDAs with the FDA seeking permission to market a
generic version of the 25 mg, 50 mg, 100 mg, and 200 mg strengths of
Toprol-XL(R) in extended release capsule form, AstraZeneca filed lawsuits
against KV for patent infringement under the provisions of the Hatch-Waxman
Act. In the Company's Paragraph IV certification, KV contended that its
proposed generic versions do not infringe AstraZeneca's patents. Pursuant to
the Hatch-Waxman Act, the filing date of the suit against the Company
instituted an automatic stay of FDA approval of the Company's ANDA until the
earlier of a judgment, or 30 months from the date of the suit. The Company
filed motions for summary judgment with the Federal District Court in
Missouri alleging, among other things, that AstraZeneca's patent is invalid
and unenforceable. These motions have been granted. AstraZeneca has
appealed. The Company intends to vigorously defend its interests; however,
it cannot give any assurance it will prevail.

The Company and/or ETHEX have been named as defendants in certain
multi-defendant cases alleging that the defendants reported improper or
fraudulent pharmaceutical pricing information, i.e., Average Wholesale
Price, or AWP, and/or Wholesale Acquisition Cost, or WAC, information, which
caused the governmental plaintiffs to incur excessive costs for
pharmaceutical products under the Medicaid program. Cases of this type have
been filed against the Company and/or ETHEX and other pharmaceutical
manufacturer defendants by the State of Massachusetts, the State of Alabama,
the State of Mississippi, New York City, and approximately 42 counties in
New York State. The New York City case and all New York county cases (other
than Erie County and complaints for two counties that have been filed but
not yet served on the Company) have been transferred to the U.S. District
Court for the District of Massachusetts for coordinated or consolidated
pretrial proceedings under the Average Wholesale Price Multidistrict
Litigation (MDL No. 1456). One of the counties, Erie County, challenged the
transfer and the Erie County Case has been remanded to state court. Each of
these actions is in the early stages, with fact discovery at beginning
phases in the Alabama, Massachusetts and Mississippi cases, but has not yet
commenced in the New York City/counties or the Erie County case. The Company
intends to vigorously defend its interests in the actions described above;
however, it cannot give any assurance it will prevail.

The Company believes that various other governmental entities have commenced
investigations into the generic and branded pharmaceutical industry at large
regarding pricing and price reporting practices. Although the Company
believes its pricing and reporting practices have complied in all material
respects with its legal obligations, it cannot give any assurance that it
would prevail if legal actions are instituted by these governmental
entities.

The Company and ETHEX are named as defendants in a case brought by the
Estate of Bertie Helen Dye and styled Hope Campbell and Charles Lee Dye,
Co-administrators of the Estate of Bertie Helen Dye filed in U.S. District
Court for the District of Virginia. It is alleged that the Company and ETHEX
caused Ms. Dye's death in connection with their manufacture and sale of
Ethezyme 830, a topical wound debridement ointment. The claims are for
negligence, breach of warranty, fraud and punitive damages. Discovery has
begun and the trial is set for October 16, 2006. The Company intends to
vigorously defend its interests; however; it cannot give any assurance it
will prevail.

The Company and ETHEX are named as co-defendants in a suit in the U.S.
District Court for the Southern District of Florida filed by the personal
representative of the estate of Joyce Hoyle and her children in connection
with Ms. Hoyle's death in 2003, allegedly from oxycodone toxicity styled
Thomas Hoyle v. Purdue Pharma et al. The suit alleges that between June 2001
and May 2003 Ms. Hoyle was prescribed and took three different opiate pain
medications manufactured and sold by the defendants, including one product,
oxycodone, that was manufactured by the Company and marketed by ETHEX, and
that such medications were promoted without sufficient warnings about the
side effect of addiction. The causes of action are strict liability for an
inherently dangerous product, negligence, breach of express and implied
warranty and breach of implied warranty of fitness for a particular purpose.
The discovery process has not yet begun, and the court has set the trial to
commence on July 16, 2007. The Company intends to vigorously defend its
interests; however, it cannot give any assurance that it will prevail.

                                     15

<PAGE>
<PAGE>

On May 20, 2005, the Company was notified by the SEC that a non-public
formal investigation was initiated that appears to relate to the Form 8-K
disclosures the Company made on July 13, 2004. The Company believes the
matter will be satisfactorily resolved.

From time to time, the Company is involved in various other legal
proceedings in the ordinary course of its business. While it is not feasible
to predict the ultimate outcome of such other proceedings, the Company
believes that the ultimate outcome of such other proceedings will not have a
material adverse effect on its results of operations or financial position.

There are uncertainties and risks associated with all litigation and there
can be no assurance that the Company will prevail in any particular
litigation.

14. RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory
Costs, an Amendment to ARB No. 43, Chapter 4," which requires that abnormal
amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage) costs be recognized as current period charges. In
addition, this statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facilities. This statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005. The adoption of
SFAS 151 on April 1, 2006 did not have a material effect on the Company's
Consolidated Financial Statements.

In December 2004, the FASB issued SFAS 123R, which replaces SFAS No. 123,
"Accounting for Stock-Based Compensation" and supersedes APB 25. SFAS 123R
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based on their
fair values. The intrinsic value method as permitted under APB 25 together
with the pro forma disclosures previously permitted under SFAS 123 no longer
will be an alternative to financial statement recognition. Under SFAS 123R,
the Company must determine the appropriate fair value model to be used for
valuing share-based payments, the amortization method for compensation cost
and the transition method to be used at date of adoption. The transition
methods include modified prospective and modified retrospective adoption
options. Under the modified retrospective option, prior periods may be
restated either as of the beginning of the year of adoption or for all
periods presented. The modified prospective method requires that
compensation expense be recorded for all unvested stock options and
restricted stock at the beginning of the first quarter of adoption of SFAS
123R, while the modified retrospective method would record compensation
expense for all unvested stock options and restricted stock beginning with
the first period restated. On April 1, 2006, the Company adopted SFAS 123R
using the modified prospective method (see Note 4).

In March 2005, the SEC issued SEC Staff Accounting Bulletin No. 107 ("SAB
107") which describes the SEC staff position as well as supplemental
implementation guidance on the application and adoption of SFAS 123R. The
Company has applied the provisions of SAB 107 and its guidance in its
adoption of SFAS 123R on April 1, 2006 (see Note 4).

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154"), which replaces Accounting Principles Board
("APB") Opinion No. 20, "Accounting Changes" ("APB 20"), and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial Statements" ("SFAS 3").
SFAS 154 applies to all voluntary changes in accounting principle and
changes the requirements for the accounting for and reporting of a change in
accounting principle. SFAS 154 also requires retrospective application to
prior period financial statements involving changes in accounting principle
unless it is impracticable to determine either the period-specific or
cumulative effect of the change. This statement also requires that a change
in the method of depreciation, amortization or depletion of long-lived
assets be accounted for as a change in accounting estimate that is accounted
for prospectively. SFAS 154 also retains many provisions of APB 20 including
those related to reporting a change in accounting estimate, a change in the
reporting entity and a correction of an error and also carries forward
provisions of SFAS 3 governing the reporting of accounting changes in
interim financial statements. SFAS 154 is effective for accounting changes
and corrections of errors made in fiscal years beginning


                                     16

<PAGE>
<PAGE>

after December 15, 2005. The adoption of SFAS 154 on April 1, 2006 did not
have a material effect on the Company's Consolidated Financial Statements.

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109"
("FIN 48"), which prescribes accounting for and disclosure of uncertainty in
tax positions. This interpretation defines the criteria that must be met for
the benefits of a tax position to be recognized in the financial statements
and the measurement of tax benefits recognized. Additionally, FIN 48
provides guidance on subsequent derecognition of tax positions, financial
statement classification, recognition of interest and penalties, accounting
in interim periods, and disclosure and transition requirements. FIN 48 is
effective for fiscal years beginning after December 15, 2006, with early
adoption permitted. The Company is currently determining the impact the
adoption of FIN 48 will have on its financial condition and results of
operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Form 10-Q, including the documents that we incorporate herein by
reference, contains various forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995
("PSLRA"), and which may be based on or include assumptions concerning our
operations, future results and prospects. Such statements may be identified
by the use of words like "plans," "expect," "aim," "believe," "projects,"
"anticipate," "commit," "intend," "estimate," "will," "should," "could," and
other expressions that indicate future events and trends.

All statements that address expectations or projections about the future,
including without limitation, statements about our strategy for growth,
product development, regulatory approvals, market position, acquisitions,
revenues, expenditures and other financial results, are forward-looking
statements.

All forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the "safe harbor"
provisions, we provide the following cautionary statements identifying
important economic, political and technology factors which, among others,
could cause actual results or events to differ materially from those set
forth or implied by the forward-looking statements and related assumptions.

Such factors include (but are not limited to) the following: (1) changes in
the current and future business environment, including interest rates and
capital and consumer spending; (2) the difficulty of predicting FDA
approvals, including timing, and that any period of exclusivity may not be
realized; (3) acceptance and demand for new pharmaceutical products; (4) the
impact of competitive products and pricing, including as a result of
so-called authorized-generic drugs; (5) new product development and launch,
including the possibility that any product launch may be delayed or that
product acceptance may be less than anticipated; (6) reliance on key
strategic alliances; (7) the availability of raw materials; (8) the
regulatory environment, including regulatory agency and judicial actions and
changes in applicable law or regulations; (9) fluctuations in operating
results; (10) the difficulty of predicting international regulatory
approval, including the timing; (11) the difficulty of predicting the
pattern of inventory movements by our customers; (12) the impact of
competitive response to our sales, marketing and strategic efforts; (13)
risks that we may not ultimately prevail in our litigation; and (14) the
risks detailed from time to time in our filings with the Securities and
Exchange Commission.

This discussion is by no means exhaustive, but is designed to highlight
important factors that may impact the Company's outlook. We undertake no
obligation to update any of the forward-looking statements after the date of
this report.

                                     17

<PAGE>
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION

Except for the historical information contained herein, the following
discussion contains forward-looking statements that are subject to known and
unknown risks, uncertainties, and other factors that may cause our actual
results to differ materially from those expressed or implied by those
forward-looking statements. These risks, uncertainties and other factors are
discussed above under the caption "Cautionary Statement Regarding
Forward-Looking Information." In addition, the following discussion and
analysis of financial condition and results of operations should be read in
conjunction with the consolidated financial statements, the related notes to
consolidated financial statements and "Management's Discussion and Analysis
of Results of Operations and Financial Condition" included in our Annual
Report on Form 10-K for the fiscal year ended March 31, 2006, and the
unaudited interim consolidated financial statements and related notes to
unaudited interim consolidated financial statements included in Item 1 of
this Quarterly Report on Form 10-Q.

BACKGROUND

We are a fully integrated specialty pharmaceutical company that develops,
acquires, manufactures and markets technologically-distinguished branded and
generic/non-branded prescription pharmaceutical products. We have a broad
range of dosage form capabilities, including tablets, capsules, creams,
liquids and ointments. We conduct our branded pharmaceutical operations
through Ther-Rx Corporation and our generic/non-branded pharmaceutical
operations through ETHEX Corporation, which focuses principally on
technologically-distinguished generic products. Through Particle Dynamics,
Inc., we develop, manufacture and market technologically advanced,
value-added raw material products for the pharmaceutical, nutritional,
personal care, food and other markets.

We have a broad portfolio of drug delivery technologies which we leverage to
create technologically-distinguished brand name and specialty generic
products. We have developed and patented 15 drug delivery and formulation
technologies primarily in four principal areas: SITE RELEASE(R)
bioadhesives, oral controlled release, tastemasking and oral quick
dissolving tablets. We incorporate these technologies in the products we
market to control and improve the absorption and utilization of active
pharmaceutical compounds. These technologies provide a number of benefits,
including reduced frequency of administration, reduced side effects,
improved drug efficacy, enhanced patient compliance and improved taste.

Our drug delivery technologies allow us to differentiate our products in the
marketplace, both in the branded and generic pharmaceutical areas. We
believe that this differentiation provides substantial competitive
advantages for our products, allowing us to establish a strong record of
growth and profitability and a leadership position in certain segments of
our industry.

RESULTS OF OPERATIONS

For the three months ended June 30, 2006, we reported net income of $9.9
million compared to a net loss of $21.9 million in the first quarter of
fiscal 2006. During the comparable prior quarter, we recorded expense of
$30.4 million in connection with the FemmePharma acquisition (see Note 2)
that consisted of $29.6 million for acquired in-process research and
development and $0.9 million in direct expenses related to the transaction.
As a result of this, we incurred a net loss for the three months ended June
30, 2005 of $21.9 million, or $(0.45) per diluted share. Excluding the $30.4
million of expense associated with the prior year acquisition of
FemmePharma, net income for the three months ended June 30, 2006 would have
increased $1.4 million, or 16.3%.

Net revenues for the quarter increased $12.9 million, or 15.1%, as we
experienced sales growth of 36.8% in our branded products segment. The
resulting $5.3 million increase in gross profit was offset in part by a $2.2
million increase in operating expenses before taking into account the $30.4
million of expense associated with the prior year acquisition of
FemmePharma. The increase in operating expenses was primarily due to an
increase in personnel costs associated with expansion of the branded sales
force in fiscal 2006, an increase in management and other personnel, and the
impact of stock-based compensation expense recorded in conjunction with the
adoption of SFAS 123R (see Note 4).

                                     18

<PAGE>
<PAGE>

NET REVENUES BY SEGMENT
-----------------------

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                   2006         2005             $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Branded products                             $   44,108    $   32,241      $   11,867     36.8%
   as % of net revenues                            44.8%         37.7%
Specialty generics                               48,789        47,752           1,037      2.2%
   as % of net revenues                            49.6%         55.9%
Specialty materials                               4,882         4,853              29      0.6%
   as % of net revenues                             5.0%          5.7%
Other                                               604           629             (25)    (4.0)%
                                             ----------    ----------      ----------
   Total net revenues                        $   98,383    $   85,475      $   12,908     15.1%
</TABLE>

The increase in branded product sales was due primarily to the continued
sales growth of our PreCare(R) product line which generated increased sales
of $12.6 million, a 154.7% increase compared to the prior year quarter. This
increase was attributable to sales growth experienced by our PrimaCare(R)
product line, the introduction of PreCare Premier(TM) and product line price
increases that have occurred over the past 12 months. Specifically, sales of
PrimaCare(R) ONE increased $8.0 million, or 339.7%, due to $5.4 million of
sales volume growth coupled with $2.6 million of higher sales associated
with price increases over the past year. The sales volume growth experienced
by PrimaCare(R) ONE was primarily due to continued market share gains since
the fourth quarter of fiscal 2005 when a temporary supply disruption of
PrimaCare(R) ONE occurred. The increase in prescription prenatal sales was
offset in part by a $0.8 million, or 5.9%, decrease in sales of our
anti-infective brands. This decrease reflected the impact during the three
months ended June 30, 2005 of larger-than-normal customer purchases of
Gynazole-1(R) made in anticipation of a July 2005 price increase. Our other
anti-infective brand, Clindesse(TM), generated sales of $5.3 million during
the quarter. Sales from our hematinic product line increased 3.4% to $8.8
million during the quarter as a $3.0 million reduction in sales from our
Chromagen(R) product line was more than offset by $2.5 million of
incremental sales associated with Repliva 21/7(TM), a new hematinic product
introduced in the second quarter of fiscal 2006, and increased sales from
our Niferex(R) product line. The decrease in Chromagen sales was partially
the result of additional fiscal 2006 first quarter sales of Chromagen as
customers responded to a July 2005 price increase.

The increase in specialty generic sales resulted primarily from sales volume
growth in our pain management product line, offset in part by a decline in
sales volume from certain products in our cardiovascular product line. The
pain management product line, which comprised 22.6% of specialty generic
sales during the quarter compared to 17.8% for the prior quarter,
contributed $2.6 million in increased revenue due primarily to incremental
sales from three product approvals which were received in fiscal 2006.

                                     19

<PAGE>
<PAGE>

GROSS PROFIT BY SEGMENT
-----------------------

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Branded products                             $   38,886    $   29,427      $    9,459     32.1%
   as % of net revenues                            88.2%         91.3%
Specialty generics                               27,615        27,642             (27)    (0.1)%
   as % of net revenues                            56.6%         57.9%
Specialty materials                               1,998         2,026             (28)    (1.4)%
   as % of net revenues                            40.9%         41.7%
Other                                            (3,937)          178          (4,115)      NM
                                             ----------    ----------      ----------
   Total gross profit                        $   64,562    $   59,273      $    5,289      8.9%
     as % of total net revenues                    65.6%         69.3%
</TABLE>

The increase in gross profit was primarily due to the significant sales
growth experienced by our branded products segment. The lower gross profit
percentage on a consolidated basis reflected the impact of higher production
costs that resulted from lower than expected production volume, coupled with
an increase in reserves for obsolete inventory. The gross profit percentage
decrease experienced by branded products was partially due to the impact of
rebates associated with branded product sales to managed care organizations
that began late last year.

RESEARCH AND DEVELOPMENT
------------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Research and development                     $    7,890    $    7,632      $      258      3.4%
  as % of net revenues                              8.0%          8.9%
</TABLE>

The increase in research and development expense was primarily due to an
increase in personnel expenses associated with the growth of our research
and development staff. Research and development expense for the quarter grew
at a slower rate than management anticipated due to the timing of certain
clinical studies that are now planned for later in fiscal 2007.

We anticipate that research and development costs for the remainder of
fiscal 2007 will increase between 25% and 30% over fiscal 2006 levels based
on our growing product development pipeline and as we move forward with the
Phase III clinical study on the endometriosis product acquired in the first
quarter of fiscal 2006.

                                     20

<PAGE>
<PAGE>

PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
---------------------------------------------
<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED JUNE 30,
                                                  -------------------------------------------------

                                                                                       CHANGE
                                                                                -------------------

             ($ IN THOUSANDS):                       2006          2005              $           %
                                                  ----------    ----------      ----------     ----

<C>                                               <C>           <C>             <C>            <C>
Purchased in-process research and development     $        -    $   30,441      $  (30,441)      NM
 as % of net revenues                                      -%         35.6%
</TABLE>

During the three months ended June 30, 2005, we recorded expense of $30.4
million in connection with the FemmePharma acquisition (see Note 2) that
consisted of $29.6 million for acquired in-process research and development
and $0.9 million in direct expenses related to the transaction. The
valuation of acquired in-process research and development represents the
estimated fair value of the worldwide marketing rights to an endometriosis
product we acquired as part of the FemmePharma, Inc. acquisition that, at
the time of the acquisition, had no alternative future use and for which
technological feasibility had not been established. The FemmePharma
acquisition expense of $30.4 million reduced our diluted earnings per share
for the three months ended June 30, 2005 by $0.62.

SELLING AND ADMINISTRATIVE
--------------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Selling and administrative                   $   39,283    $   37,360      $    1,923      5.2%
  as % of net revenues                             39.9%         43.7%
</TABLE>

The increase in selling and administrative expense was primarily due to
increases in personnel, promotional and marketing costs associated with
expanded sales efforts and increases in facilities, management and other
personnel costs over the past year. The increase in personnel costs was also
impacted by the adoption of SFAS 123R, "Share Based Payment," using the
modified prospective method which resulted in the recognition of $0.5
million of stock-based compensation expense during the quarter. There was no
share-based employee compensation expense recognized in the three months
ended June 30, 2005 as the Company previously followed the recognition and
measurement principles of APB 25. Also, in accordance with the adoption of
SFAS 123R using the modified prospective method, the Consolidated Financial
Statements for the three months ended June 30, 2005 have not been restated
to reflect, and do not include, the share-based compensation impact of SFAS
123R. The increase in these costs was offset in part by an $0.8 million
reimbursement of legal fees received during the quarter.

                                     21

<PAGE>
<PAGE>

OPERATING INCOME (LOSS)
-----------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Operating income (loss)                      $   16,192    $  (17,340)     $   33,532       NM
</TABLE>

The improvement in operating income was partially due to the $30.4 million
of expense we recorded during the three months ended June 30, 2005 in
connection with the FemmePharma acquisition. Without taking into account the
$30.4 million of expense associated with the prior year acquisition of
FemmePharma, operating income for the three months ended June 30, 2006 would
have increased $3.1 million, or 23.6%.

INTEREST EXPENSE
----------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Interest expense                             $    2,236    $    1,377      $      859     62.4%
</TABLE>

The increase in interest expense was primarily due to interest incurred on
the $43.0 million mortgage loan agreement we entered into in March 2006
coupled with the completion of a number of capital projects during fiscal
2006 and the related reduced level of capitalized interest thereon.

INTEREST AND OTHER INCOME
-------------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Interest and other income                    $    2,058    $    1,053      $    1,005     95.4%
</TABLE>

The increase in interest and other income was primarily due to an increase
in interest income on short-term investments and dividends earned on the
Strides redeemable preferred stock investment. The increase in interest
income resulted from the effect of investing excess cash in short-term
investments with higher yielding interest rates, an increase in the average
balance of invested cash and the increase in short-term interest rates.

                                     22

<PAGE>
<PAGE>

PROVISION FOR INCOME TAXES
--------------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Provision for income taxes                   $    6,136    $    4,280      $    1,856     43.4%
  effective tax rate                               38.3%         33.5%
</TABLE>


The effective tax rate for the quarter was adversely affected by the
expiration of Federal research and experimentation tax credits on December
31, 2005, which cannot be recognized until passed by Congress. The effective
tax rate was also adversely affected by the non-deductibility of stock-based
compensation recorded in accordance with SFAS 123R (see Note 4) as all of
our outstanding stock options were issued as incentive stock options. For
the three months ended June 30, 2005, we recorded a provision for income
taxes as the $30.4 million of expense we recognized for the FemmePharma
acquisition was determined to not be deductible for tax purposes. The
effective tax rate of 33.5 % was applied to a pre-tax income amount for the
three months ended June 30, 2005 that excluded the FemmePharma acquisition
expense of $30.4 million.

NET INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE
-------------------------------------------------------
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,
                                             -------------------------------------------------

                                                                                  CHANGE
                                                                           -------------------

             ($ IN THOUSANDS):                  2006          2005              $           %
                                             ----------    ----------      ----------     ----

<C>                                          <C>           <C>             <C>            <C>
Net income (loss)                            $    9,878    $  (21,944)     $   31,822       NM
  Diluted earnings (loss) per share                0.18         (0.45)           0.63       NM
</TABLE>

The improvement in net income was partially due to the $30.4 million of
expense we recorded during the three months ended June 30, 2005 in
connection with the FemmePharma acquisition. The FemmePharma acquisition
expense of $30.4 million reduced our diluted earnings per share for the
three months ended June 30, 2005 by $0.62. Excluding the effect of the $30.4
million of expense associated with the prior year acquisition of
FemmePharma, net income for the three months ended June 30, 2006 would have
increased $1.4 million, or 16.3%.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and working capital were $58.2 million and $313.4
million, respectively, at June 30, 2006, compared to $100.7 million and
$311.2 million, respectively, at March 31, 2006. The decrease in cash and
cash equivalents resulted primarily from the $45.4 million of additional
short-term marketable securities that were purchased and classified as
available for sale during the quarter. The primary source of operating cash
flow used in the funding of our businesses continues to be internally
generated funds from product sales. For the three months ended June 30,
2006, our net cash flow from operations of $18.0 million resulted primarily
from net income adjusted for non-cash items.

Net cash flow used in investing activities included capital expenditures of
$15.2 million for the three months ended June 30, 2006 compared to $22.4
million for the corresponding prior year period. In June 2006, the Company
completed the purchase of a 129,000 square foot building in the St. Louis
metropolitan area for $4.9 million. The property had been leased by the
Company since June 2001 and is used as a manufacturing facility and office
space. The purchase price was paid with cash. The remaining capital
expenditures during the quarter were primarily for purchasing machinery and
equipment to upgrade and expand our pharmaceutical manufacturing and
distribution capabilities, and for other building renovation projects. Other
investing activities during the quarter consisted of $45.4 million in
purchases of short-term marketable securities that were classified as
available for sale. For the corresponding prior year quarter, other
investing activities included the acquisition of FemmePharma for a $25.0

                                     23

<PAGE>
<PAGE>

million cash payment and the purchase of Strides redeemable preferred stock
for $11.3 million (see Note 2).

Our debt balance was $242.7 million at June 30, 2006 compared to $243.0
million at March 31, 2006. In March 2006, we entered into a $43.0 million
mortgage loan agreement with one of our primary lenders, in part, to
refinance $9.9 million of existing mortgages. The $32.8 million of net
proceeds we received from the new mortgage loan will be used for working
capital and general corporate purposes. The new mortgage loan bears interest
at a rate of 5.91% and matures on April 1, 2021.

In May 2003, we issued $200.0 million principal amount of Convertible
Subordinated Notes that are convertible, under certain circumstances, into
shares of our Class A common stock at an initial conversion price of $23.01
per share. The Convertible Subordinated Notes bear interest at a rate of
2.50% and mature on May 16, 2033. We are also obligated to pay contingent
interest at a rate equal to 0.5% per annum during any six-month period
commencing May 16, 2006, if the average trading price of the Notes per
$1,000 principal amount for the five-trading day period ending on the third
trading day immediately preceding the first day of the applicable six-month
period equals $1,200 or more. We may redeem some or all of the Convertible
Subordinated Notes at any time on or after May 21, 2006, at a redemption
price, payable in cash, of 100% of the principal amount of the Convertible
Subordinated Notes, plus accrued and unpaid interest (including contingent
interest, if any) to the date of redemption. Holders may require us to
repurchase all or a portion of their Convertible Subordinated Notes on May
16, 2008, 2013, 2018, 2023 and 2028, or upon a change in control, as defined
in the indenture governing the Convertible Subordinated Notes, at 100% of
the principal amount of the Convertible Subordinated Notes, plus accrued and
unpaid interest (including contingent interest, if any) to the date of
repurchase, payable in cash. The Convertible Subordinated Notes are
subordinate to all of our existing and future senior obligations.

On June 9, 2006, we replaced our $140.0 million credit line by entering into
a new credit agreement with ten banks that provides for a revolving line of
credit for borrowing up to $320.0 million. The new credit agreement also
includes a provision for increasing the revolving commitment, at the
lenders' sole discretion, by up to an additional $50.0 million. The new
credit facility is unsecured unless we, under certain specified
circumstances, utilize the facility to redeem part or all of our outstanding
Convertible Subordinated Notes. Interest is charged under the facility at
the lower of the prime rate or one-month LIBOR plus 62.5 to 150 basis points
depending on the ratio of senior debt to EBITDA. The new credit agreement
contains financial covenants that impose limits on dividend payments,
require minimum equity, a maximum senior leverage ratio and minimum fixed
charge coverage ratio. The new credit facility has a five-year term expiring
in June 2011. As of June 30, 2006, we were in compliance with all of our
covenants and there were no borrowings outstanding under the facility.

In December 2005, we entered into a financing arrangement with St. Louis
County, Missouri related to expansion of our operations in St. Louis County
(see Note 10 to Consolidated Financial Statements). Up to $135.5 million of
industrial revenue bonds may be issued to us by St. Louis County relative to
capital improvements made through December 31, 2009. This agreement provides
that 50% of the real and personal property taxes on up to $135.5 million of
capital improvements will be abated for a period of 10 years subsequent to
the property being placed in service. Industrial revenue bonds totaling
$73.0 million were outstanding at June 30, 2006. The industrial revenue
bonds are issued by St. Louis County to us upon our payment of qualifying
costs of capital improvements, which are then leased by us for a period
ending December 1, 2019, unless earlier terminated. We have the option at
any time to discontinue the arrangement and regain full title to the abated
property. The industrial revenue bonds bear interest at 4.25% per annum and
are payable as to principal and interest concurrently with payments due
under the terms of the lease. We have classified the leased assets as
property and equipment and have established a capital lease obligation equal
to the outstanding principal balance of the industrial revenue bonds. Lease
payments may be made by tendering an equivalent portion of the industrial
revenue bonds. As the capital lease payments to St. Louis County may be
satisfied by tendering industrial revenue bonds (which is our intention),
the capital lease obligation, industrial revenue bonds and related interest
expense and interest income, respectively, have been offset for presentation
purposes in the Consolidated Financial Statements.

We believe our cash and cash equivalents balance, cash flows from operations
and funds available under our credit facilities, will be adequate to fund
operating activities for the presently foreseeable future, including the
payment of short-term and long-term debt obligations, capital improvements,
research and development expenditures, product development activities and
expansion of marketing capabilities for the branded pharmaceutical business.
In addition, we continue to examine opportunities to expand our business
through the acquisition of or investment


                                     24

<PAGE>
<PAGE>

in companies, technologies, product rights, research and development and
other investments that are compatible with our existing businesses. We
intend to use our available cash to help in funding any acquisitions or
investments. As such, cash has been invested in short-term, highly liquid
instruments. We also may use funds available under our credit facilities, or
financing sources that subsequently become available, including the future
issuances of additional debt or equity securities, to fund these
acquisitions or investments. If we were to fund one or more such
acquisitions or investments, our capital resources, financial condition and
results of operations could be materially impacted in future periods.

INFLATION

Inflation may apply upward pressure on the cost of goods and services used
by us in the future. However, we believe that the net effect of inflation on
our operations during the past three years has been minimal. In addition,
changes in the mix of products sold and the effect of competition has made a
comparison of changes in selling prices less meaningful relative to changes
in the overall rate of inflation over the past three years.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are presented on the basis of U.S.
generally accepted accounting principles. Certain of our accounting policies
are particularly important to the portrayal of our financial position and
results of operations and require the application of significant judgment by
our management. As a result, these policies are subject to an inherent
degree of uncertainty. In applying these policies, we make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues
and expenses and related disclosures. We base our estimates and judgments on
historical experience, the terms of existing contracts, observance of trends
in the industry, information that is obtained from customers and outside
sources, and on various other assumptions that are believed to be reasonable
and appropriate under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Although we believe that
our estimates and assumptions are reasonable, actual results may differ
significantly from our estimates. Changes in estimates and assumptions based
upon actual results may have a material impact on our results of operations
and/or financial condition. Our critical accounting estimates are described
below.

REVENUE RECOGNITION AND PROVISIONS FOR ESTIMATED REDUCTIONS TO GROSS
--------------------------------------------------------------------
REVENUES. Revenue is generally realized or realizable and earned when
---------
persuasive evidence of an arrangement exists, the seller's price to the
buyer is fixed or determinable, the customer's payment ability has been
reasonably assured and title and risk of ownership have been transferred to
the customer, which is typically upon shipment to the customer.

Simultaneously with the recognition of revenue, we reduce the amount of
gross revenues by recording estimated sales provisions for chargebacks,
sales rebates, sales returns, cash discounts and other allowances, and
Medicaid rebates. These sales provisions are established based upon
consideration of a variety of factors, including but not limited to,
historical relationship to revenues, historical payment and return
experience, estimated and actual customer inventory levels, customer rebate
arrangements, and current contract sales terms with wholesale and indirect
customers.

From time to time, we provide incentives to our wholesale customers, such as
trade show allowances or stocking allowances that they in turn use to
accelerate distribution to their end customers. We believe that such
incentives are normal and customary in the industry. Sales allowances are
accrued and revenue is recognized as sales are made pursuant to the terms of
the allowances offered to the customer. Due to the nature of these
allowances, we are able to accurately calculate the required provisions for
the allowances based on the specific terms in each agreement. Additionally,
customers will normally purchase additional product ahead of regular demand
to take advantage of the temporarily lower cost resulting from the sales
allowances. This practice has been customary in the industry and we believe
would be part of a customer's ordinary course of business inventory level.
We reserve the right, with our major wholesale customers, to limit the
amount of these forward buys. Sales made as a result of allowances offered
on our specialty generics product line in conjunction with trade shows
sponsored by our major wholesale customers and for other promotional
programs accounted for 13.1% and 10.2% of total gross revenues for the three
months ended June 30, 2006 and 2005, respectively.

                                     25

<PAGE>
<PAGE>

In addition, we understand that certain of our wholesale customers have
anticipated the timing of price increases and have made, and may continue to
make, business decisions to buy additional product in anticipation of future
price increases. This practice has been customary in the industry and we
believe would be part of a customer's ordinary course of business inventory
level.

We evaluate inventory levels at our wholesale customers, which accounted for
approximately 60% of our unit sales during the three months ended June 30,
2006, through an internal analysis that considers, among other things,
wholesaler purchases, wholesaler contract sales, available end consumer
prescription information and inventory data received from our three largest
wholesale customers. We believe that our evaluation of wholesaler inventory
levels allows us to make reasonable estimates of our reserve balances.
Further, our products are typically sold with adequate shelf life to permit
sufficient time for our wholesaler customers to sell our products in their
inventory through to the end consumer.

The following table reflects the activity during the three months ended June
30, 2006 for each accounts receivable reserve:

<TABLE>
<CAPTION>
                                                           Current Provision   Current Provision   Actual Returns
                                                           Related to Sales    Related to Sales      or Credits
              (in thousands)                    Beginning     Made in the           Made in             in the          Ending
                                                 Balance    Current Period       Prior Periods     Current Period       Balance
                                                ---------  -----------------   -----------------   --------------       --------
<C>                                             <C>             <C>                  <C>               <C>              <C>
THREE MONTHS ENDED JUNE 30, 2006
  Accounts Receivable Reserves:
    Chargebacks                                 $ 14,621        $ 23,692             $ -               $ (25,993)       $ 12,320
    Sales Rebates                                  2,262           3,349               -                  (3,021)          2,590
    Sales Returns                                  2,173           2,866               -                  (2,969)          2,070
    Cash Discounts and Other Allowances            4,317           4,003               -                  (4,750)          3,570
    Medicaid Rebates                               5,944           2,096               -                  (1,811)          6,229
                                                --------        --------             ---               ---------        --------
      TOTAL                                     $ 29,317        $ 36,006             $ -               $ (38,544)       $ 26,779
                                                ========        ========             ===               =========        ========
</TABLE>

The decrease in the reserve for chargebacks at June 30, 2006 was primarily
due to our specialty generics segment experiencing a 20.5% decline in the
average chargeback per unit since March 31, 2006. This decrease resulted
from our specialty generics segment reducing the invoice price to our
wholesale customers (referred to as wholesale acquisition cost, or "WAC") on
a number of generic products during the quarter. As a result of the WAC
decrease to certain generic products, we paid shelf-stock adjustments of
$4.5 million to our wholesale customers during the quarter. We also have
$1.7 million of unpaid shelf-stock adjustments associated with this WAC
reduction included in the June 30, 2006 reserve for chargebacks.

The reserves for sales rebates and cash discounts and other allowances
require a lower degree of subjectivity, are less complex in nature and are
more readily ascertainable due to specific contract terms, rates and
consistent historical performance. The reserves for chargebacks, sales
returns and Medicaid rebates, however, are more complex and require
management to make more subjective judgments. These reserves and their
respective provisions are discussed in further detail below.

Chargebacks - We market and sell products directly to wholesalers,
-----------
distributors, warehousing pharmacy chains, mail order pharmacies and other
direct purchasing groups. We also market products indirectly to independent
pharmacies, non-warehousing chains, managed care organizations, and group
purchasing organizations, collectively referred to as "indirect customers."
We enter into agreements with some indirect customers to establish contract
pricing for certain products. These indirect customers then independently
select a wholesaler from which to purchase the products at these contracted
prices. Alternatively, we may pre-authorize wholesalers to offer specified
contract pricing to other indirect customers. Under either arrangement, we
provide credit to the


                                     26

<PAGE>
<PAGE>

wholesaler for any difference between the contracted price with the indirect
customer and the wholesaler's invoice price. This credit is called a
chargeback.

Chargeback transactions are almost exclusively related to our specialty
generics business segment. During the three months ended June 30, 2006 and
2005, the chargeback provision reduced the gross sales of our specialty
generics segment by $23.7 million and $24.1 million, respectively. These
amounts accounted for 99.2% and 99.3% of the total chargeback provisions
recorded during the three months ended June 30, 2006 and 2005, respectively.

The provision for chargebacks is the most significant and complex estimate
used in the recognition of revenue. The primary factors we consider in
developing and evaluating the reserve for chargebacks include:

     |X|  The amount of inventory in the wholesale distribution channel. We
          receive actual inventory information from our three major
          wholesale customers and estimate the inventory position of the
          remaining wholesalers based on historical buying patterns. During
          the three months ended June 30, 2006, unit sales to our three
          major wholesale customers accounted for 80% of our total unit
          sales to all wholesalers, and the aggregate inventory position of
          the three major wholesalers at June 30, 2006 was approximately
          equivalent to our last ten weeks of shipments during the fiscal
          year. We currently use the last six weeks of our shipments as an
          estimate of the inventory held by the remaining wholesalers where
          we do not receive actual inventory data, as our experience and
          buying patterns indicate that our smaller wholesale customers
          carry less inventory than our large wholesale customers. As of
          June 30, 2006, each week of inventory for those remaining
          wholesalers represented approximately $0.2 million, or 1.6%, of
          the reported reserve for chargebacks.

     |X|  The percentage of sales to our wholesale customers that will
          result in chargebacks. Using our automated chargeback system we
          track, at the product level, the percentage of sales units shipped
          to our wholesale customers that eventually result in chargebacks
          to us. The percentage for each product, which is based on actual
          historical experience, is applied to the respective inventory
          units in the wholesale distribution channel. As of June 30, 2006,
          the aggregate weighted average percentage of sales to wholesalers
          assumed to result in chargebacks was approximately 95%, with each
          1% representing approximately $0.1 million, or 1.1%, of the
          reported reserve for chargebacks.

     |X|  Contract pricing and the resulting chargeback per unit. The
          chargeback provision is based on the difference between our
          invoice price to the wholesaler, or "WAC," and the contract price
          negotiated with either our indirect customer or with the
          wholesaler for sales by the wholesaler to the indirect customers.
          We calculate the price difference, or chargeback per unit, for
          each product and for each major wholesale customer using
          historical weighted average pricing, based on actual chargeback
          experience. Use of weighted average pricing over time compensates
          for changes in the mix of indirect customers and products from
          period to period. As of June 30, 2006, a 5% shift in the
          calculated chargeback per unit in the same direction across all
          products and customers would result in a $0.6 million, or 4.5%,
          impact on the reported reserve for chargebacks.

Shelf-Stock Adjustments - These adjustments represent credits issued to our
-----------------------
wholesale customers that result from a decrease in our WAC. Decreases in our
invoice prices are discretionary decisions we make to reflect market
conditions. These credits are customary in the industry and are intended to
reduce a wholesale customer's inventory cost to better reflect current
market prices. Generally, we provide credits to customers at the time the
price reduction occurs based on the inventory that is owned by them on the
effective date of the price reduction. Since a reduction in WAC reduces the
chargeback per unit, or the difference between WAC and the contract price,
shelf-stock adjustments are typically included as part of the reserve for
chargebacks because the price reduction credits act essentially as
accelerated chargebacks. Although we have contractually agreed to provide
price adjustment credits to our major wholesale customers at the time they
occur, the impact of any such price reductions not included in the reserve
for chargebacks is immaterial to the amount of revenue recognized in any
given period.

Sales Returns - Consistent with industry practice, we maintain a returns
-------------
policy that allows our direct and indirect customers to return product six
months prior to expiration and within one year after expiration. This policy
is applicable to both our branded and specialty generics business segments.
Upon recognition of revenue from product sales to customers, we provide for
an estimate of product to be returned. This estimate is determined by

                                     27

<PAGE>
<PAGE>

applying a historical relationship of customer returns to gross sales. We
evaluate the reserve for sales returns by calculating historical return
rates using data from the last 12 months on a product specific basis and by
class of trade (wholesale versus retail chain). The calculated percentages
are applied against estimates of inventory in the distribution channel on a
product specific basis. To determine the inventory levels in the wholesale
distribution channel, we utilize actual inventory information from our major
wholesale customers and estimate the inventory positions of the remaining
wholesalers based on historical buying patterns. For inventory held by our
non-wholesale customers, we use the last two months of sales to the direct
buying chains and the indirect buying retailers as an estimate. A 10% change
in the product specific historical return rates used in the reserve analysis
would have changed the reserve balance at June 30, 2006 by approximately
$0.2 million, or 7.5%, of the reported reserve for sales returns. A 10%
change in the amount of estimated inventory in the distribution channel
would have changed the reserve balance at June 30, 2006 by approximately
$0.2 million, or 8.0%, of the reported reserve for sales returns.

Medicaid Rebates - Established in 1990, the Medicaid Drug Rebate Program
----------------
requires a drug manufacturer to provide to each state a rebate every
calendar quarter for covered outpatient drugs dispensed to Medicaid
patients. Medicaid rebates apply to both our branded and specialty generic
segments. Individual states invoice us for Medicaid rebates on a quarterly
basis using statutorily determined rates for generic (11%) and branded (15%)
products, which are applied to the Average Manufacturer's Price, or "AMP,"
for a particular product to arrive at a Unit Rebate Amount, or "URA." The
amount owed is based on the number of units dispensed by the pharmacy to
Medicaid patients extended by the URA. The reserve for Medicaid rebates is
based on expected payments, which are driven by patient usage and estimated
inventory in the distribution channel. We estimate patient usage by
calculating a payment rate as a percentage of net sales lagged six months,
which is then applied to an estimate of customer inventory. We currently use
the last two months of our shipments to wholesalers and direct buying chains
as an estimate of inventory in the wholesale and chain channels and an
additional month of wholesale sales as an estimate of inventory held by the
indirect buying retailer. A 10% change in the amount of customer inventory
subject to Medicaid rebates would have changed the reserve at June 30, 2006
by $0.4 million, or 6.1% of the reported reserve for Medicaid rebates.
Similarly, a 10% change in estimated patient usage would have changed the
reserve at June 30, 2006 by $0.4 million, or 6.1% of the reported reserve
for Medicaid rebates.

INVENTORY VALUATION. Inventories consist of finished goods held for
--------------------
distribution, raw materials and work in process. Our inventories are stated
at the lower of cost or market, with cost determined on the first-in,
first-out basis. In evaluating whether inventory should be stated at the
lower of cost or market, we consider such factors as the amount of inventory
on hand and in the distribution channel, estimated time required to sell
existing inventory, remaining shelf life and current and expected market
conditions, including levels of competition. We establish reserves, when
necessary, for slow-moving and obsolete inventories based upon our
historical experience and management's assessment of current product demand.

INTANGIBLE ASSETS. Our intangible assets principally consist of product
------------------
rights, license agreements and trademarks resulting from product
acquisitions and legal fees and similar costs relating to the development of
patents and trademarks. Intangible assets that are acquired are stated at
cost, less accumulated amortization, and are amortized on a straight-line
basis over their estimated useful lives. Upon approval, costs associated
with the development of patents and trademarks are amortized on a
straight-line basis over estimated useful lives ranging from five to 17
years. We determine amortization periods for intangible assets that are
acquired based on our assessment of various factors impacting estimated
useful lives and cash flows of the acquired products. Such factors include
the product's position in its life cycle, the existence or absence of like
products in the market, various other competitive and regulatory issues, and
contractual terms. Significant changes to any of these factors may result in
a reduction in the intangible asset's useful life and an acceleration of
related amortization expense.

We assess the impairment of intangible assets whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Some
factors we consider important which could trigger an impairment review
include the following: (1) significant underperformance relative to expected
historical or projected future operating results; (2) significant changes in
the manner of our use of the acquired assets or the strategy for our overall
business; and (3) significant negative industry or economic trends.

When we determine that the carrying value of an intangible asset may not be
recoverable based upon the existence of one or more of the above indicators
of impairment, we first perform an assessment of the asset's recoverability.

                                     28

<PAGE>
<PAGE>

Recoverability is determined by comparing the carrying amount of an
intangible asset against an estimate of the undiscounted future cash flows
expected to result from its use and eventual disposition. If the sum of the
expected future undiscounted cash flows is less than the carrying amount of
the intangible asset, an impairment loss is recognized based on the excess
of the carrying amount over the estimated fair value of the intangible
asset.

CONTINGENCIES. We are involved in various legal proceedings, some of which
--------------
involve claims for substantial amounts. An estimate is made to accrue for a
loss contingency relating to any of these legal proceedings if it is
probable that a liability was incurred as of the date of the financial
statements and the amount of loss can be reasonably estimated. Because of
the subjective nature inherent in assessing the outcome of litigation and
because of the potential that an adverse outcome in legal proceedings could
have a material impact on our financial position or results of operations,
such estimates are considered to be critical accounting estimates. After
review, it was determined at June 30, 2006 that for each of the various
legal proceedings in which we are involved, the conditions mentioned above
were not met. We will continue to evaluate all legal matters as additional
information becomes available.

                                     29

<PAGE>
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited to fluctuating interest rates
associated with variable rate indebtedness and marketable securities that
are subject to interest rate changes.

Advances to us under our credit facilities bear interest at a rate that
varies consistent with increases or decreases in the publicly announced
prime rate and/or the LIBOR rate with respect to LIBOR-related loans, if
any. A material increase in such rates could significantly increase
borrowing expenses. We did not have any cash borrowings under our credit
facilities at June 30, 2006.

The majority of our investments in marketable securities are tax exempt
auction rate securities. The rates on these securities reset on a 28-day
cycle. As of June 30, 2006, we had invested $115,000 in auction rate
securities, primarily in high quality (Triple A Rated) municipal bonds.

In May 2003, we issued $200.0 million of Convertible Subordinated Notes. The
interest rate on the Convertible Subordinated Notes is fixed at 2.50% and
therefore not subject to interest rate changes. Beginning May 16, 2006, we
are obligated to pay contingent interest at a rate equal to 0.5% per annum
during any six-month period, if the average trading price of the Convertible
Subordinated Notes per $1,000 principal amount for the five-trading day
period ending on the third trading day immediately preceding the first day
of the applicable six-month period equals $1,200 or more. As of May 15,
2006, the average trading price of the Convertible Subordinated Notes had
not reached the price that would result in the payment of contingent
interest.

In March 2006, we entered into a $43.0 million mortgage loan secured by
three of our buildings that matures in April 2021. The interest rate on this
loan is fixed at 5.91% per annum and not subject to market interest rate
changes.

ITEM 4.    CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management, including our
principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures.

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our principal
executive officer and principal financial officer concluded that our
disclosure controls and procedures were effective as of the end of the
period covered by this report.

There have been no significant changes in our internal control over
financial reporting or in other factors that have materially affected, or
are reasonably likely to materially affect, our internal controls over
financial reporting in the first quarter of fiscal year 2007.

                                     30

<PAGE>
<PAGE>

PART II.  - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note 13 - CONTINGENCIES - LITIGATION to the
Consolidated Financial Statements included in Part I of this report is
incorporated in this Part II, Item 1 by reference.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors set forth in Item 1A,
"Risk Factors," of the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2006. Please refer to that section for disclosures
regarding the risks and uncertainties related to the Company's business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

        PURCHASE OF EQUITY SECURITIES BY THE COMPANY

        The following table provides information about purchases the
        Company made of its common stock during the quarter ended June 30,
        2006:

<TABLE>
<CAPTION>
                                                                           TOTAL NUMBER OF
                                     TOTAL NUMBER                          SHARES PURCHASED          MAXIMUM NUMBER
                                       OF SHARES                             AS PART OF A          OF SHARES THAT MAY
                                       PURCHASED    AVERAGE PRICE         PUBLICLY ANNOUNCED        YET BE PURCHASED
       PERIOD                            (a)        PAID PER SHARE             PROGRAM             UNDER THE PROGRAM

<C>                                     <C>            <C>                      <C>                       <C>
  April 1-30, 2006                        298          $ 23.06                   --                        --

  May 1-31, 2006                          317          $ 20.67                   --                        --

  June 1-30, 2006                       1,000          $ 17.68                   --                        --
                                        -----

    Total                               1,615          $ 19.26                   --                        --
                                        =====
</TABLE>

Shares were purchased from employees upon their termination pursuant to the
terms of the Company's stock option plan.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

           a) Exhibits. See Exhibit Index.

           b) Reports on Form 8-K.

                  None


                                     31

<PAGE>
<PAGE>

                                 SIGNATURES
                                 ----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                   K-V PHARMACEUTICAL COMPANY

Date:  August 8, 2006           By /s/  Marc S. Hermelin
                                   ------------------------------------------
                                   Marc S. Hermelin
                                   Chairman of the Board and
                                   Chief Executive Officer
                                   (Principal Executive Officer)

Date:  August 8, 2006           By /s/  Gerald R. Mitchell
                                   ------------------------------------------
                                   Gerald R. Mitchell
                                   Vice President and Chief Financial Officer
                                   (Principal Financial Officer)

Date:  August 8, 2006           By /s/ Richard H. Chibnall
                                   ------------------------------------------
                                   Richard H. Chibnall
                                   Vice President, Finance
                                   (Principal Accounting Officer)


                                     32

<PAGE>
<PAGE>


                                EXHIBIT INDEX

Exhibit No.                   Description
-----------                   -----------

   31.1         Certification of Chief Executive Officer.

   31.2         Certification of Chief Financial Officer.

   32.1         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   32.2         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                     33