Taro Pharmaceutical Industries Ltd.

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Taro Provides Results Year Ended March 31, 2013

HAWTHORNE, N.Y.--(BUSINESS WIRE)-- Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the three months and year ended March 31, 2013.

Quarter ended March 31, 2013 Highlights - compared to March 31, 2012

  • Net sales of $165.1 million, increased $20.0 million, or 13.8%, however, volumes have slightly declined
  • Gross profit, as a percentage of net sales was 72.4%, compared to 68.3%
  • Research and development expenses increased 23.9% to $12.2 million
  • Selling, marketing, general and administrative expenses decreased $1.0 million
  • Settlements and loss contingencies of $22.0 million, in March 2013, related to certain price reporting litigations
  • Operating income decreased to $63.1 million, or 38.2% of net sales, compared to $66.2 million, or 45.6% of net sales; however, excluding settlements and loss contingencies, operating income would have been $85.1 million, or 51.6% of net sales
  • Net income attributable to Taro was $49.2 million compared to $47.3 million, resulting in diluted earnings per share of $1.10 compared to $1.06

Year ended March 31, 2013 Highlights - compared to March 31, 2012

  • Net sales of $671.0 million, increased $127.9 million, or 23.5%, however, volumes have slightly declined
  • Gross profit, as a percentage of net sales was 73.7%, compared to 67.3%
  • Research and development expenses increased 39.0% to $46.5 million
  • Selling, marketing, general and administrative expenses decreased $8.1 million and as a percentage of net sales decreased from 17.4% to 12.9%
  • Settlements and loss contingencies, of $33.3 million, primarily related to certain price reporting litigations
  • Operating income increased to $328.6 million, or 49.0% of net sales, compared to $237.6 million, or 43.7% of net sales; however, excluding settlements and loss contingencies, operating income would have been $361.9 million, or 53.9% of net sales
  • Income tax expense increased $31.8 million from $36.0 million to $67.8 million
  • Net income attributable to Taro was $266.2 million compared to $204.3 million, a $61.9 million increase, resulting in diluted earnings per share of $5.95 compared to $4.59

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations for the year ended March 31, 2013, as compared to March 31, 2012, was $248.7 million compared to $235.1 million
  • Cash, including marketable securities, increased $226.2 million to $560.5 million from March 31, 2012

FDA Approvals and Filings

During the quarter, the Company filed Abbreviated New Drug Applications (“ANDAs”) for five (5) products with the U.S. Food and Drug Administration (“FDA”). With this, ANDAs representing twenty-one (21) products as well as two (2) New Drug Applications (“NDAs”) await FDA approval.

Taro Receives FDA Approval for Topicort® (desoximetasone) Topical Spray, 0.25%

As announced on April 12, 2013, Taro received approval from the FDA for its NDA, Topicort® (desoximetasone) Topical Spray, 0.25%.

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change. Final audited results will be included in the Company's Form 20-F to be filed with the U.S. Securities and Exchange Commission (“SEC”) on or before the due date of July 31, 2013.

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 and statements 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 financial information for fiscal year 2013. 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 actions of the Company's lenders and creditors, 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.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

   

Quarter Ended

Year Ended

March 31,

March 31,

2013

  2012   2013   2012
Sales, net $ 165,133 $ 145,141 $ 670,954 $ 543,082
Cost of sales   45,658     45,971     176,128     177,497  
Gross Profit 119,475 99,170 494,826 365,585
 

Operating Expenses:

Research and development, net 12,202 9,847 46,508 33,456
Selling, marketing, general and administrative 22,126 23,101 86,438 94,559
Settlements and loss contingencies   22,000     -     33,300     -  
Operating income 63,147 66,222 328,580 237,570
 

Financial Expenses, net:

Interest and other financial (income) expenses, net (1,074 ) (107 ) (1,514 ) 2,338
Foreign exchange (income) expense (681 ) 1,107 (2,417 ) (6,222 )
Other income (loss), net   1,400     (94 )   3,352     264  
Income before income taxes 66,302 65,128 335,863 241,718
Tax expense   16,086     17,791     67,799     35,974  
Income from continuing operations 50,216 47,337 268,064 205,744
 
Net (loss) income from discontinued operations   (1,150 )   66     (1,194 )   (1,016 )
Net income 49,066 47,403 266,870 204,728
Net (loss) income attributable to non-controlling interest   (101 )   151     664     454  
 
Net income attributable to Taro $ 49,167   $ 47,252   $ 266,206   $ 204,274  
 
Net income per ordinary share from continuing operations attributable to Taro:
Basic $

1.13

$ 1.06 $ 5.99 $

4.61

Diluted $

1.13

$ 1.06 $ 5.98 $ 4.61
 
Net loss per ordinary share from discontinued operations attributable to Taro:
Basic ($ 0.03 ) $ 0.00* ($ 0.03 ) ($ 0.02 )
Diluted ($ 0.03 ) $ 0.00* ($ 0.03 ) ($ 0.02 )
 
Net income per ordinary share attributable to Taro:
Basic $ 1.10 $ 1.06 $ 5.96 $ 4.59
Diluted $ 1.10 $ 1.06 $ 5.95 $ 4.59
 
Weighted-average number of shares used to compute net income per share:

 

Basic 44,757,257 44,476,429 44,677,603 44,468,209
Diluted 44,762,748 44,589,007

44,715,111

44,541,302
 

* Amount is less than $0.01.

May not foot due to rounding.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in thousands)

   

March 31,

March 31,

2013 2012
 
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 237,284 $ 238,266
Short-term bank deposits 312,603 72,440
Restricted short-term bank deposits 7,430 15,780
Marketable securities 3,183 7,835
Accounts receivable and other:
Trade, net 119,810 111,130
Other receivables and prepaid expenses

119,768

98,501
Inventories 109,626 109,638
Long-term assets held for sale, net   67   71
TOTAL CURRENT ASSETS

909,771

653,661
 
Long-term receivables and other assets 23,227 19,972
Property, plant and equipment, net 145,265 150,750
Other assets  

28,373

  32,041
TOTAL ASSETS $ 1,106,636 $ 856,424
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Current maturities of long-term debt $ 11,330 $ 10,957
Trade payables and other current liabilities   181,201   187,942
TOTAL CURRENT LIABILITIES 192,531 198,899
 
Long-term debt, net of current maturities 17,269 27,949
Deferred taxes and other long-term liabilities   5,875   6,618
TOTAL LIABILITIES 215,675 233,466
 
Taro shareholders’ equity 886,347 619,008
Non-controlling interest   4,614   3,950
 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$ 1,106,636 $ 856,424

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

 

Year Ended March 31,

2013     2012

Operating Activities:

Net income $ 266,870 $ 204,728
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 17,765 18,619
Impairment of long-lived assets - 784
Share-based compensation expense 8 39
Loss on sale of long-lived assets and marketable securities, net 925 593
Increase (decrease) in long-term debt due to currency fluctuations 440 (2,157 )
Increase in trade receivables, net (8,912 ) (29,492 )
Change in derivative instruments, net 1,550 2,678
Increase in other receivables, prepaid expenses and other assets (19,560 ) (20,175 )
Increase in inventories, net (630 ) (24,455 )
Effect of exchange differences on inter-company balances (1,510 ) (776 )
(Decrease) increase in trade and other payables and liabilities   (8,296 )   84,757  
Net cash provided by operating activities   248,650     235,143  

 

Investing Activities:
Purchase of property, plant & equipment (9,466 ) (7,016 )
Investment in other intangible assets (777 ) -
Investment in long-term security deposits and other assets (242 ) (3,764 )
Investment in short-term bank deposits (241,671 ) (31,883 )
Proceeds from (investment in) restricted bank deposits 8,224 (11,548 )
Proceeds from sale of long-lived assets   1     459  
Net cash used in investing activities   (243,931 )   (53,752 )
 
Financing Activities:
Excess tax benefits from share-based payment arrangements 838 -
Proceeds from issuance of shares, net 6,584 303
Repayments of long-term debt (10,748 ) (19,502 )
Repayments of short-term bank debt, net   -     (2,428 )
Net cash used in financing activities   (3,326 )   (21,627 )
 
Effect of exchange rate changes   (2,375 )   (370 )
Net (decrease) increase in cash (982 ) 159,394
Cash at beginning of period

238,266

    78,872  
 
Cash at end of period $ 237,284   $ 238,266  

Taro Pharmaceutical Industries Ltd.
Michael Kalb
GVP, CFO
914-345-9001
Michael.Kalb@taro.com
or
William J. Coote
VP, Treasurer
914-345-9001
William.Coote@taro.com

Source: Taro Pharmaceutical Industries Ltd.

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