Taro Provides Third Quarter and Fiscal Year to Date Results

Favorable Performance Over 2011 Periods Continues

Hawthorne, New York, United States, Tuesday, February 05, 2013 — (Business Wire India) –

Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the three and nine month periods ended December 31, 2012.

 

Quarter ended December 31, 2012 Highlights – compared to December 31, 2011

• Net sales of $185.7 million, increased $37.6 million, or 25.4%, however, sales volumes have slightly declined
• Gross profit, as a percentage of net sales was 75.4%, compared to 71.6%
• Research and development expenses increased 33.5% to $11.8 million
• Selling, marketing, general and administrative expenses, which included a $3.3 million litigation provision in 2012, increased $2.1 million
• Operating income increased to $104.0 million, or 56.0% of net sales, compared to $74.5 million, or 50.3% of net sales
• Net income attributable to Taro was $88.8 million compared to $62.4 million, resulting in diluted earnings per share of $1.98 compared to $1.40.

Nine months ended December 31, 2012 Highlights – compared to December 31, 2011

• Net sales of $505.8 million, increased $107.9 million, or 27.1%, however, sales volumes have marginally declined
• Gross profit, as a percentage of net sales was 74.2%, compared to 66.9%
• Research and development expenses increased 45.3% to $34.3 million
• Selling, marketing, general and administrative expenses, which included $11.3 million litigation provisions in 2012, increased $4.2 million
• Operating income increased to $265.4 million, or 52.5% of net sales, compared to $170.6 million, or 42.9% of net sales
• Income tax expense increased $33.5 million from $18.2 million to $51.7 million
• Net income attributable to Taro was $217.0 million compared to $157.0 million, a $60.0 million increase, resulting in diluted earnings per share of $4.86 compared to $3.52.

Cash Flow and Balance Sheet Highlights

• Cash flow provided by operations for the nine months ended December 31, 2012, as compared to December 31, 2011, was $173.1 million compared to $157.0 million, primarily due to the payment of income taxes as reflected in the significant decrease in trade and other payables
• Cash, including marketable securities, increased $152.2 million to $486.6 million from March 31, 2012.

FDA Approvals and Filings
During the quarter, the Company filed one ANDA with the FDA. With this, ANDAs representing seventeen products as well as two NDAs await FDA approval.

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.

**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,									Year to Date December 31,
						2012				2011					2012				2011
		Sales, net				$	185,695			$	148,105				$	505,821			$	397,941
		Cost of sales					45,769				42,056					130,470				131,526
		Gross Profit					139,926				106,049					375,351				266,415
		Operating Expenses:
		Research and development, net					11,838				8,867					34,306				23,609
		Selling, marketing, general and administrative					24,053				21,930					75,612				71,458
		Impairment					–				784					–				784
		Operating income					104,035				74,468					265,433				170,564
		Financial Expenses, net:
		Interest and other financial (income) expenses, net					(581	)			315					(440	)			2,445
		Foreign exchange (income) expense					(1,992	)			6,312					(1,736	)			(7,329	)
		Other income (loss), net					1,359				(565	)				1,952				358
		Income before income taxes					107,967				67,276					269,561				175,806
		Tax expense					18,779				4,584					51,713				18,183
		Income from continuing operations					89,188				62,692					217,848				157,623
		Net loss from discontinued operations					(37	)			(344	)				(44	)			(298	)
		Net income					89,151				62,348					217,804				157,325
		Net income (loss) attributable to non-controlling interest					374				(52	)				765				303
		Net income attributable to Taro				$	88,777			$	62,400				$	217,039			$	157,022
		Net income per ordinary share from continuing operations attributable to Taro:
		Basic				$	1.98			$	1.41				$	4.86			$	3.53
		Diluted				$	1.98			$	1.41				$	4.86			$	3.53
		Net loss per ordinary share from discontinued operations attributable to Taro:
		Basic				($0.00)*				($0.01)					($0.00)*				($0.01)
		Diluted				($0.00)*				($0.01)					($0.00)*				($0.01)
		Net income per ordinary share attributable to Taro:
		Basic				$	1.98			$	1.40				$	4.86			$	3.53
		Diluted				$	1.98			$	1.40				$	4.86			$	3.52
		Weighted-average number of shares used to compute net income per share:
		Basic					44,725,898				44,474,727					44,651,534				44,527,689
		Diluted					44,740,427				44,550,022					44,699,715				44,587,620

* 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)
					December 31,					March 31,
					2012					2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents					$	276,995				$		238,266
Short-term bank deposits						198,973						72,440
Restricted short-term bank deposits						7,430						15,780
Marketable securities						3,172						7,835
Accounts receivable and other:
Trade, net						134,590						111,130
Other receivables and prepaid expenses						109,711						98,501
Inventories						110,732						109,638
Long-term assets held for sale, net						69						71
TOTAL CURRENT ASSETS						841,672						653,661
Long-term receivables and other assets						27,929						19,972
Property, plant and equipment, net						145,762						150,750
Other assets						29,945						32,041
TOTAL ASSETS					$	1,045,308				$		856,424
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt					$	11,086				$		10,957
Trade payables and other current liabilities						162,756						187,942
TOTAL CURRENT LIABILITIES						173,842						198,899
Long-term debt, net of current maturities						17,244						27,949
Deferred taxes and other long-term liabilities						6,116						6,618
TOTAL LIABILITIES						197,202						233,466
Taro shareholders’ equity						843,391						619,008
Non-controlling interest						4,715						3,950
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY					$	1,045,308				$		856,424

TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in thousands)
				Nine Months Ended December 31,
					2012					2011
Operating Activities:
Net income					$	217,804				$	157,325
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization						13,493					14,021
Impairment of long-lived assets						–					784
Share-based compensation expense						8					39
Loss on sale of long-lived assets and marketable securities, net						106					571
Decrease in long-term debt due to currency fluctuations						(23	)				(2,971	)
Increase in trade receivables, net						(23,417	)				(39,295	)
Change in derivative instruments, net						1,048					6,070
Increase in other receivables, prepaid expenses and other assets						(10,622	)				(23,544	)
Increase in inventories, net						(1,021	)				(22,872	)
Effect of exchange differences on inter-company balances						367					(2,881	)
(Decrease) increase in trade and other payables and liabilities						(24,647	)				69,802
Net cash provided by operating activities						173,096					157,049
Investing Activities:
Purchase of property, plant & equipment						(6,183	)				(5,406	)
Investment in other intangible assets						(765	)				–
(Investment in) proceeds from long-term security deposits and other assets						(5,289	)				1,127
Investment in short-term bank deposits						(126,415	)				(49,928	)
Proceeds from (investment in) restricted bank deposits						8,350					(15,562	)
Proceeds from sale of long-lived assets						1					431
Net cash used in investing activities						(130,301	)				(69,338	)
Financing Activities:
Proceeds from issuance of shares, net						5,877					296
Repayments of long-term debt						(10,554	)				(12,907	)
Repayments of short-term bank debt, net						–					(2,428	)
Net cash used in financing activities						(4,677	)				(15,039	)
Effect of exchange rate changes						611					(1,543	)
Net increase in cash						38,729					71,129
Cash at beginning of period						238,266					78,872
Cash at end of period					$	276,995				$	150,001

CONTACT DETAILS

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