Taro Reports Record Sales for Second Quarter and First Half.HAWTHORNE, N.Y. -- Taro Pharmaceutical Industries Ltd. (Nasdaq: TARO) today reported results for the Company's second quarter and six months ended June 30, 2005. Second Quarter 2005 Results Taro reported record second-quarter sales of $78.6 million, compared with $49.1 million in the second quarter of 2004. Gross profit for the quarter was $43.5 million, compared with $23.5 million for the second quarter of 2004. The results for the second quarter of 2005 did not include certain sales and gross profit from proprietary consumer products divested in the first quarter of 2005. Selling, general and administrative ("SG&A") expenses for the quarter were $23.3 million, compared with $30.6 million in the year-ago quarter. The reduction in SG&A expenses for the second quarter of 2005 reflects the impact of cost reduction initiatives and a decrease in selling costs following the March 2005 divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the Company's proprietary over-the-counter products in the U.S. R&D expenses in the second quarter of 2005 were $11.8 million, compared with $10.5 million for the year-ago quarter. The Company reported net income for the quarter of $6.5 million, or $0.22 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 a net loss of $8.9 million, or a net loss of $0.31 per share, for the year-ago quarter. "In addition to reporting record sales for the second quarter and first half of 2005, the Company continued to show sequential improvement in 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. and net income despite intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: competition in the U.S. market for generic pharmaceutical products," said Barrie Levitt, M.D., Chairman of the Company. "Net income increased 29% compared with the first quarter of 2005 even after Taro increased its investment in research by $2.1 million. In addition, SG&A expenses, on both an absolute basis and as a percentage of sales, are lower. Inventories decreased as we continued to be vigilant in our expense control and cash management programs." First Half 2005 Results Taro reported record first-half sales for 2005 of $157.1 million, compared with $133.2 million for the same period in 2004. The Company's gross profit in the six-month period was $86.9 million, compared with $79.9 million for the same period in 2004. Selling, general and administrative expenses for the period were $49.7 million, compared with $64.7 million for the first half of last year. R&D expenses were $21.6 million, compared with $22.2 million for the year-ago period. Net income for the first half of 2005 was $11.5 million, or $0.39 per diluted share, compared with $2.3 million, or $0.08 per diluted share, for the year-ago period. Financial Position At June 30, 2005, Taro's total assets were $702.5 million, an increase of $5.7 million compared with $696.8 million at December 31, 2004. Total liabilities were $324.1 million at June 30, 2005, a decrease of $3.9 million compared with $328.0 million at the end of 2004. 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. at June 30, 2005 was $377.7 million, an increase of $9.6 million compared with $368.1 million at the end of 2004. Proprietary Research Taro is conducting preliminary clinical research in preparation for a Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA clinical study in Canada of T2000 for the treatment of 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. . The Company is also conducting research on T2000 and other proprietary non-sedating 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. compounds for a variety of neurological neurological, neurologic pertaining to or emanating from the nervous system or from neurology. neurological assessment evaluation of the health status of a patient with a nervous system disorder or dysfunction. indications. There can be no assurance of the successful completion of Phase III testing, or of the approval by any regulatory authority Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities of any of these drugs for any indication, or their commercial success if and when approved. U.S. 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 and Filings During the second quarter, Taro reported that it had received FDA approval of its ANDA ANDA abbr. abbreviated new drug application for ciclopirox olamine ci·clo·pir·ox ol·a·mine n. A broad-spectrum antifungal agent used in the treatment of a variety of fungal and yeast infections of the skin. ciclopirox olamine (sik´lōpē´roks) (topical), cream USP USP - unique sales point , 0.77%, a 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. antifungal antifungal /an·ti·fun·gal/ (-fung´gal) 1. destructive to fungi, or suppressing their reproduction or growth; effective against fungal infections. 2. an agent that so acts. product used for treating fungal infections Fungal infections Several thousand species of fungi have been described, but fewer than 100 are routinely associated with invasive diseases of humans. of the skin. This prescription pharmaceutical product 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 Medicis Pharmaceutical Medicis Pharmaceutical is a pharmaceutical company headquartered in Scottsdale, Arizona. One of their divisions is Ucyclyd Pharma. External links
In the second quarter, the Company also received approval of its ANDA for fluticasone propionate fluticasone propionate (fl  tik´ 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. 0.005%, a 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 product used for treating inflammatory skin disorders. This prescription pharmaceutical product is bioequivalent to GlaxoSmithKline's Cutivate(R) Ointment. Currently, Taro has 28 filings at the FDA. These consist of 27 ANDAs, including two tentative approvals, plus a New Drug Application related to the Company's proprietary NonSpil(R) liquid drug delivery system. In addition, the Company has regulatory filings in Israel, Canada and other countries. 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 ANDAs address U.S. markets with annual sales in excess of $1 billion. Conference Call The Company will conduct a conference call to discuss second quarter and six month results on Thursday, July 28, 2005 at 11 a.m. Eastern Time (8 a.m. Pacific Time). The call will be available live via the Internet by accessing www.taro.com. An online replay will be available through August 4, 2005 on www.taro.com. A telephone replay will also be available through August 5, 2005 by dialing 1-888-286-8010 (domestic U.S.) or +617-801-6888 (international) and providing the passcode 82524360 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 may be considered 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. Such statements may include, but are not limited to, statements that do not describe historical facts and statements that refer or relate to events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or the Company "anticipates," "expects," "plans," "intends," "designs," "believes," "hopes," or "wants" to happen or exist; statements about which the Company is "optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op " or has "confidence," or, similar language. 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 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, future demand and market size for products under development, marketplace acceptance of new or existing products, either generic or proprietary, sold directly by Taro or through other companies, 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 speak 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.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
June 30, March 31, December 31,
2005 2005 2004
---- ---- ----
Assets
Current Assets:
Cash and Cash Equivalents $78,665 $78,010 $98,630
Restricted Short-Term Bank Deposits 6,750 6,796 6,598
Accounts Receivable - Trade 138,965 129,955 124,674
Accounts Receivable - Other and
Prepaid Expenses 19,203 16,434 16,621
Inventories 79,003 80,618 86,591
------------------------------------- -------- -------- --------
Total Current Assets 322,586 311,813 333,114
Long Term Investments 18,512 21,300 19,984
Property, Plant and Equipment, net 260,383 257,935 241,966
Deferred Taxes and Other Assets 101,060 102,160 101,783
------------------------------------- -------- -------- --------
TOTAL ASSETS $702,541 $693,208 $696,847
===================================== ======== ======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $67,282 $58,966 $64,961
Current Maturities of Long-Term
Liabilities 19,325 15,517 16,944
Accounts Payable and Accrued Expenses 50,036 51,592 49,624
------------------------------------- -------- -------- --------
Total Current Liabilities 136,643 126,075 131,529
Long -Term Liabilities 179,495 183,723 187,346
Deferred Taxes and Other Liabilities 8,003 8,644 9,158
------------------------------------- -------- -------- --------
Total Liabilities 324,141 318,442 328,033
Minority Interest 664 654 694
Shareholders' Equity 377,736 374,112 368,120
------------------------------------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $702,541 $693,208 $696,847
===================================== ======== ======== ========
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,
2005 2004 2005 2004
---- ---- ---- ----
SALES $78,571 $49,103 $157,112 $133,180
Cost of Sales 35,069 25,613 70,165 53,327
---------- ---------- ---------- ----------
Gross Profit 43,502 23,490 86,947 79,853
Operating Expenses:
Selling, General and
Administrative 23,322 30,575 49,739 64,723
Research and Development 11,848 10,510 21,599 22,229
---------- ---------- ---------- ----------
Operating Income (Loss) 8,332 (17,595) 15,609 (7,099)
Financial and Other
Expenses Net 1,595 2,183 3,630 3,987
---------- ---------- ---------- ----------
6,737 (19,778) 11,979 (11,086)
Taxes on Income 233 (10,352) 488 (12,610)
---------- ---------- ---------- ----------
6,504 (9,426) 11,491 1,524
Minority Share in Profits
(Loss) of Subsidiary 11 (566) (30) (736)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $6,493 $(8,860) $11,521 $2,260
========== ========== ========== ==========
Earnings (Loss) per
Ordinary Share $0.22 $(0.31) $0.39 $0.08
Diluted Earnings per
Ordinary Share $0.22 $0.39 $0.08
Weighted Average Number of
Shares:
BASIC 29,235,878 29,023,594 29,213,941 29,006,821
DILUTED 29,646,402 29,630,724 29,762,244
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