Taro Provides Results for Quarter Ended June 2013

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.

SAFE HARBOR STATEMENT

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**

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(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.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

June 30,

March 31,

2013

2013

ASSETS

(unaudited)

(audited)

CURRENT ASSETS:

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

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Current maturities of long-term debt

$ 11,497

$ 11,330

Trade payables and other current liabilities

199,966

181,201

TOTAL CURRENT LIABILITIES

211,463

192,531

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

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$1,170,375

$1,106,636

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(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
GVP, CFO
Michael.Kalb@taro.com
or
William J. Coote, 914-345-9001
VP, Treasurer
William.Coote@taro.com

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

INDUSTRY KEYWORDS:

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