Taro Pharmaceutical Industries Ltd. (NYSE:TARO) ("Taro" or the "Company") today provided unaudited financial results for the three months and nine months ended December 31, 2013.

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

  • Net sales of $213.6 million, increased $27.9 million, or 15.0%, with a decrease in volumes
  • Gross profit, as a percentage of net sales was 80.7%, compared to 75.4%
  • Research and development expenses increased 27.8% to $15.1 million or 7.1% of net sales compared to 6.4%
  • Selling, marketing, general and administrative expenses, as a percentage of net sales, was 10.3% compared to 11.2%
  • Operating income increased to $134.9 million, or 63.2% of net sales, compared to $104.0 million, or 56.0% of net sales
  • Net income attributable to Taro was $115.6 million compared to $88.8 million, resulting in diluted earnings per share of $2.59 compared to $1.98

Nine Months ended December 31, 2013 Highlights - compared to December 31, 2012

  • Net sales of $572.1 million, increased $66.3 million, or 13.1%, with relatively flat volumes
  • Gross profit, as a percentage of net sales was 76.7%, compared to 74.2%
  • Research and development expenses increased 23.2% to $42.3 million or 7.4% of net sales compared to 6.8%
  • Selling, marketing, general and administrative expenses were relatively flat, however, as a percentage of net sales decreased from 12.7% to 11.4%
  • Settlements and loss contingencies of $2.6 million compared to $11.3 million in 2012, related to certain price reporting litigations
  • Operating income increased to $328.7 million, or 57.5% of net sales, compared to $265.4 million, or 52.5% of net sales
  • Net income attributable to Taro was $270.7 million compared to $217.0 million, a $53.7 million increase, resulting in diluted earnings per share of $6.05 compared to $4.86

Cash Flow and Balance Sheet Highlights

  • Cash provided by operations for the period ended December 31, 2013, as compared to December 31, 2012, was $273.7 million compared to $173.1 million
  • Cash, including marketable securities of $573.5 million, which includes the impact from the December 2013 tender offer of $193.0 million, increased $13.0 million from March 31, 2013
  • Shareholders' equity increased $58.4 million from March 31, 2013 however, decreased $92.2 million from September 30, 2013 as a result of the aforementioned tender offer, whereby Taro purchased 1,959,514 ordinary shares

FDA Approvals and Filings

During the quarter, the Company filed six ANDAs with the FDA. With this, ANDAs representing twenty-five products as well as one NDA await FDA approval.

Taro Announces Final Results of Its Self-Tender Offer

On December 30, 2013, Taro announced the final results of its modified "Dutch auction" tender offer whereby, an aggregate of 1,959,514 ordinary shares were properly tendered and not properly withdrawn at or below the final purchase price of $97.50 per share, for an aggregate purchase price of $191.1 million (excluding fees and expenses relating to the tender offer).

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 INCOME

(Unaudited)

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

 

 

 

Quarter Ended
December 31,

Nine Months Ended
December 31,

2013

   20122013   2012
Sales, net $213,598 $ 185,695 $ 572,109 $ 505,821
Cost of sales 41,136   45,769   133,461   130,470  
Gross Profit 172,462 139,926 438,648 375,351
 

Operating Expenses:

Research and development, net 15,124 11,838 42,263 34,306
Selling, marketing, general and administrative 21,904 20,753 65,086 64,312
Settlements and loss contingencies 540   3,300   2,590   11,300  
Operating income 134,894 104,035 328,709 265,433
 

Financial Expenses, net:

Interest and other financial (income) expenses, net (1,436 ) (581 ) (3,926 ) (440 )
Foreign exchange (income) (2,513 ) (1,992 ) (3,221 ) (1,736 )
Other income, net 436   1,359   962   1,952  
Income before income taxes 139,279 107,967 336,818 269,561
Tax expense 23,514   18,779   65,296   51,713  
Income from continuing operations 115,765 89,188 271,522 217,848
 
Net loss from discontinued operations (50 ) (37 ) (222 ) (44 )
Net income 115,715 89,151 271,300 217,804
Net income attributable to non-controlling interest 100   374   553   765  
Net income attributable to Taro$ 115,615   $ 88,777   $ 270,747   $ 217,039  
 
Net income per ordinary share from continuing operations attributable to Taro:
Basic $ 2.59 $ 1.98 $ 6.06 $ 4.86
Diluted $ 2.59 $ 1.98 $ 6.05 $ 4.86
 
Net loss per ordinary share from discontinued operations attributable to Taro:
Basic ($0.00)* ($0.00)* ($ 0.01 )

($0.00)*

Diluted ($0.00)* ($0.00)* ($ 0.00

)*

 

($0.00)*
 
Net income per ordinary share attributable to Taro:
Basic $ 2.59 $ 1.98 $ 6.05 $ 4.86
Diluted $ 2.59 $ 1.98 $ 6.05 $ 4.86
 
Weighted-average number of shares used to compute net income per share:
Basic 44,700,460 44,725,898 44,749,065 44,651,534
Diluted 44,703,837 44,740,427 44,752,633 44,699,715

* Amount is less than $0.01.
May not foot due to rounding.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

   

 

December 31,

 

March 31,

2013 2013
(unaudited) (audited)
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 207,455 $ 237,284
Short-term bank deposits 362,901 312,603
Restricted short-term bank deposits - 7,430
Marketable securities 3,102 3,183

Accounts receivable and other:

Trade, net

127,010

119,810

Other receivables and prepaid expenses 158,002 119,768
Inventories 119,822 109,626
Long-term assets held for sale, net 73 67
TOTAL CURRENT ASSETS 978,365 909,771
 
Long-term receivables and other assets 45,757 23,227
Property, plant and equipment, net 150,960 145,265
Other assets 29,942 28,373
TOTAL ASSETS $ 1,205,024 $ 1,106,636
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Current maturities of long-term debt $ 12,084 $ 11,330
Trade payables and other current liabilities 231,849 181,201
TOTAL CURRENT LIABILITIES 243,933 192,531
 
Long-term debt, net of current maturities 6,107 17,269
Deferred taxes and other long-term liabilities 5,120 5,875
TOTAL LIABILITIES 255,160 215,675
 
Taro shareholders' equity 944,697 886,347
Non-controlling interest 5,167 4,614

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 1,205,024 $ 1,106,636

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

   

Nine Months Ended December 31,

20132012

Operating Activities:

Net income $ 271,300 $217,804

Adjustments required to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 12,408 13,493
Share-based compensation expense - 8
(Gain) loss on sale of long-lived assets and marketable securities, net (5 ) 106
Increase (decrease) in long-term debt due to currency fluctuations 1,260 (23 )
Increase in trade receivables, net (7,542 ) (23,417 )
Change in derivative instruments, net 2,426 1,048
Increase in other receivables, prepaid expenses and other assets (37,741 ) (10,622 )
Increase in inventories, net (11,646 ) (1,021 )
Effect of exchange differences on inter-company balances (6,858 ) 367
Increase (decrease) in trade and other payables and liabilities 50,113   (24,647 )
Net cash provided by operating activities273,715   173,096  

 

Investing Activities:
Purchase of property, plant & equipment (16,646 ) (6,183 )
Investment in other intangible assets (4,401 ) (765 )
Investment in long-term security deposits and other assets (25,076 ) (5,289 )
Investment in short-term bank deposits (56,581 ) (126,415 )
Proceeds from restricted bank deposits 7,430 8,350
(Investment in) proceeds from marketable securities (50 ) 1  
Net cash used in investing activities(95,324)(130,301)
 
Financing Activities:
Purchase of treasury shares (192,993 ) -
Excess tax benefits from share-based payment arrangements 97 -
Proceeds from issuance of shares, net 1,189 5,877
Repayments of long-term debt (11,668 ) (10,554 )
Net cash used in financing activities(203,375)(4,677)
 
Effect of exchange rate changes (4,845 ) 611  
Net (decrease) increase in cash (29,829 ) 38,729
Cash at beginning of period 237,284   238,266  
 
Cash at end of period$207,455   $276,995  

#####

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