Taro Reports Record 2nd Quarter & Six-Month 2002 Results; 26th Consecutive Quarter of Record Sales; 16th Consecutive Quarter of Record Net Income.Business Editors & Health/Medical Writers HAWTHORNE Hawthorne. 1 City (1990 pop. 71,349), Los Angeles co., S Calif., a suburb of Los Angeles; inc. 1922. Located in an oil- and gas-producing area, Hawthorne manufactures navigation systems, solar panels, electronic components, silicon instruments, and , N.Y.--(BUSINESS WIRE)--July 23, 2002 Taro Pharmaceutical Industries Ltd. (Nasdaq/NMS:TARO) today reported record sales and earnings for the Company's second quarter and six months ended June June: see month. 30, 2002. Second Quarter 2002 Highlights:
- Sales Increase 36% to $49.6 Million
- Net Income Increases 68% to $10.2 Million, or $0.35 Per Diluted Share
- Purchase of Assets and Liabilities of Thames Pharmacal Company
- Two ANDA Approvals (One Tentative)
Financial Highlights ($000)
3 Months Ended % 6 Months Ended %
June 30, Change June 30, Change
------------------- ------ ------------------- ------
2002 2001 2002 2001
-------- -------- ------ -------- -------- ------
Sales $ 49,583 $ 36,360 36% $ 94,123 $ 64,728 45%
Gross Profit $ 30,808 $ 23,778 30% $ 59,649 $ 40,801 46%
Operating
Income $ 18,161 $ 12,346 47% $ 35,257 $ 20,551 72%
Before R&D
Operating
Income $ 11,914 $ 7,448 60% $ 23,659 $ 11,639 103%
Net Income $ 10,192 $ 6,060 68% $ 20,067 $ 8,831 127%
Second Quarter 2002 Results Sales for the second quarter of 2002 increased 36% to $49.6 million, compared with $36.4 million in the second quarter of 2001. Net income for the quarter increased 68% to $10.2 million, or $0.35 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 $6.1 million, or $0.24 per diluted share, for the year-ago quarter. (Per share data for the second quarter and six-month results are adjusted to reflect a two-for-one stock split in the form of a 100% stock dividend paid on July July: see month. 26, 2001.) Taro's gross profit for the quarter increased 30% to $30.8 million, or 62% of sales, compared with $23.8 million, or 65% of sales, for the second quarter of 2001. The change in 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. reflects factors that include price competition as well as the integration of the operations of Thames Thames, river, Canada Thames (tĕmz), river, c.160 mi (260 km) long, rising NW of Woodstock, S Ont., Canada, and flowing SW past London and Chatham to Lake St. Clair. Pharmacal Company, Inc. ("Thames"). Selling, general and administrative expenses for the quarter were $12.6 million, or 26% of sales, compared with $11.4 million, or 31% of sales, in the year-ago quarter. 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 47% to $18.2 million, or 37% of sales, compared with $12.3 million, or 34% of sales, for the second quarter of 2001. R&D expenses were $6.2 million, or 13% of sales, compared with $4.9 million, or 13% of sales, for the year-ago quarter. Operating income increased 60% to $11.9 million, compared with $7.4 million in the second quarter of 2001. "Our top line growth reflects gains in market share across all of our principal product lines," stated Barrie Barrie, city (1991 pop. 62,728), S Ont., Canada, on the west shore of Lake Simcoe. It is a commuter city in the Toronto metropolitan region. Among the city's diverse manufactures are clothing, spirits, electronics, and leather goods. A large military base is nearby. Levitt, M.D., Chairman of the Company. "At the same time, the Company's strong increase in net income demonstrates effective operational leverage." First Half 2002 Results Sales for the first half of 2002 increased 45% to $94.1 million, compared with $64.7 million for the same period in 2001. Net income increased 127% to $20.1 million, or $0.68 per diluted share, compared with $8.8 million, or $0.35 per diluted share, for the year-ago period. The Company's gross profit in the six-month period increased 46% to $59.6 million, or 63% of sales, compared with $40.8 million, or 63% of sales, for the same period in 2001. Selling, general and administrative expenses for the period were $24.4 million, or 26% of sales, compared with $20.3 million, or 31% of sales, for the year-ago period. Operating income before R&D expenses increased to $35.3 million, or 37% of sales, compared with $20.6 million, or 32% of sales, for the second half of 2001. R&D expenses were $11.6 million, or 12% of sales, compared with $8.9 million, or 14% of sales, for the year-ago period. Operating income increased 103% to $23.7 million, compared with $11.6 million for the same period of 2001. Thames Acquisition In May, the Company purchased substantially all the assets and liabilities of Thames, a privately-held pharmaceutical manufacturer 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. . Thames had sales of approximately $9 million in 2001, primarily consisting 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. generic products. With the purchase, Taro acquired the rights to all of Thames' generic prescription and over-the-counter products, including its 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") approved by 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. "). Taro also acquired and is operating Thames' FDA-approved manufacturing facilities under the name Thames Pharmaceuticals, Inc., a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. . 2nd Quarter ANDA ANDA abbr. abbreviated new drug application Approvals In May, Taro received FDA approval of its ANDA for 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 USP USP - unique sales point , 0.1%, 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 Healthcare's Cyclocort(R) Topical Cream. To date, Taro is the only company approved to market a generic version of Cyclocort(R) Topical Cream in the U.S.; the annual market for this product was estimated by industry sources at $5.4 million in 2001. The Company manufactures both the active pharmaceutical ingredient and the finished product at its facilities in Haifa, Israel. In June, Taro received tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. approval from the FDA for its ANDA 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 10 mg/10 ml, 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. A tentative approval is an FDA determination that an ANDA submission currently satisfies the substantive requirements for approval, subject to the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of all statutorily imposed exclusivities and restrictions. Tentative approvals do not grant marketing rights; a company may only market a product upon receiving final approval for an ANDA submission. Taro and other pharmaceutical companies are currently involved in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with Schering-Plough regarding certain patents held by Schering-Plough for Loratadine. Another generic company has the right to an exclusive marketing period for the product, after which Taro, as well as other competitors, expect to receive final approval to market Loratadine Syrup. 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, the annual market for Claritin(R) Syrup is estimated to be approximately $70 million. Taro currently has 14 filings submitted to the FDA, including one tentative approval, and multiple filings with regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. around the world. Strong Financial Position At June 30, 2002, Taro's total assets were $338 million, compared with $308 million at December 31, 2001. Cash and cash equivalents were $133 million, compared with $151 million at the end of 2001. Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. at June 30, 2002 were $243 million, compared with $231 million at December 31, 2001. Total liabilities were $98 million, compared with $89 million at the end of 2001. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. were $44 million, compared with $35 million at year-end 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 $240 million, compared with $218 million at the end of 2001. Cash and cash equivalents were reduced as a result of several factors, including: the acquisition of Thames; higher accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and inventories associated with increased sales; and investments in property, plant and equipment made in anticipation of the Company's future growth. Outlook "We are investing in research while seeking product acquisitions that complement our skills and resources," said Dr. Levitt. "Future growth will depend on new product approvals, as well as potential acquisitions. Taro's strategy will continue to be driven by its long-standing commitment to good science, effective marketing and efficient, high-quality manufacturing." Conference Call The Company will conduct a conference call to discuss second quarter and six month results on Tuesday, July 23, 2002 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). The call will be available live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by accessing www.taro.com. For those who cannot listen to the live broadcast, an online replay will be available through July 30, 2002 on www.taro.com. A telephone replay will also be available through July 30, 2002 by dialing 800-428-6051 (domestic U.S.) or +973-709-2089 (international) and entering the passcode 252524 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, comments concerning: Taro's expectations regarding growth; ANDA filings and approvals; market acceptance of Taro's products; operational leverage and contribution of new products and acquisitions. Although Taro believes the expectations reflected in such forward-looking statements are 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 include industry and market conditions, general economic conditions, slower than anticipated regulatory approval of new generic products, other regulatory actions, slower than anticipated penetration of new markets, changes in the Company's financial position, 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)
JUNE 30, DECEMBER 31,
2002 2001
-------- ------------
Assets
Current Assets:
Cash and Cash Equivalents $133,483 $150,732
Restricted Short-Term Bank
Deposits 2,436 2,416
Accounts Receivable - Trade 60,961 41,131
Accounts Receivable - Other
and Prepaid Expenses 9,864 8,134
Inventories 36,233 29,081
------------------------------- -------- ------------
Total Current Assets 242,977 231,494
Long Term Investments 705 2,838
Property, Plant and Equipment,
net 67,171 54,024
Deferred Taxes and Other
Assets 27,064 19,406
------------------------------- -------- ------------
TOTAL ASSETS $337,917 $307,762
=============================== ======== ============
Liabilities and Shareholders'
Equity
Current Liabilities:
Short-Term Bank Credits $9,886 $2,221
Current Maturities of
Long-Term Liabilities 6,800 6,010
Accounts Payable and Accrued
Expenses 27,590 26,552
------------------------------- -------- ------------
Total Current 44,276 34,783
Liabilities
Long -Term Liabilities 48,565 49,285
Deferred Taxes and Other
Liabilities 4,696 4,554
------------------------------- -------- ------------
Total Liabilities 97,537 88,622
Minority Interest 855 776
Shareholders' Equity 239,525 218,364
------------------------------- -------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $337,917 $307,762
=============================== ======== ============
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30
2002 2001 2002 2001
----------- ---------- ----------- ----------
SALES $49,583 $36,360 $94,123 $64,728
Cost of Sales 18,775 12,582 34,474 23,927
----------- ---------- ----------- ----------
Gross Profit 30,808 23,778 59,649 40,801
Operating Expenses:
Selling, General
and Administrative 12,647 11,432 24,392 20,250
----------- ---------- ----------- ----------
Operating Income
before Research and
Development 18,161 12,346 35,257 20,551
Research and
Development 6,247 4,898 11,598 8,912
----------- ---------- ----------- ----------
Operating Income 11,914 7,448 23,659 11,639
Financial Expenses -
Net 154 1,090 96 1,832
----------- ---------- ----------- ----------
11,760 6,358 23,563 9,807
Other Income - Net (3) 184 (3) 161
----------- ---------- ----------- ----------
11,757 6,542 23,560 9,968
Taxes on Income 1,542 469 3,414 1,134
----------- ---------- ----------- ----------
10,215 6,073 20,146 8,834
Minority Share in
Profits of Subsidiary 23 13 79 3
----------- ---------- ----------- ----------
NET INCOME $10,192 $6,060 $20,067 $8,831
=========== ========== =========== ==========
Earnings per Ordinary
Share $0.36 $0.28 $0.70 $0.41
Diluted Earnings per
Ordinary Share $0.35 $0.24 $0.68 $0.35
Weighted Average
Number of Shares for:
BASIC EPS 28,641,497 21,772,400 28,631,252 21,646,958
DILUTED EPS 29,344,769 25,373,968 29,383,412 25,187,552
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