Taro Pharmaceuticals Reports Record 2002 Results; 28 Consecutive Quarters of Record Sales, 18 Consecutive Quarters of Record Net Income.Business Editors/Health/Medical Writers HAWTHORNE, N.Y.--(BUSINESS WIRE)--Feb. 20, 2003 Taro Pharmaceutical Industries Ltd.(NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TARO): 2002 Highlights -- Q4 Sales Increase 43% to $61,976,000 -- Q4 Gross Profit Increases 38% to $38,541,000 -- Q4 Net Income Increases 32% to $12,925,000, or $0.44 per Diluted Share -- 2002 Sales Increase 42% to $211,581,000 -- 2002 Net Income Increases 71% to $44,555,000, or $1.52 per Diluted Share Financial Highlights (,000)(1)
3 Months Ended 12 Months Ended
December 31, December 31,
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% %
2002 2001 Change 2002 2001 Change
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Net Sales $61,976 $43,459 +43% $211,581 $149,230 +42%
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Gross Profit $38,541 $27,905 +38% $132,113 $94,494 +40%
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Operating Income
Before R&D $23,519 $17,007 +38% $79,632 $52,408 +52%
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Operating Income $15,526 $11,196 +39% $53,259 $32,775 +62%
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Net Income $12,925 $9,826 +32% $44,555 $25,994 +71%
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EPS (diluted) $0.44 $0.34 $1.52 $0.99
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(1) Except per share data. Taro Pharmaceutical Industries Ltd. (Nasdaq/NMS: TARO) today reported record fourth quarter and year-end results for 2002. Fourth Quarter 2002 Results The fourth quarter was Taro's 28th consecutive quarter of record sales and 18th consecutive quarter of record net income. Sales for the fourth quarter of 2002 increased 43% to $61,976,000, compared with sales of $43,459,000 for the fourth quarter of 2001. Taro's gross profit in the fourth quarter of 2002 increased 38% to $38,541,000, or 62% of sales, from $27,905,000, or 64% of sales, in the fourth quarter of 2001. Selling, general and administrative expenses in the fourth quarter of 2002 were $15,022,000, or 24% of sales, compared with $10,898,000, or 25% of sales, in the fourth quarter of 2001. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before R&D expenses increased 38% to $23,519,000, or 38% of sales, compared with $17,007,000, or 39% of sales, in the fourth quarter of 2001. R&D expenses for the fourth quarter of 2002 were $7,993,000, compared with $5,811,000 in the fourth quarter of 2001, which was 13% of sales in both periods. Operating income for the quarter increased to $15,526,000 or 25% of sales compared with $11,196,000 or 26% of sales for the same period in 2001. Net income for the fourth quarter of 2002 increased 32% to $12,925,000, or $0.44 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $9,826,000, or $0.34 per diluted share, for the fourth quarter of 2001. "The results of the fourth quarter reflect excellent top line growth and profitability. The investment in promotion and advertising of proprietary products increased during the quarter and is expected to continue as Taro pursues its proprietary marketing initiatives in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and elsewhere," said Barrie Levitt, M.D., Chairman of the Company. Full Year 2002 Results Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the year ended December 31, 2002 increased 42% to $211,581,000, compared with sales of $149,230,000 in 2001. Gross profit in 2002 was $132,113,000, or 62% of sales, compared with $94,494,000, or 63% of sales, in 2001. Selling, general and administrative expenses for the year were $52,481,000, or 25% of sales, compared with $42,086,000, or 28% of sales, in 2001. Operating income before R&D expenses in 2002 was $79,632,000, or 38% of sales, compared with $52,408,000, or 35% of sales, in 2001. R&D expenses were $26,373,000, or 12% of sales, compared with $19,633,000, or 13% of sales, in 2001. Operating income in 2002 was $53,259,000 or 25% of sales, compared with $32,775,000 or 22% of sales, in 2001. Net income for 2002 increased 71% to $44,555,000, or $1.52 per diluted share, based on 29,408,194 weighted average shares outstanding, compared with net income of $25,994,000, or $0.99 per diluted share, based on 26,301,929 weighted average shares outstanding in 2001. Strong Balance Sheet At December 31, 2002, total assets were $378,708,000, compared with $307,762,000 at the end of 2001. Cash and cash equivalents were $130,717,000, compared with $150,732,000 at the end of 2001. Total liabilities were $108,412,000, compared with $88,622,000 at the end of 2001. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $269,137,000, compared with $218,364,000 at December 31, 2001. U.S. Operations For several years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time U.S. market has accounted for more than 85% of Taro's sales. In 2002, the Company organized its U.S. operations into three divisions: Taro Generics, TaroPharma and Taro Consumer Healthcare Products ("TCHP TCHP Tropical Cyclone Heat Potential "), each focused on optimizing performance in a discrete sector of the market. Taro Generics focuses primarily on the Company's core business of marketing generic products to the pharmaceutical trade. Through this division, Taro is expanding its commitment to the U.S. generic market. The Company expects this division to continue as the main driver for Taro's near-term growth. TaroPharma was created in 2002 to initiate direct-to-physician marketing of the Company's proprietary prescription products. In establishing this division, Taro recruited a core team of professional medical representatives who have existing relationships with dermatologists and pediatricians. Initial product offerings for this division include Ovide(R), Topicort Top·i·cort A trademark for the drug desoximetasone. (R), Primsol Primsol® Pediatrics A formulation of Trimethoprim for managing acute otitis media in younger children. See Acute otitis media. (R) and A/T/S(R). TCHP was established for direct-to-consumer marketing of proprietary over-the-counter products. The division has secured nationwide placement for Kerasal(R), a unique moisturizing exfoliant exfoliant n → exfoliante m for use on dry, callused feet. TCHP is currently promoting Kerasal(R) directly to consumers. In 2003, TCHP plans to launch over-the-counter products based on Taro's NonSpil(TM) liquid drug delivery system. These spill-resistant formulations are expected to provide consumers with increased ease and accuracy of dosing. However, there can be no assurance of the timing or commercial success of these ventures. Facilities Expansion As sales continue to grow, Taro is increasing its manufacturing capacity to keep pace with demand for its products. In May 2002, Taro acquired substantially all the assets of Thames Pharmacal, Inc., a pharmaceutical manufacturer with an FDA-approved plant located in Ronkonkoma, New York Ronkonkoma is a census-designated place (CDP) in Suffolk County, New York, United States. The population was 20,029 at the 2000 census. Ronkonkoma is a community in the Town of Islip. . The acquisition gave Taro its first U.S. manufacturing facility, providing additional capacity for production of topical topical /top·i·cal/ (top´i-k'l) pertaining to a particular area, as a topical antiinfective applied to a certain area of the skin and affecting only the area to which it is applied. top·i·cal adj. and liquid products. On February 18, 2003, Taro announced that it entered into an agreement to acquire a multi-purpose pharmaceutical plant located in Roscrea, County Tipperary County Tipperary (Irish: Contae Thiobraid Árann) is a county in the Republic of Ireland situated in the province of Munster. Tipperary was one of the first Irish counties to be established in the 13th century. , Ireland. Substantial grants from the Irish Development Agency have been approved by the Irish government to help offset the initial costs of staffing the operations. This 14-acre campus consists of 124,000 square feet of manufacturing, laboratory, office and warehouse space. The facility is licensed by the Irish Medicines Board to manufacture pharmaceutical products in Ireland for distribution in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . Individual products to be manufactured by Taro at this new facility will require regulatory approval in each jurisdiction and there can be no assurance with respect to the granting or timing of such approvals. In Israel, a new chemical facility is expected to begin production in the first half of 2003. Pharmaceutical plant expansion is also underway in Haifa and Toronto. Taro's current facilities expansion program should more than triple the Company's 2002 production capacity. Approvals in 2002 In 2002, Taro received approvals for several Abbreviated New Drug Applications abbreviated new drug application Pharmacology An application made in the US by a pharmaceutical company requesting authority to market a 'new' drug for which both its therapeutic indications and formulation were previously approved by the FDA in another similar ("ANDAs") from the U.S. Food and Drug Administration ("FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. "). Approvals were granted for the topical corticosteroid corticosteroid /cor·ti·co·ster·oid/ (-ster´oid) any of the steroids elaborated by the adrenal cortex (excluding the sex hormones) or any synthetic equivalents; divided into two major groups, the glucocorticoids and Amcinonide amcinonide /am·cin·o·nide/ (am-sin´ah-nid?) a synthetic corticosteroid used topically for the relief of inflammation and pruritus in corticosteroid-responsive dermatoses. Cream, bioequivalent bi·o·e·quiv·a·lent n. A value indicating the rate at which a substance enters the bloodstream and becomes available to the body. to Fujisawa's Cyclocort(R) Cream, and the topical antifungals Ketoconazole ketoconazole /ke·to·co·na·zole/ (ke?to-kon´ah-zol) a derivative of imidazole used as an antifungal agent. ke·to·co·na·zole n. Cream and Econazole econazole /econ·a·zole/ (e-kon´ah-zol) an imidazole derivative used as the nitrate salt as a broad-spectrum antifungal agent. e·con·a·zole n. Cream, bioequivalent to Janssen's Nizoral Ni·zo·ral A trademark for a preparation of ketoconazole. ketoconazole Dactarin Gold (UK), Dandrazol (UK), Dandrid (UK), Ketozole, Nizoral, Nizoral A-D Pharmacologic class: Imidazole (R) Cream and Ortho's Spectazole Spec·ta·zole A trademark for the drug econazole. (R) Cream, respectively. A tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. approval was granted for Loratadine loratadine /lor·at·a·dine/ (lah-rat´ah-den) a nonsedating antihistamine used in the treatment of allergic rhinitis, chronic idiopathic urticaria, and asthma. lor·at·a·dine n. Syrup, bioequivalent to Schering-Plough's Claritin Clar·i·tin A trademark for the drug loratadine. loratadine Alavert, Claritin, Claritin RediTabs, Clarityn (UK) Pharmacologic class: Histamine1-receptor antagonist (second-generation) (R) Syrup. Supplemental ANDAs were approved for Amiodarone amiodarone /ami·o·da·rone/ (ah-me´o-dah-ron?) a potassium channel blocking agent used as the hydrochloride salt in the treatment of ventricular arrhythmias. Tablets in 100 mg and 400 mg strengths. The 400 mg tablet See digitizer tablet and tablet computer. TABLET - A query language. ["Human Factor Comparison of a Procedural and a Non-procedural Query Language", C. Welty et al, ACM Trans Database Sys 6(4):626-649 (Dec 1981)]. is bioequivalent to Upsher-Smith's Pacerone Pacerone® Amiodarone Cardiology An antiarrhythmic similar to Cordarone®. See Antiarrhythmic. (R) Tablets; Taro believes it is currently the only company with approval to market a 100 mg Amiodarone Tablet. Proprietary Research In December 2002, a New Drug Application ("NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ") was submitted to the FDA for a product incorporating Taro's NonSpil(TM) spill-resistant liquid drug delivery system. NonSpil(TM) pours like a liquid, but resists spilling. The Company holds several patents on NonSpil(TM) and additional patents are pending in the United States and elsewhere. The Company believes that the system's spill-resistant properties will permit increased ease and accuracy of dosing in children and the elderly. In an early Phase II trial, T2000, the first of Taro's novel class of non-sedating barbiturates Barbiturates Definition Barbiturates are medicines that act on the central nervous system and cause drowsiness and can control seizures. Purpose , showed effectiveness in reducing essential tremor Essential tremor An uncontrollable (involuntary) shaking of the hands, head, and face. Also called familial tremor because it is sometimes inherited, it can begin in the teens or in middle age. The exact cause is not known. , a common form of involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal. INVOLUNTARY. shaking. Published medical sources estimate that one-half to two percent of the adult population suffer from this disorder. An additional U.S. patent on T2000 has been filed for this indication. As with any novel pharmaceutical product in development, there can be no assurance of final regulatory approval or successful commercialization. U.S. FDA Filings Currently, Taro has 24 filings at the FDA. These include the tentative ANDA ANDA abbr. abbreviated new drug application approval for Loratidine Syrup, 20 additional ANDAs, 2 unique supplemental ANDAs, and the NonSpil(TM)-related NDA. The ANDAs address U.S. markets with annual sales in excess of $1 billion. Conference Call The Company will conduct a conference call to discuss fourth quarter and year end results on Thursday, February 20, 2003 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). The call will be available live via the Internet by accessing www.taro.com. Online and telephone replays of the call will be available from approximately 1:00 p.m. on February 20th through February 28, 2003. The online replay can be accessed at www.taro.com. The telephone replay can be heard by dialing 1-800-428-6051 (domestic U.S.) or +973-709-2089 (international) and entering the passcode 286224 when prompted. Taro 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. Certain statements in this release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements include, but are not limited to, statements that are not describing historical facts, and comments concerning the Taro Generics, TaroPharma and TCHP divisions in the U.S., proprietary products, manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. in the U.S. and Ireland, expanded manufacturing operations in Israel, proprietary and generic research facilities and programs, increases in manufacturing capacity, proprietary products, and Taro's filings with the FDA. 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 at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. . Factors that could cause actual results to differ include general economic conditions, industry and market conditions, slower than anticipated penetration of new markets, changes in the Company's financial position, regulatory actions and legislative actions in the countries in which Taro operates or intends to market products, the viability of acquired facilities and difficulties in integrating them into the operations of Taro, marketplace and/or physician and patient acceptance of prescription or over-the-counter proprietary products developed or acquired by Taro, and other risks detailed from time to time in the Company's SEC reports, including its 2001 Annual Report on Form 20-F.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
DECEMBER DECEMBER
31, 31,
2002 2001
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ASSETS
Current Assets:
Cash and Cash Equivalents $130,717 $150,732
Restricted short-term bank deposits 2,468 2,416
Accounts Receivable - Trade 68,292 41,131
Accounts Receivable - Other and prepaid expenses 12,453 8,134
Inventories 42,439 29,081
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Total Current Assets 256,369 231,494
Long Term Investments 1,348 2,838
Property, Plant and Equipment, net 92,911 54,024
Deferred Taxes and Other Assets 28,080 19,406
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TOTAL ASSETS $378,708 $307,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-Term Bank Credits $2,310 $2,221
Current Maturities of Long-Term Liabilities 7,975 6,010
Accounts Payable and Accrued Expenses 46,835 26,552
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Total Current Liabilities 57,120 34,783
Long -Term Liabilities 47,114 49,285
Deferred Taxes and Other Liabilities 4,178 4,554
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TOTAL LIABILITIES 108,412 88,622
Minority Interest 1,159 776
Shareholders' Equity 269,137 218,364
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $378,708 $307,762
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
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SALES $61,976 $43,459(2) $211,581 $149,230(2)
Cost of Sales 23,435 15,554 79,468 54,736
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Gross Profit 38,541 27,905 132,113 94,494
Operating Expenses:
Selling and
Administrative 15,022 10,898(2) 52,481 42,086(2)
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Operating Income
before Research and
Development 23,519 17,007 79,632 52,408
Research and
Development 7,993 5,811 26,373 19,633
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Operating Income 15,526 11,196 53,259 32,775
Financial (Income)
Expenses - Net (217) (98) 162 2,594
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15,743 11,294 53,097 30,181
Other Income - Net 47 120 78 272
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15,790 11,414 53,175 30,453
Taxes on Income 2,740 1,532 8,406 4,378
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13,050 9,882 44,769 26,075
Minority Share in Profits
of Subsidiary 125 56 214 81
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NET INCOME $12,925 $9,826 $44,555 $25,994
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Earnings per Ordinary
Share $0.45 $0.35 $1.55 $1.11
Diluted Earnings per
Ordinary Share $0.44 $0.34 $1.52 $0.99
Weighted Average Number of
Shares-
BASIC EPS 28,706,286 28,236,982 28,664,887 23,370,224
DILUTED EPS 29,462,204 29,252,457 29,408,194 26,301,929
(2) Reclassified
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