Net Income in 2008 Increases 143% to $51 Million From
$21 Million in 2007
$74 Million Net Cash Generated From Operations in 2008
HAWTHORNE, N.Y., Feb. 2, 2009 (GLOBE NEWSWIRE) -- Taro Pharmaceutical Industries Ltd. ("Taro," the "Company,") (Pink Sheets:TAROF) today provided preliminary, unaudited and unreviewed information on its financial performance for the year ended December 31, 2008.
2008 Financial Performance
For the year ended December 31, 2008, Taro estimates net sales of $341.9 million, compared to estimated net sales of $312.9 million in 2007. Gross profit in 2008 is estimated at $187.2 million, or 55% of net sales, compared to estimated gross profit of $168.5 million in 2007, or 54% of net sales. Research and development expenses in 2008 were $35.7 million, an increase of $6.4 million or 22%, compared to $29.3 million in 2007. Net income in 2008 is estimated at $51.4 million, compared to an estimated $21.1 million in 2007. Estimated diluted earnings per Ordinary Share were $1.27 in 2008 compared to $0.60 in 2007. Net cash generated from operations in 2008 is estimated at $74.1 million.
The Company said that the estimated results for 2008 demonstrate the strength of its dramatic operational and financial turnaround, especially since it was able to achieve these results in spite of the difficult global economic environment. The Company said that its improved performance is largely the result of its efforts, which began in 2006, to conserve cash, improve operating efficiencies and enhance profitability through the implementation of an improved business model.
In addition to the substantial revenue and profit gains, the Company also improved its balance sheet and liquidity. As of December 31, 2008, Taro had $78.1 million in cash and cash equivalents as well as an additional $6.2 million in restricted deposits, after making normally scheduled and required principal debt payments of approximately $31.0 million during 2008. For 2009, Taro is scheduled to make principal payments totaling $30.0 million. In addition, the Company notes that it has a separate $28 million credit facility due on March 31, 2009, which it expects to be able to refinance. As of December 31, 2008, the Company's total debt was approximately $189.0 million.
The Company believes, in the ordinary course, that it should have sufficient liquidity to meet its cash requirements for the foreseeable future, subject to the continuing support of its lenders. The Company continues to be out of compliance with certain financial reporting and other requirements in certain of its debt instruments due primarily to the lack of audited financial statements and continues to discuss the situation with its lenders. Taro noted that it remains current with its payments to lenders and that in the near term it does not foresee the need for additional sources of outside liquidity to fund its ongoing business operations.
The Company cautioned that the financial information presented in this press release is based on currently available information, and is unaudited and subject to further review and change. Additionally, these results do not provide complete financial information and both the 2007 and the 2008 results are subject to audit by the Company's outside auditors. However, subject to the foregoing caveats, the Company believes that the information herein represents the best information currently available to Taro management.
Status of Audit of 2006 and 2007 Financial Statements
As the Company previously disclosed, the completion of its financial statements for the years ended December 31, 2006 and December 31, 2007 has been delayed because the Company is continuing to review the adequacy of estimates for accruals recorded in 2005 and prior years for sales returns, chargebacks, rebates, administrative fees and other amounts. The Company has retained Huron Consulting Group to advise and assist it in this review. The Company does not expect that any changes resulting from this review would affect the results for 2006 and prior years, when taken in the aggregate. Furthermore, if any such changes were to be made, they would likely reduce the estimated loss in 2006 as previously announced. The Company added that it believes such changes, if any, would not have a material impact on the financial results for 2007 and 2008.
The review described above is in the process of being completed, and is subject to audit by the Company's outside auditors. The Company is working on finalizing its financial statements and is hopeful of completing its 2006 financial statements in the near term and thereafter its 2007 financial statements.
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.
The Taro Pharmaceutical Industries Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4733
For further information on Taro Pharmaceutical Industries Ltd., please visit the Company's website at www.taro.com.
SAFE HARBOR STATEMENT
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, including its financial performance during the last three years, availability of financial information, completion of the 2006, 2007 and 2008 audits, estimates of financial results and financial information for 2005-2008, review of results for prior years and estimates of expenses and reserves. Although Taro Pharmaceutical Industries Ltd. 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 the possible unavailability of financial information, completion of the audits of 2006, 2007 and/or 2008, actions of the Company's lenders, creditors and Sun Pharmaceutical Industries Ltd. ("Sun"), including but not limited to the outcome of litigation with Sun, 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 actions 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 speak 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
(US dollars in thousands, except per share data)
Unaudited and Unreviewed
--------------------------
Year Ended December 31,
--------------------------
2008 2007
-------- --------
NET SALES $341,944 $312,955
Cost of Sales 154,767 144,470
-------- --------
Gross Profit 187,177 168,485
Operating Expenses:
Selling and Administrative (Note 1) 92,149 94,444
-------- --------
Operating Income before
Research and Development 95,028 74,041
Research and Development 35,727 29,302
-------- --------
Operating Income 59,301 44,739
Financial Expenses:
Interest and other Financial Expenses 16,609 16,470
Foreign Exchange Fluctuations (17,449) 7,422
Other Income - Net (Note 2) 1,214 5,243
-------- --------
61,355 26,090
Taxes on Income 9,955 4,951
-------- --------
NET INCOME $ 51,400 $ 21,139
======== ========
Basic Earnings Per Ordinary Share $ 1.31 $ 0.61
Diluted Earnings Per Ordinary Share $ 1.27 $ 0.60
Weighted Average Number of Shares
Basic EPS 39,186,478 34,721,189
Diluted EPS 40,406,270 35,281,464
Note 1: In 2007, administrative expenses included approximately $12
million of one-time charges and non-recurring expenses, including
professional fees related to the Company's investigations and its
proposed transaction with Sun Pharmaceutical Industries Ltd.
("Sun"). The administrative expenses also included audit and tax
related services of approximately $3.3 million for 2007. In 2008,
administrative expenses included approximately $8 million of one
time charges and non-recurring expenses, including professional fees
related to the proposed transaction with Sun as well as audit and
tax related services of approximately $1.2 million. No material
non-audit related services were performed by the external auditors
in 2007 or 2008.
Note 2: In 2007, other income included a one-time gain of
approximately $4 million resulting from the sale of a parking lot in
Ireland.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
Unaudited and Unreviewed
--------------------------
December 31,
--------------------------
2008 2007
-------- --------
Current Assets:
Cash and Cash Equivalents $ 78,052 $ 45,178
Restricted Short-Term Bank Deposits 6,250 --
Accounts Receivable - Trade 74,550 68,497
Accounts Receivable - Other and Prepaid
Expenses 8,884 26,733
Inventories 67,686 66,036
-------- --------
Total Current Assets 235,422 206,444
Long-Term Investments 21,213 18,765
Property, Plant and Equipment, net 188,326 212,437
Other Assets 44,300 47,625
-------- --------
TOTAL ASSETS $489,261 $485,271
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $ 91,411 $ 95,320
Current Maturities of Long-Term
Liabilities 29,887 28,564
Accounts Payable and Accrued Expenses 84,090 72,543
-------- --------
Total Current Liabilities 205,388 196,427
Long-Term Liabilities 67,716 94,048
Deferred Taxes and Other Liabilities 6,893 8,402
-------- --------
Total Liabilities 279,997 298,877
Shareholders' Equity (Note 1) 209,264 186,394
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $489,261 $485,271
======== ========
Note 1: In 2007, Shareholders' Equity was net of $2.4 million of
fees associated with Sun's equity investment in Taro. In 2008,
Shareholders' Equity reflected approximately $20 million of charges
for foreign exchange translation as well as other adjustments.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(US Dollars in Thousands)
Unaudited and Unreviewed
--------------------------
Year Ended December 31,
2008 2007
--------------------------
Operating Activities:
Net Income $ 51,400 $ 21,139
Adjustments Required to Reconcile
Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 23,001 26,094
Stock Based Compensation 369 357
Loss (Gain) on Sales of Property,
Plant and Equipment 9 (3,844)
Increase (Decrease) in Fair Value
of Derivative Instruments 11,074 (6,776)
Increase in Long-Term Debt due to
Currency Fluctuations 3,703 7,714
Amortization of Deferred Revenue (982) (5,894)
Increase in Trade Receivables (12,250) (26,775)
Increase in other Receivables and
Tax Assets (2,623) (305)
Increase in Inventories (4,565) (3,175)
Foreign Exchange Effect on
Intercompany Balances (13,014) 6,959
Increase (Decrease) in Trade and
other Payables and Accruals 17,946 (10,798)
--------------------------------------------------------------------
Net Cash Provided by Operating
Activities 74,068 4,696
Investing Activities:
Purchase of Property Plant &
Equipment, Net of Related Grants (3,436) (4,453)
Investment in other Intangible
Assets (366) (271)
Investment in Short-Term Bank
Deposits (6,250) --
Proceeds from Sales of Marketable
Securities -- 114
Proceeds from Sales of Property,
Plant and Equipment -- 10,321
--------------------------------------------------------------------
Net Cash (Used) Provided by
Investing Activities (10,052) 5,711
Financing Activities:
Proceeds from Issuance of Shares,
Net -- 56,417
Proceeds from Long-Term Loans 4,743 --
Repayments of Long-Term Debt (31,926) (31,965)
Proceeds (Repayments) of Short-Term
Bank Debt, Net (1,925) (6,754)
--------------------------------------------------------------------
Net Cash (Used) Provided by
Financing Activities (29,108) 17,698
Effect of Exchange Rate Changes (2,033) 162
--------------------------------------------------------------------
Net increase in Cash 32,875 28,267
Cash at Beginning of Period 45,178 16,911
--------------------------------------------------------------------
Cash at End of Period $ 78,052 $ 45,178
======== ========