Taro Provides Results for Quarter Ended June 2013

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Taro Provides Results for Quarter Ended June 2013

HAWTHORNE, N.Y.--(BUSINESS WIRE)-- Taro Pharmaceutical Industries Ltd. (NYS: TARO) ("Taro" or the "Company") today provided unaudited financial results for the three month period ended June 30, 2013.

Quarter ended June 30, 2013 Highlights - compared to June 30, 2012

  • Net sales of $153.2 million, decreased $6.0 million, or 3.7%
  • Gross profit, as a percentage of net sales was 69.7%, compared to 71.7%
  • Research and development expenses increased 6.0% to $12.2 million and as a percentage of net sales was 8.0%, compared to 7.2%
  • Selling, marketing, general and administrative expenses increased $0.7 million, and as a percentage of net sales was 13.7%, compared to 12.7%
  • Operating income decreased to $73.6 million, or 48.0% of net sales, compared to $79.0 million, or 49.6% of net sales; a $5.4 million decrease
  • Net income attributable to Taro was $58.8 million compared to $62.9 million, a $4.1 million decrease, resulting in diluted earnings per share of $1.32 compared to $1.41.

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations was $64.4 million compared to $19.2 million for the three months ended June 30, 2012, which was negatively impacted by the payment of income taxes as reflected in the significant decrease in trade and other payables
  • Cash, including marketable securities, increased $52.1 million and $260.0 million to $612.6 million from March 31, 2013 and June 30, 2012, respectively.

Mr. Kal Sundaram, Taro's CEO stated, "Jim Kedrowski and the Taro team have done an excellent job of maximizing the market opportunities for the Taro portfolio. I would like to thank Jim for his many contributions to the organization." Mr. Sundaram continued, "The revenue decline is principally due to a net charge taken to meet contractual obligations associated with price adjustments made in the current quarter, the benefit of which should be realized in future periods. Excluding the one-time charge, Q1 sales would have increased over 10% versus the prior year. We also note the recent entry of competition for our flagship product, Nystatin/Triamcinalone, which we anticipate will result in the loss of sales and market share going forward."

FDA Approvals and Filings

The Company recently received three approvals from the U.S. Food and Drug Administration ("FDA") - a New Drug Application ("NDA") for Topicort® (desoximetasone) Spray, 0.25%, as well as Abbreviated New Drug Applications ("ANDAs") for Carbamazepine Extended release Capsules 100 mg, 200 mg and 300 mg, and Gabapentin Oral Solution, 250 mg/5mL. During the quarter, the Company filed one ANDA with the FDA. With this, ANDAs representing twenty products as well as one NDA await FDA approval.

Taro Board Announces Senior Leadership Changes

On July 18, the Company announced that Mr. Dilip Shanghvi has been appointed to Taro's Board of Directors as its Chairman. Effective August 1, 2013, Mr. James Kedrowski retired as the Interim Chief Executive Officer of the Company and Mr. Kal Sundaram has been appointed to serve as Chief Executive Officer of the Company. Mr. Kedrowski will continue to serve as a member of Taro's Board of Directors.

Form 20-F Filings with the SEC

On July 2, the Company filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission ("SEC") for the fiscal year ended March 31, 2013.

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change.

About Taro

Taro Pharmaceutical Industries Ltd. is a multinational, science-based pharmaceutical company, dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products. For further information on Taro Pharmaceutical Industries Ltd., please visit the Company's website at www.taro.com.


The unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments necessary to present fairly the financial condition and results of operations of the Company. The unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 20-F, as filed with the SEC.

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements that do not describe historical facts or that refer or relate to events or circumstances the Company "estimates," "believes," or "expects" to happen or similar language, and statements with respect to the Company's financial performance, availability of financial information, and estimates of financial results and information for fiscal year 2014. Although the Company believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurances that its expectations will be attained. Factors that could cause actual results to differ include general domestic and international economic conditions, industry and market conditions, changes in the Company's financial position, litigation brought by any party in any court in Israel, the United States, or any country in which Taro operates, regulatory and legislative actions in the countries in which Taro operates, and other risks detailed from time to time in the Company's SEC reports, including its Annual Reports on Form 20-F. Forward-looking statements are applicable only as of the date on which they are made. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.

**Financial Tables Follow**



(U.S. dollars in thousands, except share data)


Three Months Ended

June 30,

2013     2012
Sales, net $153,195 $159,152
Cost of sales 46,480   45,056  
Gross profit 106,715 114,096
Operating Expenses:
Research and development, net 12,212 11,525
Selling, marketing, general and administrative 20,953 20,284
Settlement and loss contingencies -   3,300  
Operating income 73,550 78,987
Financial Expenses, net:
Interest and other financial (income) expense (1,165 ) 390
Foreign exchange income (993 ) (708 )
Other income, net 396   365  
Income before income taxes 76,104 79,670
Tax expense 17,035   16,510  
Income from continuing operations 59,069 63,160
Net (loss) income from discontinued operations (123 ) 10  
Net income 58,946 63,170
Net income attributable to non-controlling interest 150   259  
Net income attributable to Taro $58,796   $62,911  
Net income per ordinary share

from continuing operations attributable to Taro:

Basic $1.32 $1.41
Diluted $1.32 $1.41
Net (loss) income per ordinary share

from discontinued operations attributable to Taro:

Basic $(0.00)* $0.00*
Diluted $(0.00)* $0.00*
Net income per ordinary share

attributable to Taro:

Basic $1.32 $1.41
Diluted $1.32 $1.41

Weighted-average number of ordinary shares used

to compute net income per ordinary share:

Basic 44,770,433 44,542,808
Diluted 44,774,048 44,643,181

* Amount is less than $0.01.




(U.S. dollars in thousands)


June 30,

March 31,

2013 2013
ASSETS (unaudited) (audited)
Cash and cash equivalents $273,558 $ 237,284
Short-term bank deposits 328,803 312,603
Restricted short-term bank deposits 7,430 7,430
Marketable securities 2,818 3,183
Accounts receivable and other:
Trade, net 116,599 119,810
Other receivables and prepaid expenses 133,760 119,768
Inventories 112,537 109,626
Long-term assets held for sale, net 69   67  
TOTAL CURRENT ASSETS 975,574 909,771
Long-term receivables and other assets 23,251 23,227
Property, plant and equipment, net 144,073 145,265
Other assets 27,477   28,373  
TOTAL ASSETS $1,170,375   $1,106,636  
Current maturities of long-term debt $ 11,497 $ 11,330
Trade payables and other current liabilities 199,966   181,201  
Long-term debt, net of current maturities 17,214 17,269
Deferred income taxes and other long-term liabilities 5,623   5,875  
TOTAL LIABILITIES 243,300 215,675
Taro shareholders' equity 931,311 886,347
Non-controlling interest 4,764   4,614  


$1,170,375   $1,106,636  


(U.S. dollars in thousands)



Three Months Ended June 30,

2013     2012
Operating Activities
Net income $ 58,946 $ 63,170
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,234 4,542
Stock-based compensation - 8
(Gain) loss on sale of marketable securities and long-lived assets (112 ) 32
Increase (decrease) in long-term debt due to currency fluctuations 310 (1,208 )
Decrease (increase) in trade receivables 2,881 (9,312 )
Change in derivative instruments, net 2,969 4,921
Increase in other receivables, prepaid expenses and other assets (14,415 ) (5,493 )
(Increase) decrease in inventories (4,058 ) 4,898
Foreign exchange effect on intercompany balances (3,856 ) (1,602 )
Increase (decrease) in trade and other payables and accruals 17,512   (40,748 )
Net cash provided by operating activities 64,411   19,208  


Investing Activities:
Purchase of property plant & equipment, net of related grants (3,898 ) (1,783 )
Investment in other intangible assets - (20 )
Proceeds from long-term deposits and other assets - 18
Investment in short-term and restricted bank deposits (20,694 ) (71,129 )
Proceeds from marketable securities 365   4,792  
Net cash used in investing activities (24,227 ) (68,122 )
Financing Activities:
Excess tax benefits from share-based payment arrangements 21 -
Proceeds from the issuance of shares, net 298 3,804
Repayments of long-term debt (197 ) (185 )
Net cash provided by financing activities 122   3,619  
Effect of exchange rate changes (4,032 ) (1,724 )
Net increase (decrease) in cash 36,274 (47,019 )
Cash at beginning of period 237,284   238,266  
Cash at end of period $273,558   $191,247  

Taro Pharmaceutical Industries Ltd.
Michael Kalb, 914-345-9001
William J. Coote, 914-345-9001
VP, Treasurer

KEYWORDS:   United States  Asia Pacific  North America  New York  Middle East  India  Israel


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