HAWTHORNE, N.Y., July 28, 2008 (PRIME NEWSWIRE) -- Taro Pharmaceutical Industries Ltd. ("Taro," the "Company") (Pink Sheets:TAROF) today announced that it is sending a letter to its shareholders updating them on the status of the Company's financial and operational turnaround.
The letter includes details of preliminary financial results for the first half of 2008 that were previously disclosed on July 23, along with current projections for significant growth in net sales for the remainder of the year.
The letter also advises shareholders that Taro's Board of Directors has reaffirmed its recommendation that they reject the unsolicited tender offer by Sun Pharmaceutical Industries Ltd. ("Sun").
The full text of the letter is set forth below:
Our Board of Directors Reaffirms Its Recommendation That You Reject
Sun's Unsolicited Tender Offer
July 24, 2008
Dear Fellow Shareholder:
I am pleased to report that our net income after tax for the first
half of 2008 is estimated at $20.6 million. This net income is
almost equal to the $21.1 million net income that we reported for the
entire year of 2007. Moreover, we believe that the momentum we have
generated over the past 18 months is continuing. To that end, I am
further pleased to report that Taro's second quarter net income for
2008 is approximately 73% higher than the net income for the first
quarter of this year.
Current Unreviewed, Unaudited and Projected Financial Results
For the second quarter ended June 30, 2008, we estimate net sales of
approximately $88.1 million, compared to approximately $78 million in
the prior quarter. For the first half of 2008, we estimate our net
sales to be approximately $166.2 million. Based upon preliminary
orders we are receiving from customers, we expect to achieve an
increase of between 10%-15% in net sales for all 2008 over the net
sales we reported in 2007.
Operating income for the six months ended June 30, 2008 was
approximately $29.2 million, and for the second quarter was
approximately $17.7 million. Depreciation and amortization for the
six months ended June 30, 2008 was approximately $11.7 million, and
for the second quarter was approximately $5.9 million.
We estimate net income of approximately $13.0 million for the second
quarter of 2008, compared with $7.5 million for the first quarter,
which represents an increase of $5.5 million, or 73%.
For the first half of 2008, our improved net earnings of
$20.6 million took place notwithstanding approximately $10 million of
expenses related to maintaining the Company's Irish facility as well
as professional and legal fees associated with the termination of the
merger agreement with Sun Pharmaceutical Industries Ltd. ("Sun") and
related litigation.
As in the past, I want to caution that the financial information in
this letter does not constitute complete financial information, has
not been reviewed by our independent auditors and is subject to
possible change. However, subject to the foregoing caveats, we
believe that the information above represents the best information
currently available.
Please note that the Company has been unable to file audited
financial statements for the year ended December 31, 2006 due to
questions concerning estimates of accruals for sales returns,
chargebacks, rebates, and administrative items recorded in 2005 and
prior years. The ending balances for 2006 could affect the year
ended December 31, 2007, and accordingly, the Company has been unable
to file audited financial statements for 2007 as well. We continue
to work diligently with our auditors to resolve these issues and
obtain completed audits for both years. We believe that, in addition
to fulfilling other requirements, the availability of audited
financial statements should facilitate the relisting of the Company
on NASDAQ.
Factors Contributing to Taro's Turnaround and Growth Expectations
Our turnaround reflects a number of advantages and competitive
strengths that Taro enjoys, thanks to its dedicated, experienced and
talented management and scientific teams. Over the years, we have
built a leadership position in both generic and proprietary niche
topical dermatologic products. Our proprietary portfolio (Lustra(r),
Ovide(r), Topicort(r)) is well established, with growth opportunities
and new product launches planned in these markets and in the
underserved pediatric market. We've received final approval from the
U.S. Food and Drug Administration ("U.S. FDA") for our New Drug
Application for Flo-Pred(tm) to treat pediatric asthma. The product
utilizes our patent protected, spill resistant, taste masking
technology. It is sugar free, dye free, alcohol free and does not
require refrigeration.
Our investment in state-of-the-art facilities has improved our
operational efficiencies. Major capital projects are now complete
with only limited expenditures required in the foreseeable future.
In addition, our best-in-class facilities in Israel and Canada will
help to maintain our outstanding record of regulatory compliance,
with multiple successful inspections and product approvals by the
U.S. FDA and by regulators in Canada, Israel, the UK, Ireland and
elsewhere.
We are a vertically integrated company that manufactures the active
pharmaceutical ingredients for a number of our key products,
including Ovide(r), Warfarin, Topicort(r), Carbamazepine,
Oxcarbazepine and Etodolac. We have also modified our wholesaler
relationships to increase our insight into wholesaler inventories.
Our growth in net sales over the last six quarters occurred despite
significant wholesaler inventory reductions that took place during
that period.
Recent Developments Related to Sun's Unsolicited Tender Offer
It is very important to me that you, the shareholders, be given an
opportunity to decide what happens to your Company. I am confident
that the courts in Israel will provide you with the opportunity to
protect your investment in light of Sun's unsolicited tender offer.
I hope that you've already received our letter of July 10, which,
together with the Company's Schedule 14D-9 ("14D-9") that we filed
with the U.S. Securities and Exchange Commission ("SEC"), sets forth
the reasons for the Board's unanimous recommendation that you reject
the unsolicited tender offer from Sun and not tender your shares to
Sun pursuant to that offer.
Beyond what was written in the 14D-9, I would add only the obvious:
that Sun's offer of $7.75 per share is significantly below the price
at which our shares are trading today, which is at a 52 week high,
and even further below the price that Sun paid to get blocks of Taro
shares in recent private transactions with investors. Given our
performance year to date and our outlook, I believe the Sun offer
significantly undervalues our Company and deprives you of what we
believe your shares are worth. I would also like to make sure you
are aware that Sun has extended the expiration date of its tender
offer until September 2nd, by which date the court in Tel-Aviv has
indicated it will rule on our claim that Sun's tender offer is
illegal under Israeli law. This development significantly extends
the timeframe originally contemplated by Sun by which it could close
its offer and provides you with more time to decide whether it is
prudent to tender your shares.
I encourage you to read the 14D-9, which is available on our website
at www.taro.com or from our information agent, Georgeson at
1-866-324-8878.
Commitment to Our Business
We have put our hearts and souls into Taro's turnaround and into our
efforts to protect the rights of our shareholders and the value of
their investment. I am pleased with this dramatic turnaround in our
financial and operational performance and our outlook for future
profitable growth. I want to thank Taro's employees personally for
keeping their focus on our business, which is to develop and
manufacture outstanding pharmaceutical products for customers around
the world. Clearly, it is this devotion to our business that
underscores the success of our turnaround. I can assure you that the
Board and management team of Taro will continue to concentrate on the
business of our Company and do all we can to build shareholder value.
On behalf of the Board of Directors,
/s/
Barrie Levitt, M.D.
Chairman of the Board
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.
The Taro Pharmaceutical Industries Ltd. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4733
SAFE HARBOR STATEMENT
Certain statements in this release and letter 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, "should" happen, or similar language, and statements with respect to the value of the Company and its pipeline, the Company's financial performance, including its business model and financial performance during the last two years, relisting of the Company on NASDAQ, availability of financial information, completion of the 2006 and 2007 audits, estimates of financial results and financial information for 2005-2008, review of results for prior years and estimates of expenses and one-time charges. Although Taro 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, completion of the audits of 2006, 2007 and/or 2008, actions of the Company's lenders, creditors and Sun Pharmaceutical Industries Ltd. ("Sun"), including but not limited to the outcome of the litigation with Sun referenced herein, 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 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.
In connection with the Sun tender offer, Taro has filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9. Taro's shareholders should read carefully the Schedule 14D-9 (including any amendments or supplements thereto) prior to making any decisions with respect to the Sun tender offer because it contains important information. Free copies of the Schedule 14D-9 and the related amendments or supplements thereto that Taro has filed with the SEC are available at the SEC's website at www.sec.gov, at Taro's website at www.taro.com, or from Taro's information agent, Georgeson at 1-866-324-8878.