Taro Pharmaceuticals Reports Record Third Quarter and Nine Month Financial Results.Business Editors HAWTHORNE, N.Y.--(BUSINESS WIRE)--Oct. 18, 2001 Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS: TARO)-- 23rd Consecutive Quarter of Record Sales, 13th Consecutive Quarter of Record Net Income Highlights: - Q3 Sales Increase to a Record $41.4 Million, a 52% Gain Over Q3 2000 - Q3 Net Income Increases 161% to a Record $7.3 Million, or $0.29 Per Diluted Share, from $2.8 Million, or $0.12 Per Diluted Share in Q3 2000 - Q3 Operating Income Before R&D Expenses Increases 79% to $14.8 Million from $8.3 Million in Q3 2000 - Q3 Gross Profit Grows 58% to $26.1 Million, or 63% of Sales - ANDA Approval for Cardiovascular Drug in Q3 - Acquisition of Dermovate(R) Brand in Canada in Q3 - In October, Taro Closes Public Offering of 5,750,000 Ordinary Shares, Realizes Net Proceeds in Excess of $127 Million Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS: TARO) today reported record results for the Company's third quarter and the nine-month period ended September 30, 2001. Third Quarter Results The third quarter results represent the Company's 23rd consecutive quarter of record revenues and its 13th consecutive quarter of record net income. Third quarter 2001 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 increased 52% to $41.4 million from $27.2 million in the third quarter of 2000. Net income for the quarter increased 161% to $7.3 million, or $0.29 per diluted share, compared with $2.8 million, or $0.12 per diluted share, for the third quarter of 2000. Per share data for the third quarter and nine-month period of 2000 are adjusted to reflect a two-for-one stock split in the form of a stock dividend paid on July 26, 2001. Taro's gross profit increased 58% in the third quarter of 2001 to $26.1 million, or 63% of sales, up from $16.5 million, or 61% of sales, in the third quarter of the prior year. 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 to $14.8 million, or 36% of sales, from $8.3 million, or 31% of sales, for the third quarter of 2000. Selling, general and administrative expenses decreased as a percentage of sales to $11.3 million, or 27% of sales, compared with $8.2 million, or 30% of sales, in the third quarter of 2000. R&D expenses increased to $4.9 million, or 12% of sales, compared with $3.8 million, or 14% of sales, for the third quarter of 2000. "Taro's growth reflects continuing gains across our base business, coupled with the outstanding contribution of new products," stated Barrie Levitt, M.D., Chairman of the Company. "With the strong leverage Taro realizes on new product introductions, we believe the company will continue to reap the benefits of our investments in infrastructure and R&D." Nine-Month Results For the nine-month period ended September 30, 2001, sales increased 44% to a record $106.1 million, compared with $73.8 million for the same period in 2000. Net income for the nine-month period was a record $16.2 million, or $0.64 per diluted share, compared with $6.5 million, or $0.28 per diluted share, for the same period in 2000. Selling, general and administrative expenses for the nine-month period were $31.5 million, or 30% of sales, compared with $22.9 million, or 31% of sales, for the same period in 2000. R&D expenses increased to $13.8 million, or 13% of sales, from $10.7 million, or 15% of sales, for the same period in 2000. Taro's gross profit for the nine-month period increased by 50% to $66.9 million, or 63% of sales, from $44.6 million, or 60% of sales, for the same period in 2000. Operating income before R&D expenses was $35.4 million, or 33% of sales, up from $21.7 million, or 29% of sales, for the same period in the prior year. Taro Closes Public Offering of 5,750,000 Ordinary Shares On October 5, 2001, Taro completed a public offering of 5,750,000 ordinary shares, including 3,950,000 shares sold by Taro and 1,800,000 shares sold by selling shareholders. The sale of shares by Taro resulted in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to the Company in excess of $127 million. Taro will use the proceeds to fund its research and development efforts, enhance its sales and marketing operations, expand its manufacturing facilities and for general corporate purposes. It may also use some of the net proceeds to finance acquisitions of other companies or product lines and pay down, permanently or temporarily, outstanding indebtedness. The exercise of nonqualified options in conjunction with the offering resulted in a tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. to the Company of approximately $86 million, which will substantially reduce its tax liabilities for 1999, 2000 and 2001; entitle Taro to a tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. of approximately $1.2 million; and enable Taro to carry forward a deduction of approximately $83 million, which may be used to reduce tax liabilities for up to 20 tax years. The impact of the offering, which was completed in October, is not reflected in the third quarter financial statements. Balance Sheet At September 30, 2001, total assets were $152.0 million, compared with $120.4 million at the end of fiscal 2000. Cash and cash equivalents were $15.9 million, compared with $7.2 million at the end of fiscal 2000. Shareholder's equity at September 30, 2001 was $66.4 million, compared with $50.2 million at the end of fiscal 2000. New Cardiovascular Product Approved During the third quarter, Taro received approval 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. ) for its Abbreviated New Drug Application 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 (ANDA ANDA abbr. abbreviated new drug application ) for Enalapril Maleate e·nal·a·pril maleate n. An angiotensin-converting enzyme inhibitor used as an antihypertensive agent. enalapril maleate (enal´ and Hydrochlorothiazide hydrochlorothiazide /hy·dro·chlo·ro·thi·a·zide/ (-klor?o-thi´ah-zid) a thiazide diuretic, used for treatment of hypertension and edema. hy·dro·chlo·ro·thi·a·zide n. Abbr. Tablets, USP USP - unique sales point (Enalapril HCTZ HCTZ abbr. hydrochlorothiazide ) in strengths of 5/12.5 mg and 10/25 mg. Enalapril HCTZ is 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 Merck & Company's Vaseretic(R) Tablets and is used in the treatment of hypertension. Taro also manufactures and markets Enalapril Maleate Tablets, USP in four strengths. Taro's Enalapril Maleate Tablets are bioequivalent to Merck's Vasotec(R) and are used in treating hypertension, heart failure, and other cardiac conditions. The two Enalapril products are important additions to Taro's growing line of solid dosage products for heart disease, neurological disorders This is a list of major and frequently observed neurological disorders (e.g. Alzheimer's disease), symptoms (e.g.back pain), signs (e.g. aphasia) and syndromes (e.g. Aicardi syndrome). , and other conditions. Taro Acquires Dermovate(R) Brand in Canada In October 2001, the Company announced that its Canadian subsidiary, Taro Pharmaceuticals Inc., acquired the Canadian rights to Dermovate(R) (clobetasol propionate clobetasol propionate (klōbā´t  sol´ prō´pē 0.05%) Cream, 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. , and Topical Solution from GlaxoSmithKline. Dermovate(R) is an ultra-high potency 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 used in treating dermatological dermatological, dermatologic pertaining to dermatology; of or affecting the skin. conditions such as psoriasis psoriasis (sôrī`əsĭs), occasionally acute but usually chronic and recurrent inflammation of the skin. The exact cause is unknown, but the disease appears to be an inherited, possibly autoimmune disorder that causes the and eczema eczema (ĕk`səmə), acute or chronic skin disease characterized by redness, itching, serum-filled blisters, crusting, and scaling. . The Canadian market size of Dermovate(R) and generic clobetasol propionate products is estimated to be approximately CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $5.9 million, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. industry sources. Taro's professional dermatology dermatology (dûrmətŏl`əjē), branch of medicine concerned with diagnosis and treatment of diseases and disorders of the skin. field-sales force will begin detailing Dermovate(R) in the fourth quarter of 2001. Proprietary Research Taro's proprietary research program includes NonSpil(TM), a patented, spill-resistant liquid delivery system which has potential applications in a wide variety of both prescription and over-the-counter pharmaceutical products. Taro is continuing to evaluate NonSpil(TM) products in advance of possible market introduction. The Company holds several patents relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this unique delivery system and has additional patents pending in the U.S. and worldwide. The Company also continues development of T2000, 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. . Taro is currently in Phase I clinical testing for T2000, a non-sedating, long-acting barbiturate barbiturate (bärbĭch`ərāt'), any one of a group of drugs that act as depressants on the central nervous system. High doses depress both nerve and muscle activity and inhibit oxygen consumption in the tissues. that may require less frequent administration than other commonly used treatments for epilepsy and seizure disorders Seizure Disorder Definition A seizure is a sudden disruption of the brain's normal electrical activity accompanied by altered consciousness and/or other neurological and behavioral manifestations. . While there can be no assurances of successful development of T2000, this new class of barbiturates Barbiturates Definition Barbiturates are medicines that act on the central nervous system and cause drowsiness and can control seizures. Purpose has not produced toxicity in animals or humans during the Phase I testing to date. Outlook "Management expects to maintain Taro's long and short-term growth by continuing our investment in the company's infrastructure and targeted R&D programs, broadening our product lines in the U.S. and by increasing penetration of other attractive markets," said Dr. Levitt. "Moreover, the strong cash position achieved through our recent public offering enables the company to acquire products or operations within our core disciplines." The Company has multiple regulatory filings in Canada and Israel, and eleven current submissions to the FDA. 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. 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 assurances that its expectations will be attained. Factors that could cause actual results to differ 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 Prospectus, dated October 1, 2001.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
SEPTEMBER 30, DECEMBER 31,
2001 2000
Assets
Current Assets:
Cash and Cash Equivalents $15,870 $7,245
Restricted Short-Term Bank Deposits 3,488 2,307
Accounts Receivable - Trade 41,143 38,670
Accounts Receivable - Other
and Prepaid Expenses 6,888 3,898
Inventories 26,629 19,618
Total Current Assets 94,018 71,738
Property, Plant and Equipment, Net 48,943 41,827
Other Assets 9,043 6,881
TOTAL ASSETS $152,004 $120,446
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $2,268 $2,170
Current Maturities of Long-Term Debt 5,960 6,321
Accounts Payable and Accrued Expenses 22,369 19,659
Total Current Liabilities 30,597 28,150
Long -Term Liabilities 50,686 38,250
Deferred Taxes and Other Liabilities 4,136 3,664
Total Liabilities 85,419 70,064
Minority Interest 193 168
Shareholders' Equity 66,392 50,214
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $152,004 $120,446
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2001 2000(a) 2001 2000(a)
SALES $41,393 $27,201 $106,121 $73,845
Cost of Sales 15,255 10,665 39,182 29,268
Gross Profit 26,138 16,536 66,939 44,577
Operating Expenses:
Selling and Administrative 11,288 8,224 31,538 22,923
Operating Income Before
Research and Development 14,850 8,312 35,401 21,654
Research and Development 4,910 3,799 13,822 10,726
Operating Income 9,940 4,513 21,579 10,928
Financial Expenses - Net 860 991 2,692 2,659
9,080 3,522 18,887 8,269
Other Income - Net (9) 7 152 170
9,071 3,529 19,039 8,439
Taxes on Income 1,712 704 2,846 1,887
7,359 2,825 16,193 6,552
Minority Share in Profits of
Subsidiaries 21 14 24 39
NET INCOME $7,338 $2,811 $16,169 $6,513
Earnings per Ordinary Share $0.34 $0.13 $0.74 $0.30
Earnings per Diluted Share $0.29 $0.12 $0.64 $0.28
Weighted average number of shares-
BASIC EPS 21,877,833 21,429,548 21,724,762 21,411,386
DILUTED EPS 25,517,223 23,952,204 25,298,287 23,632,184
(a) Per share data for the third quarter and nine-month period of 2000 are adjusted to reflect a two-for-one stock split in the form of a stock dividend paid on July 26, 2001. |
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