According to a press release dated July 17, 2006, the complaint alleges violations of Sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Par, headquartered in New Jersey, develops, manufactures and markets more than 110 generic drugs and innovative branded pharmaceuticals for specialty markets. Specifically, the Complaint alleges that throughout the class period, defendants reported earnings that were materially inflated as a result of accounting errors including an understatement of accounts receivable reserves. The Company has now admitted that the overstatement of its revenues has resulted in Par overpaying its business partners in various profit sharing arrangements. As a result of the Company's internal review of its trade accounts receivable balances, the Company has decided to restate its previously reported financial statements for fiscal year 2004 and 2005 and the first quarter of 2006. In addition, Par announced it will write-off inventory in an amount up to $15 million due to flawed physical inventory procedures. In response to these revelations, on July 6, 2006, Par stock fell $4.78 per share, losing nearly 26% of its value in one day on extremely high volume of over 9 million shares traded, to close at $13.47 per share A similar, purported class action complaint has also been filed in the U.S. District Court for the Southern District of New York.

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