Taro Pharmaceuticals Reports Record Fourth-Quarter Sales and Earnings; New Product Introductions Drive Financial Gains.HAWTHORNE, N.Y.--(BUSINESS WIRE)--Feb. 25, 1999--Taro Pharmaceutical Industries Ltd. (Nasdaq/NMS:TAROF) today reported record fourth-quarter sales and earnings for the period ended December 31, 1998. The Company reported record sales of $19,739,000 for the fourth quarter, a 23% increase from sales of $16,034,000 for the fourth quarter of 1997. Gross profit for the fourth quarter of 1998 was $10,562,000, or 53% of sales, an increase of 26% from the $8,388,000 gross profit, or 52% of sales, for the fourth quarter of 1997. Net income for the fourth quarter was a record $1,226,000, or $0.12 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 $179,000, or $0.02 per diluted share, for the fourth quarter of 1997. "Our record fourth-quarter results represent the best quarter in our 49-year history," stated Barrie Levitt, M.D., Chairman of the Company. "Taro maintains its position as a leader in 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. dermatologicals, and our growing group of solid dosage form A dosage form is the physical form of a dose of medication, such as a capsule or injection. The route of administration is dependent on the dosage form of a given drug. products is gaining momentum. We look forward to further growth in 1999 with the profitable new products coming out of our R&D program. We also expect our recently strengthened team of experienced sales and marketing executives to continue increasing our top and bottom line as we benefit from economies of scale." Year-End Results The Company reported 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 of $66,725,000 for the year ended December 31, 1998, compared with $60,971,000 for the previous year, a 9% increase. R&D expenditures were $9,180,000, or 14% of sales, compared with expenditures of $9,695,000, or 16% of sales for the previous year. Net income for fiscal 1998 was $2,302,000, or $0.23 per diluted share, compared with $1,413,000, or $0.14 per diluted share, for 1997. New Product Approvals Improve Sales and Earnings In the second half of 1998, Taro received approvals from the U.S. Food and Drug Administration for its ANDAs for Hydrocortisone Valerate hydrocortisone valerate Westcort Pharmacologic class: Short-acting corticosteroid Therapeutic class: Anti-inflammatory (steroidal) Pregnancy risk category C ActionCream and Ointment ointment /oint·ment/ (oint´ment) a semisolid preparation for external application to the skin or mucous membranes, usually containing a medicinal substance.oint·ment n. , as well as line extensions such as Clobetasol clobetasol /clo·be·ta·sol/ (klo-ba´tah-sol) a synthetic corticosteroid used topically as the propionate salt for the relief of inflammation and pruritus in corticosteroid-responsive dermatoses. Topical Solution and Desoximetasone desoximetasone /des·ox·i·met·a·sone/ (des-ok?se-met´ah-son) a synthetic corticosteroid used topically for the relief of inflammation and pruritus in corticosteroid-responsive dermatoses. Gel. The annual U.S. market for Hydrocortisone Valerate Cream and Ointment combined is estimated by industry sources to exceed $40 million. The Company noted that products approved over the past three years are making increasing contributions to sales and earnings. These products include both topical dermatologicals and solid dosage form products which have increased market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" . Vertical Integration Program The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the year ended December 31, 1998 was 54%, up from 52% in the prior year. "Taro maintains high gross margins despite competitive pressure in the marketplace because of our significant capital investments in efficient 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. . The Company has also made considerable progress in its vertical integration program, and has submitted Drug Master Files Drug Master File or DMF is a document prepared by a manufacturer in the pharmaceutical industry and submitted solely at his discretion to the Food and Drug Administration (FDA). There is no requirement by law or FDA regulation to present a DMF. to the 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. for active pharmaceutical ingredients for several products that it currently markets," Dr. Levitt added. "Synthesizing the active pharmaceutical ingredients for products the Company manufactures ensures a steady source of supply as well as reduced manufacturing costs. The Company plans to increase the number of products that are vertically integrated in 1999 and in coming years." Proprietary Research The Company continues work on its patented novel anticonvulsant anticonvulsant /an·ti·con·vul·sant/ (-kon-vul´sant) inhibiting convulsions, or an agent that does this. an·ti·con·vul·sant n. A drug that prevents or relieves convulsions. and anticipates beginning Phase I clinical trials Noun 1. phase I clinical trial - a clinical trial on a few persons to determine the safety of a new drug or invasive medical device; for drugs, dosage or toxicity limits should be obtained phase I in the second half of 1999. Taro also continues work on its patented NonSpil(tm) delivery system line of products, formulating products using different active ingredients An active ingredient, also active pharmaceutical ingredient (or API), is the substance in a drug that is pharmaceutically active. Some medications may contain more than one active ingredient. . The Company is in negotiations with large multinational companies with respect to the commercialization of the NonSpil(tm) products. Outlook for Growth "The rich pipeline that we maintain at the FDA should produce additional approvals with commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. gains in sales and earnings during 1999. We will continue to invest in R&D to achieve our goals in both generic and proprietary research and expect to make significant strides in these areas during the next two years," stated Dr. Levitt. The Company has multiple regulatory filings in Canada and Israel, and nine ANDAs currently submitted to the FDA. Industry sources estimate that the current annual markets in the U.S. for the drugs targeted by these ANDAs have an aggregate value exceeding $750 million. Taro Pharmaceutical Industries Ltd. is a multinational pharmaceutical company whose research and development program has resulted in the Company being the first generic marketer of several branded drugs, as well as the developer of several novel pharmaceutical compounds. For further information on Taro Pharmaceutical Industries Ltd., at no charge, dial 1-800-PRO-INFO and enter company code 104 or ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors TAROF. You can also visit the Company's website at www.taropharma.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. Although Taro Pharmaceutical Industries Ltd. believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurance 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 materially from the Company's expectations include industry and market conditions, slower than anticipated penetration of new markets, changes in the Company's financial position, regulatory actions, and other risks detailed from time to time in the Company's SEC reports, including its Annual Report on Form 20-F for the last fiscal year ended Dec. 31, 1997. -0-
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,
1998 1997 1998 1997
SALES $19,739 $16,034 $66,725 $60,971
Cost of Sales 9,177 7,646 30,358 29,275
Gross Profit 10,562 8,388 36,367 31,696
Operating Expenses:
Selling and
Administrative 5,478 4,647 20,663 18,002
Operating Income
before R&D 5,084 3,741 15,704 13,694
Research and
Development 2,311 2,993 9,180 9,695
Operating Income 2,773 748 6,524 3,999
Financial Expenses - Net 614 643 2,893 2,173
2,159 105 3,631 1,826
Other Income - Net 5 188 52 201
2,164 293 3,683 2,027
Taxes on Income 915 87 1,358 596
1,249 206 2,325 1,431
Minority Share in profits
of Subsidiaries 23 27 23 18
NET INCOME $1,226 $179 $2,302 $1,413
Earnings per Ordinary
Share - Basic $ 0.12 $0.02 $ 0.23 $0.14
Earnings per Ordinary
Share - Diluted $ 0.12 $0.02 $ 0.23 $0.14
Weighted average number
of shares-
Basic 10,037,692 9,987,637 10,012,851 9,980,470
Diluted 10,120,260 10,106,133 10,110,109 10,413,067
-0-
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
DECEMBER 31 DECEMBER 31
1998 1997
Assets
Current Assets:
Cash and Cash Equivalents $1,688 $806
Restricted short-term bank deposits 2,006 1,900
Accounts Receivable 21,897 20,085 (a)
Inventories 14,682 14,795
Total Current Assets 40,273 37,586
Property, Plant and Equipment, net 29,611 28,731
Other Assets 5,247 5,415
TOTAL ASSETS $75,131 $71,732
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $14,229 $11,139
Current Maturities of Long-Term Liabilities 2,380 2,533
Accounts Payable and Accrued Expenses 11,157 13,494 (a)
Total Current Liabilities 27,766 27,166
Long-Term Liabilities 16,843 16,115
Deferred Taxes and Other Liabilities 1,559 1,043
Total Liabilities 46,168 44,324
Minority Interest 122 100
Shareholders' Equity 28,841 27,308
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $75,131 $71,732
(a) Reclassified
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