a6805191.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2011

Commission File Number 000-22286
 
Taro Pharmaceutical Industries Ltd.
 
(Translation of registrant’s name into English)

14 Hakitor Street, Haifa Bay 26110, Israel
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F   x     Form 40-F   ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  Yes   ¨     No   x

 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____.
 
 
 

 
 
 
Taro Pharmaceutical Industries Ltd.
c/o Taro Pharmaceuticals U.S.A., Inc.
Three Skyline Drive
logo  Hawthorne, New York 10532
(Pink Sheets: TAROF)
 
FOR IMMEDIATE RELEASE

CONTACTS:
 
Michael Kalb
William J. Coote
GVP, CFO
VP, Treasurer
(914) 345-9001
(914) 345-9001
Michael.Kalb@taro.com
William.Coote@taro.com


TARO PROVIDES 2011 SECOND QUARTER AND YEAR TO DATE RESULTS
Net Sales, Gross Profit, Operating Income and Net Income All Increase over 2010 Comparable Periods

Hawthorne, NY, July 26, 2011 - Taro Pharmaceutical Industries Ltd. (“Taro,” or the “Company,” Pink Sheets: TAROF) today provided unaudited financial results for the quarter and year to date periods ended June 30, 2011.

Second Quarter 2011 Highlights vs. 2010
  
Net sales of $111.6 million, increased $13.8 million or 14.2%,
  
Gross profit, as a percentage of net sales was 60.1%, compared to 58.4%,
  
Selling, general and administrative expenses decreased $2.1 million, and as a percentage of net sales decreased to 22.5%, compared to 27.8%,
  
Operating income increased 75.8% to $34.2 million, or 30.6% of net sales, compared to $19.4 million, or 19.9% of net sales,
  
Net income attributable to Taro was $35.7 million, compared to $16.4 million, an increase of $19.3 million, resulting in diluted earnings per share of $0.80 compared to $0.40.

Year to Date 2011 Highlights vs. 2010
  
Net sales of $219.3 million, increased $32.5 million or 17.4%,
  
Gross profit, as a percentage of net sales was 59.4%, compared to 59.0%,
  
Selling, general and administrative expenses decreased $4.5 million, and as a percentage of net sales decreased to 21.7% as compared to 27.9%,
  
Operating income increased 79.9% to $67.6 million, or 30.8% of net sales, compared to $37.5 million, or 20.1% of net sales,
  
Net income attributable to Taro was $61.3 million compared to $25.0 million, a $36.3 million increase, resulting in diluted earnings per share of $1.38 compared to $0.61.

Taro’s Interim Chief Executive Officer, Jim Kedrowski, commented, “These results reflect our continuing efforts to improve our business model and processes as we pursue operating efficiencies, cost efficiencies, and speed-to-market of quality products. We are focused on the successful execution of these important strategic and business development opportunities in order to remain well positioned for future growth.”  Mr. Kedrowski also noted that “Taro’s second quarter benefited from a slower than expected ramp up in R&D expenditures, which we expect to be at higher levels in future periods, as well as a non-recurring tax benefit of approximately $6.6 million.  In addition, new entrants into the therapeutic space occupied by Taro are likely to have some negative impact on sales and/or pricing in future quarters.”
- more -
 
 
 

 
 
Taro Pharmaceutical Industries Ltd.
Page  2 of 5

Cash Flows and Balance Sheet Highlights
  
Cash flows from operations were $57.7 million compared to $24.1 million in the same period a year ago,
  
Cash, including marketable securities, increased $63.3 million to $152.1 million from December 31, 2010.
 
Form 20-F Filings with the SEC

On June 29, 2011, the Company filed its annual report, which includes audited consolidated financial statements for the year ended December 31, 2010 on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”).  On August 4, 2010, December 23, 2010 and March 31, 2011, the Company filed audited consolidated financial statements for the years ended December 31, 2007, 2008 and 2009, respectively, with the SEC, each on Form 6-K. The Company is in the process of addressing its SEC Form 20-F filing requirements for those years.

FDA Approvals and Filings

During the second quarter, Taro received four ANDA approvals from the U.S. Food and Drug Administration (the “FDA”):  Imiquimod Cream, 5%, Cetirizine Hydrochloride Oral Solution, 1 mg/mL (Sugar Free, Bubble Gum), Meprobamate Tablets and Ranitidine Hydrochloride Syrup USP, 15 mg/mL.  In addition, the Company received two tentative approvals from the FDA during the quarter: Clobetasol Propionate Lotion, 0.05% and Fluocinonide Cream USP, 0.1%. Total approvals received in 2011 are nine.

Also, during the quarter, Taro filed two ANDAs with the FDA.  The total number of products awaiting approval at the FDA is twenty-one ANDAs and one NDA.

************************

About Taro
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.  For further information on Taro Pharmaceutical Industries Ltd., please visit the Company’s website at www.taro.com.

SAFE HARBOR STATEMENTS
The unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments necessary to present fairly the financial condition and results of operations of the Company.  The unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s report on Form 20-F, as filed with the SEC.

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, statements that do not describe historical facts and statements that refer or relate to events or circumstances the Company “estimates,” “believes,” or “expects” to happen or similar language, and statements with respect to the Company’s financial performance, availability of financial information, and estimates of financial results and financial information for 2011.  Although the Company 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 the possible unavailability of financial information, actions of the Company's lenders and creditors, general domestic and international economic conditions, industry and market conditions, changes in the Company's financial position, litigation brought by any party in any court in Israel, the United States, or any country in which Taro operates, regulatory actions and legislative actions in the countries in which Taro operates, 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 are applicable 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.

**Financial Tables Follow**

 
 

 
 
Taro Pharmaceutical Industries Ltd.
Page 3 of 5
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(U.S. dollars in thousands, except share data)
                                                                                                                           ­                                                                                                                               
    Quarter Ended        Year to Date  
    June 30,      June 30,   
       2011       2010(1)       2011       2010(1)  

Sales, net
  $ 111,584     $ 97,751     $ 219,312     $ 186,794  
Cost of sales
     44,524       40,705       89,142       76,596  
Gross Profit
    67,060       57,046       130,170       110,198  

Operating Expenses:                                
Research and development, net
    7,807       9,103       15,066       17,941  
    Selling, marketing, general and administrative
    25,092       27,199       47,552       52,097  
    Impairment
     -       1,307        -       2,617  
Operating income
    34,161       19,437       67,552       37,543  

Financial Expenses, net:                                
Interest and other financial expenses
    624       1,635       1,401       2,123  
Foreign exchange expense
    2,431       (4,333 )     2,840       (527 )

Other income (expense), net
     752       22       1,004       (127 )
Income before income taxes
    31,858       22,157       64,315       35,820  
Tax (benefit) expense(3)
     (4,719 )     3,951        1,650       5,815  
Income from continuing operations
    36,577       18,206       62,665       30,500  
                                 
Net loss from discontinued operations (2)
    (249 )     (1,666 )     (384 )     (4,888 )
                                 
Net income
    36,328       16,540       62,281       25,117  
                                 
Net income attributable to non-controlling interest(3)
     639       91       935        121  
                                 
Net income attributable to Taro
  $ 35,689     $ 16,449     $ 61,346     $ 24,996  
                                 

Net income per ordinary share from continuing operations attributable to Taro:
                       
Basic
  $ 0.81     $ 0.46     $ 1.39     $ 0.76  
Diluted
  $ 0.81     $ 0.44     $ 1.39     $ 0.73  

Net loss per ordinary share from discontinued operations attributable to Taro:
                       
Basic
  $ (0.01 )   $ (0.04 )   $ (0.01 )   $ (0.12 )
Diluted
  $ (0.01 )   $ (0.04 )   $ (0.01 )   $ (0.12 )

Net income per ordinary share attributable to Taro:
                       
Basic
  $ 0.80     $ 0.42     $ 1.38     $ 0.64  
Diluted
  $ 0.80     $ 0.40     $ 1.38     $ 0.61  

Weighted-average number of shares used to compute net income per share:
                       
Basic
    44,511,229       39,249,342       44,398,519       39,249,342  
Diluted
    44,568,588       41,434,830       44,505,099       41,203,849  

(1)  
The 2010 information presented above is updated from the August 23, 2010 quarterly press release to reflect footnotes 2 and 3 below.
(2)  
In 2010, the Company closed its Ireland manufacturing facility and decided to sell the facility and has therefore classified the losses attributable to its Irish subsidiary as losses from discontinued operations.
(3)  
Represents the impact of the Company adopting FASB ASC Section 810-10-65, which requires the Company to allocate income or loss attributable to a non-controlling interest based on the respective ownership percentages.
 
 
 

 

Taro Pharmaceutical Industries Ltd.
Page 4 of 5

 
TARO PHARMACEUTICAL INDUSTRIES LTD.
 SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

    June 30,     December 31,  
   
2011
   
2010
 
   
(unaudited)
   
(audited)
 
ASSETS
 
           
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 107,703     $ 54,144  
Short-term bank deposits
    41,642       31,000  
Marketable securities
    2,786       3,693  
Accounts receivable and other:                
   Trade, net
    83,135       73,406  
   Other receivables and prepaid expenses
    68,865       49,251  
Inventories
    90,910       83,709  
Long-term assets held for sale, net(1)
    470       434  
TOTAL CURRENT ASSETS
    395,511       295,637  
                 
Long-term receivables and other assets
    31,696       30,663  
Property, plant and equipment, net
    159,424       163,596  
Other assets
    50,185       66,546  
TOTAL ASSETS
  $ 636,816     $ 556,442  
                 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES:
               
Short-term bank credit and short-term loans
  $ 13,417     $ 14,885  
Current maturities of long-term debt
    13,947       13,310  
Trade payables and other current liabilities
    104,998       101,591  
TOTAL CURRENT LIABILITIES
    132,362       129,786  
                 
Long-term debt, net of current maturities
    33,068       31,225  
Deferred taxes and other long-term liabilities
    11,839       10,918  
TOTAL LIABILITIES
    177,269       171,929  
                 
Non-controlling interest(2)
    4,136       3,201  
Taro shareholders' equity
    455,411       381,312  
                 
TOTAL LIABILITIES AND  SHAREHOLDERS’ EQUITY
  $ 636,816     $ 556,442  
                 

(1)  
In 2010, the Company closed its Ireland manufacturing facility and decided to sell the facility and therefore has classified the related assets as held for sale.
(2)  
Represents the impact of the Company adopting FASB ASC Section 810-10-65, which requires the Company to allocate income or loss attributable to a non-controlling interest based on the respective ownership percentages.
 
 
 

 

Taro Pharmaceutical Industries Ltd.
Page 5 of 5

 

TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF CASHFLOWS
(Unaudited)
(U.S. dollars in thousands)

 
   
Six Months Ended June 30,
 
    2011     2010(1)  
Operating Activities            
Net income
  $ 62,281     $ 25,117  
Adjustments required to reconcile net income to net cash
               
provided by operating activities:
               
     Depreciation and amortization
    9,463       9,298  
     Stock-based compensation
    58       177  
     Impairment of long-lived assets
    -       2,617  
     Increase  in long-term debt due to currency fluctuations
    2,461       245  
     Increase in trade receivables
    (9,469 )     (11,169 )
     Change in derivative instruments, net
    (1,163 )     -  
     (Increase) decrease in other receivables, prepaid expenses and other assets
    (4,302 )     100  
     Increase in inventories
    (6,336 )     (7,890 )
     Foreign exchange effect on intercompany balances
    1,394       (906 )
     Increase in trade and other payables and accruals
    3,320       6,474  
Net cash provided by operating activities
     57,707       24,063  
                 
Investing Activities:
               
     Purchase of property plant & equipment, net of related grants
    (2,240 )     (816 )
     Investment in other intangible assets
    -       (2,528 )
     Investment in short-term bank deposits
    (10,641 )     (32,028 )
     Proceeds from sale of short-term bank deposits
    -       12,489  
     Proceeds from the sale of marketable securities
    923       -  
Net cash used in investing activities
     (11,958 )     (22,883 )
                 
Financing Activities:
           
     Proceeds from the issuance of shares, net
    8,781       -  
     Repayments of long-term debt
    (3 )     (14,861 )
     (Proceeds) repayments of short-term bank debt, net
    (1,446 )     1,775  
Net cash provided by (used in) financing activities
     7,332       (13,086 )
                 
Effect of exchange rate changes
    478       (224 )
Net increase (decrease) in cash
    53,559       (12,130 )
Cash at beginning of period
 
54,144
      98,439  

Cash at end of period
  $ 107,703     $ 86,309  

(1) 
The 2010 information presented above is updated from the August 23, 2010 press release to reflect the Company’s Irish subsidiary as discontinued operations and the impairment of its assets.
 

#####
 
 
 

 

SIGNATURE

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Date:  July 26, 2011
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
 
By:
/s/ James Kedrowski
 
 
Name:
James Kedrowski
 
 
Title:
Interim Chief Executive Officer and Director