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.

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 sales46,480 45,056 
Gross profit106,715114,096
 
Operating Expenses:
Research and development, net12,21211,525
Selling, marketing, general and administrative20,95320,284
Settlement and loss contingencies- 3,300 
Operating income73,55078,987
 
Financial Expenses, net:
Interest and other financial (income) expense(1,165)390
Foreign exchange income(993)(708)
 
Other income, net396 365 
Income before income taxes76,10479,670
Tax expense17,035 16,510 
Income from continuing operations59,06963,160
Net (loss) income from discontinued operations(123)10 
Net income58,94663,170
Net income attributable to non-controlling interest150 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:

Basic44,770,43344,542,808
Diluted44,774,04844,643,181
 

* Amount is less than $0.01.

 

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

    

June 30,

March 31,

20132013
ASSETS(unaudited)(audited)
 
CURRENT ASSETS:
Cash and cash equivalents$273,558$ 237,284
Short-term bank deposits328,803312,603
Restricted short-term bank deposits7,4307,430
Marketable securities2,8183,183
Accounts receivable and other:
Trade, net116,599119,810
Other receivables and prepaid expenses133,760119,768
Inventories112,537109,626
Long-term assets held for sale, net69 67 
TOTAL CURRENT ASSETS975,574909,771
 
Long-term receivables and other assets23,25123,227
Property, plant and equipment, net144,073145,265
Other assets27,477 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 liabilities199,966 181,201 
TOTAL CURRENT LIABILITIES211,463192,531
 
Long-term debt, net of current maturities17,21417,269
Deferred income taxes and other long-term liabilities5,623 5,875 
TOTAL LIABILITIES243,300215,675
 
Taro shareholders' equity931,311886,347
Non-controlling interest4,764 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 amortization4,2344,542
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 fluctuations310(1,208)
Decrease (increase) in trade receivables2,881(9,312)
Change in derivative instruments, net2,9694,921
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 accruals17,512 (40,748)
Net cash provided by operating activities64,411 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 securities365 4,792 
Net cash used in investing activities(24,227)(68,122)
 
Financing Activities:
Excess tax benefits from share-based payment arrangements21-
Proceeds from the issuance of shares, net2983,804
Repayments of long-term debt(197)(185)
Net cash provided by financing activities122 3,619 
 
Effect of exchange rate changes(4,032)(1,724)
Net increase (decrease) in cash36,274(47,019)
Cash at beginning of period237,284 238,266 
 
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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