Taro Provides Results for Year Ended March 31, 2014

HAWTHORNE, N.Y.--()--Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter and year ended March 31, 2014.

Quarter ended March 31, 2014 Highlights - compared to March 31, 2013

  • Net sales of $187.2 million, increased $22.0 million, or 13.3%, with a slight decrease in volumes
  • Gross profit, as a percentage of net sales was 75.5%, compared to 72.4%
  • Research and development expenses increased 7.9% to $13.2 million, however as a percentage of net sales decreased from 7.4% to 7.0%
  • Selling, marketing, general and administrative expenses, as a percentage of net sales, was 14.2% compared to 13.4%
  • Operating income increased to $101.5 million, or 54.3% of net sales, compared to $63.1 million, or 38.2% of net sales
  • Net income attributable to Taro was $89.6 million compared to $49.2 million, resulting in diluted earnings per share of $2.10 (which reflects 1,959,514 less shares due to the impact from the December 2013 tender offer) compared to $1.10

Year ended March 31, 2014 Highlights - compared to March 31, 2013

  • Net sales of $759.3 million, increased $88.3 million, or 13.2%, with a slight decrease in volumes
  • Gross profit, as a percentage of net sales was 76.4%, compared to 73.7%
  • Research and development expenses increased 19.2% to $55.4 million or 7.3% of net sales compared to 6.9%
  • Selling, marketing, general and administrative expenses increased $5.3 million, however, as a percentage of net sales decreased to 12.1% from 12.9%
  • Settlements and loss contingencies of $2.6 million compared to $33.3 million in 2013, related to certain price reporting litigations
  • Operating income increased to $430.3 million, or 56.7% of net sales, compared to $328.6 million, or 49.0% of net sales
  • Net income attributable to Taro was $360.4 million compared to $266.2 million, a $94.2 million increase, resulting in diluted earnings per share of $8.14 compared to $5.95

Cash Flow and Balance Sheet Highlights

  • Cash provided by operations for the year ended March 31, 2014 was $357.6 million, as compared to $248.7 million for the year ended March 31, 2013
  • Cash at March 31, 2014 (including marketable securities), which includes the impact from the December 2013 tender offer of $193.0 million (which includes fees and expenses), increased $71.9 million to $632.4 million from March 31, 2013

FDA Approvals and Filings

The Company recently received approval from the U.S. Food and Drug Administration (“FDA”) for an Abbreviated New Drug Application (“ANDA”) for Phenytoin Chewable Tablets USP, 50 mg. During the quarter, the Company filed three ANDAs with the FDA. With this, ANDAs representing twenty-seven products await FDA approval, of which one is tentatively approved.

Taro Announces Results of its Extraordinary General Meeting of Shareholders

On March 27, 2014, Taro announced the Company held an extraordinary general meeting of shareholders for the purpose of the ratification of certain resolutions adopted by the Company’s shareholders at its 2013 annual general meeting. The resolutions that were approved and ratified were the following: (i) approval of the Company’s compensation policy, (ii) approval of compensation to three of its directors (Dilip Shanghvi, Sudhir Valia and Kal Sundaram), and (iii) re-election of its external directors (Ilana Avidov Mor and Dan Biran).

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

   

Quarter Ended
March 31,

Year Ended
March 31,

2014

  2013 2014   2013
(unaudited) (unaudited) (unaudited) (audited)
 
Sales, net $187,176 $ 165,133 $ 759,285 $ 670,954
Cost of sales 45,818   45,658   179,279   176,128  
Gross profit 141,358 119,475 580,006 494,826
 

Operating Expenses:

Research and development 13,167 12,202 55,430 46,508
Selling, marketing, general and administrative 26,647 22,126 91,733 86,438
Settlements and loss contingencies -   22,000   2,590   33,300  
Operating income 101,544 63,147 430,253 328,580
 

Financial Expenses, net:

Interest and other financial (income) expenses, net (1,241 ) (1,074 ) (5,167 ) (1,514 )
Foreign exchange income (3,897 ) (681 ) (7,118 ) (2,417 )
Other income, net 407   1,400   1,369   3,352  
Income before income taxes 107,089 66,302 443,907 335,863
Tax expense 17,433   16,086   82,729   67,799  
Income from continuing operations 89,656 50,216 361,178 268,064
 
Net loss from discontinued operations (97 ) (1,150 ) (319 ) (1,194 )
Net income 89,559 49,066 360,859 266,870
Net (loss) income attributable to non-controlling interest (81 ) (101 ) 472   664  
Net income attributable to Taro $ 89,640   $ 49,167   $ 360,387   $ 266,206  
 
Net income per ordinary share from continuing operations attributable to Taro:
Basic $ 2.10 $ 1.13 $ 8.15 $ 5.99
Diluted $ 2.10 $ 1.13 $ 8.15 $ 5.98
 
Net loss per ordinary share from discontinued operations attributable to Taro:
Basic ($0.00)* ($0.03 ) ($0.01 ) ($0.03 )
Diluted ($0.00)* ($0.03 ) ($0.01 ) ($0.03 )
 
Net income per ordinary share attributable to Taro:
Basic $ 2.10 $ 1.10 $ 8.14 $ 5.96
Diluted $ 2.10 $ 1.10 $ 8.14 $ 5.95
 
Weighted-average number of shares used to compute net income per share:
Basic 42,830,989 44,757,257 44,276,003 44,677,603
Diluted 42,832,772 44,762,748 44,279,124 44,715,111

* 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)

   

March 31,

March 31,

2014 2013
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 209,967 $ 237,284
Short-term bank deposits 418,946 312,603
Restricted short-term bank deposits 227 7,430
Marketable securities 3,255 3,183

Accounts receivable and other:

Trade, net

138,772

119,810

Other receivables and prepaid expenses 162,392 119,768
Inventories 117,639 109,626
Long-term assets held for sale, net 73 67
TOTAL CURRENT ASSETS 1,051,271 909,771
 
Long-term receivables and other assets 52,894 23,227
Property, plant and equipment, net 151,416 145,265
Other assets 28,795 28,373
TOTAL ASSETS $ 1,284,376 $ 1,106,636
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Current maturities of long-term debt $ 11,974 $ 11,330
Trade payables and other current liabilities 241,330 181,201
TOTAL CURRENT LIABILITIES 253,304 192,531
 
Long-term debt, net of current maturities 5,888 17,269
Deferred taxes and other long-term liabilities 4,591 5,875
TOTAL LIABILITIES 263,783 215,675
 
Taro shareholders’ equity 1,015,507 886,347
Non-controlling interest 5,086 4,614

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$ 1,284,376 $ 1,106,636

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

 (U.S. dollars in thousands)

 

 

 Year Ended March 31,

2014

  2013
(unaudited) (audited)

Operating Activities:

Net income $360,859 $266,870

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

Depreciation and amortization 16,567 17,765
Impairment of long-lived assets 47 969
Share-based compensation expense - 8
Loss (gain) on sale of long-lived assets and marketable securities, net 21 (44 )
Increase in long-term debt due to currency fluctuations 1,137 440
Increase in trade receivables, net (19,755 ) (8,912 )
Change in derivative instruments, net 4,181 1,550
Increase in other receivables, prepaid expenses and other assets (43,106 ) (19,834 )
Increase in inventories, net (10,697 ) (630 )
Effect of exchange differences on inter-company balances (11,670 ) (1,510 )
Increase (decrease) in trade and other payables and liabilities 60,060   (8,022 )
Net cash provided by operating activities 357,644   248,650  

 

Investing Activities:
Purchase of property, plant & equipment (21,249 ) (9,466 )
Investment in other intangible assets (4,555 ) (777 )
Investment in long-term deposits and other assets (33,956 ) (5,000 )
Investment in short-term bank deposits (120,648 ) (241,671 )
Proceeds from restricted bank deposits 7,203 8,224
(Investment in) proceeds from sale of marketable securities (100 ) 4,758
Proceeds from sale of long-lived assets 8   1  
Net cash used in investing activities (173,297 ) (243,931 )
Financing Activities:
Purchase of treasury stock (192,999 ) -
Excess tax benefits from share-based payment arrangements 149 838
Proceeds from issuance of shares, net 1,262 6,584
Repayments of long-term debt (11,874 ) (10,748 )
Net cash used in financing activities (203,462 ) (3,326 )
Effect of exchange rate changes (8,202 ) (2,375 )
Net decrease in cash (27,317 ) (982 )
Cash at beginning of period 237,284   238,266  
Cash at end of period $209,967   $237,284  

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Contacts

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

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Contacts

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