Market Overview

Taro Provides Results for Quarter Ended June 2015


Taro Pharmaceutical Industries Ltd. (NYSE: TARO) ("Taro" or the "Company") today provided unaudited financial results for the quarter ended June 30, 2015.

Quarter ended June 30, 2015 Highlights - compared to June 30, 2014

  • Net sales of $215 million, reflects an increase of $85 million. Last year's quarter net sales were negatively impacted by a $79 million provision for price protection (current quarter's price protection provision was $14 million). On a pro-forma basis, adjusted for the price protection provisions, the net sales increase would have been 10%. Sales volumes declined 10% as the result of an increase in competitor activity in the U.S. market.
  • Gross profit was $172 million as compared to $85 million. Excluding the impact of the aforementioned price adjustments in both periods, the gross profit increase would have been 13% over the same period last year.
  • Research and development (R&D) and Selling, marketing, general and administrative expenses remained relatively flat.
  • Operating income increased $80 million to $134 million, primarily due to the benefits realized from the price adjustments in the prior year. Excluding the non-recurring items, operating income on a comparable basis, would have increased approximately 17%.
  • Net income attributable to Taro was $104 million compared to $46 million, a $58 million increase, resulting in diluted earnings per share of $2.42 compared to $1.08.

Cash Flow and Balance Sheet Highlights

  • Cash flow provided by operations was $68 million compared to $36 million for the three months ended June 30, 2014.
  • Cash, including short-term bank deposits and marketable securities, increased $77 million to $998 million from March 31, 2015.

Mr. Kal Sundaram, Taro's CEO stated, "As we have stated in the past, we remain cautious of the ever-increasing pressure on our business from strong competition and the continuing industry and customer consolidations. We continue our commitment to building a strong, quality pipeline of products through our investment in our R&D efforts which, along with our business development efforts, will help to fuel our medium and long-term growth".

FDA Approvals and Filings

The Company recently received approvals from the U.S. Food and Drug Administration ("FDA") for the Abbreviated New Drug Applications ("ANDAs") Desloratadine Oral Solution, 0.5 mg/mL and Loratadine Oral Solution USP, 1 mg/mL (Sugar Free, Bubble Gum Flavor, OTC). The Company has a total of thirty-two ANDAs and one NDA for Orphan indication, awaiting FDA approval.

Form 20-F Filings with the SEC

On July 1, the Company filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission ("SEC") for the fiscal year ended March 31, 2015.

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change.

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


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 2016. 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.




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

Three Months Ended June 30,
2015   2014
Sales, net $ 215,278 $ 130,230
Cost of sales   43,474     44,863  
Gross profit 171,804 85,367
Operating Expenses:
Research and development 14,540 14,988
Selling, marketing, general and administrative 22,892 22,386
Settlements and loss contingencies   -     (6,500 )
Operating income 134,372 54,493
Financial Expenses, net:
Interest and other financial income (3,269 ) (1,568 )
Foreign exchange expense 4,200 5,242
Other income, net   352     406  
Income before income taxes 133,793 51,225
Tax expense   30,089     4,903  
Income from continuing operations 103,704 46,322
Net loss from discontinued operations   (31 )   (124 )
Net income 103,673 46,198
Net income attributable to non-controlling interest   37     100  
Net income attributable to Taro $ 103,636   $ 46,098  
Net income per ordinary share from continuing operations attributable to Taro:
Basic $ 2.42 $ 1.08
Diluted $ 2.42 $ 1.08
Net loss per ordinary share from discontinued operations attributable to Taro:
Basic $ (0.00)* $ (0.00)*
Diluted $ (0.00)* $ (0.00)*
Net income per ordinary share attributable to Taro:
Basic $ 2.42 $ 1.08
Diluted $ 2.42 $ 1.08
Weighted-average number of ordinary shares used to compute net income per ordinary share:
Basic 42,833,533 42,832,648
Diluted 42,833,533 42,833,325
*Amount is less than $0.01



(U.S. dollars in thousands)

June 30,


March 31,


(unaudited) (audited)
Cash and cash equivalents $ 438,998 $ 481,641
Short-term bank deposits 555,122 434,899
Restricted short-term bank deposits - 199
Marketable securities 3,425 3,458
Accounts Receivable and other:
Trade, net 196,795 222,427
Other receivables and prepaid expenses 257,228 250,911
Inventories   119,382   120,272
TOTAL CURRENT ASSETS 1,570,950 1,513,807
Long-term receivables 41,419 46,330
Property, plant and equipment, net 152,902 153,045
Other assets   23,746   24,563
TOTAL ASSETS $ 1,789,017 $ 1,737,745
Current maturities of long-term debt $ 925 $ 912
Trade payable and other current liabilities   248,079   309,093
Long -term debt, net of current maturities 4,740 4,976
Deferred income taxes and other long-term liabilities   5,260   5,381
TOTAL LIABILITIES 259,004 320,362
Taro shareholders' equity 1,524,312 1,411,720
Non-controlling interest   5,701   5,663




(U.S. dollars in thousands)

Three Months Ended June 30,
2015   2014

Operating Activities

Net Income $ 103,673 $ 46,198
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,913 3,964
Gain (loss) on sale of marketable securities and long-lived assets 48 (39 )
Increase in long-term debt due to currency fluctuations - 206
Decrease in trade receivables 25,809 35,636
Change in derivative instruments, net (5,198 ) (3,989 )
Increase in other receivables, prepaid expenses and other assets (5,785 ) (42,651 )
Decrease (increase) in inventories 1,317 (8,656 )
Foreign exchange effect on intercompany balances 1,716 5,209
Decrease in trade and other payables and accruals   (57,226 )   (144 )
Net cash provided by operating activities   68,267     35,734  
Investing Activities:

Purchase of property plant & equipment

(2,393 ) (6,058 )

(Investment in) proceeds from sale of property plant & equipment and other intangible assets

(15 ) 78
Investment in long-term deposits and other assets (20,000 ) (14,708 )
(Investment in) proceeds from short-term and bank deposits (92,124 ) 90,078
Investment in marketable securities, net   (16 )   -  
Net cash (used in) provided by investing activities   (114,548 )   69,390  
Financing Activities:
Proceeds from the issuance of shares, net - 13
Repayments of long-term debt   (223 )   (209 )
Net cash used in financing activities   (223 )   (196 )
Effect of exchange rate changes   3,861     2,978  
Net (decrease) increase in cash (42,643 ) 107,906
Cash at beginning of period   481,641     209,967  
Cash at end of period $ 438,998   $ 317,873  

Taro Pharmaceutical Industries Ltd.
Michael Kalb, GVP, CFO, 914-345-9001
William J. Coote, 914-345-9001

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