HAWTHORNE, N.Y., Feb. 19, 2008 (PRIME NEWSWIRE) -- Taro Pharmaceutical Industries Ltd. ("Taro," the "Company,") (Pink Sheets:TAROF) today provided information for the year ended December 31, 2007.
The Company cautioned that the financial information being presented is both unaudited and subject to further review and possible change. Additionally, these results do not provide complete financial information and both the 2006 and the 2007 results are subject to audit by the Company's outside auditors. These results have not been and will not be subject to quarterly review procedures. However, subject to the foregoing caveats, the Company believes that the information below represents the best information currently available to Taro management.
2007 Financial Performance
For the year ended December 31, 2007, Taro estimates net sales of approximately $313 million, gross profit of approximately $168 million, or 53.7% of sales, and net income of approximately $21.1 million. The Company noted that in the year ended December 31, 2007, there were approximately $12 million of one-time charges and non-recurring expenses, including significantly higher professional fees due to a restatement of 2003 and 2004 results, a related investigation and the proposed transaction with Sun Pharmaceutical Industries Ltd. ("Sun," Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE: 524715). Depreciation and amortization expenses were approximately $27 million during 2007. Capital expenditures during 2007 were approximately $5 million. The Company believes that the substantially improved results it is providing for the year ended December 31, 2007 reflect the actions that were previously described in the "Outlook for 2007" section of its March 20, 2007 press release and which were subsequently discussed in its December 6, 2007 press release.
In May 2007, Sun made an equity investment of approximately $41 million to help the Company avoid an impending payment default on certain of its debt obligations. In August 2007, Sun provided $18 million more to the Company through the exercise of warrants. Thus, since May 2007, Sun has made equity investments in Taro totaling approximately $59 million. Sun and Taro continue to work towards implementing the transactions contemplated by the Company's merger agreement with Sun. As of December 31, 2007, Taro had $45 million in cash or cash equivalents, after making normally scheduled and required principal debt payments of approximately $35 million since December 2006 and sustaining a number of one-time expenses. For 2008, Taro is scheduled to make principal and interest payments totaling $42 million. In addition, the Company notes that it has a separate $28 million credit facility due in late 2008, which it expects to be able to refinance. As of December 31, 2007, the Company's total debt was approximately $218 million. The Company believes, in the ordinary course, that it should have sufficient liquidity to meet its cash requirements for the foreseeable future, subject to the continuing support of its lenders. The Company continues to be out of compliance with certain of its debt instruments and continues to discuss the situation with its lenders.
A New Drug Application for Flo-Pred(tm) (prednisolone acetate oral suspension) was approved by the U.S. Food and Drug Administration in the first quarter of 2008 which the Company expects to market in the third quarter of 2008.
Status of 2006 Financial Statements
As the Company previously disclosed, the completion of its financial statements for the year ended December 31, 2006 has been delayed because the Company is continuing to review the adequacy of estimates for accruals recorded in 2005 and prior years for sales returns, chargebacks, rebates and administrative fees. The eventual outcome of this review cannot be predicted with any certainty at this time. Taro stated that on the basis of present information, changes in the estimates for those years, if made, may be material. However, the Company does not expect that any such changes would affect the results for 2006 and prior years, when taken in the aggregate. Furthermore if any such changes were to be made, they would likely reduce the amount of the loss in 2006 as presented herein. The Company added that it believes such changes would not impact the financial results for 2007.
Taro emphasized that its review of accruals described above has not yet been completed, and is subject to audit by its outside auditors. The Company stated that, as a result of this review, it cannot predict when it will be in a position to issue its 2006 or its 2007 audited financial statements.
Taro Pharmaceutical Industries Ltd. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4733
SAFE HARBOR STATEMENT
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, "should" happen, or similar language, and statements with respect to the availability of financial information, completion of the 2006 or 2007 audit(s), estimates of financial results and financial information for 2003-2007, review of results for prior years, estimates of expenses and one-time charges, and completion of the transaction with Sun described in this press release. 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 the possible unavailability of financial information, completion of the audits of 2006 and/or 2007, inability to complete the transaction with Sun, actions of the Company's lenders, creditors and Sun, 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 or Sun operates, litigation, regulatory actions and legislative actions in the countries in which Taro or Sun operate, 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 STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except per share data)
Unaudited Unaudited
and and
Unreviewed Unreviewed
Year Ended Year Ended
December 31, December 31,
2007 2006
--------- ---------
SALES $ 312,955 $ 184,122
Cost of Sales 144,470 141,938
--------- ---------
Gross Profit 168,485 42,184
Operating Expenses:
Selling and Administrative (Notes 1 & 2) 94,444 134,922
--------- ---------
Operating Income (Loss) before Research
and Development 74,041 (92,738)
Research and Development 29,302 36,220
--------- ---------
Operating Income (Loss) 44,739 (128,958)
Financial Expenses 23,892 13,404
Other Income - Net (note 3) 5,243 --
--------- ---------
26,090 (142,362)
Tax Expense (Benefit) on Income (Loss) 4,951 (1,640)
--------- ---------
NET INCOME (LOSS) $ 21,139 $(140,722)
========= =========
Basic Earnings (Loss) Per Ordinary Share $ 0.61 $ (4.80)
Diluted Earnings Per Ordinary Share $ 0.60
Weighted average number of shares-
Basic EPS 34,721,189 29,315,224
Diluted EPS 35,281,464 29,501,777
Note 1: In 2006, includes charges for asset impairments in the amount
of $38 million.
Note 2: In 2007, includes approximately $12 million of one-time
charges and non-recurring expenses, including professional fees
related to the Company's investigations and its proposed transaction
with Sun Pharmaceutical Industries Ltd. ("Sun"). The administrative
expenses include audit and tax related services of approximately $1.7
million for 2006 and approximately $3.3 million for 2007. No material
non-audit related services were performed by the external auditors.
Note 3: In 2007, includes a one-time gain of approximately $4 million
resulting from the sale of a parking lot in Ireland.
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
Unaudited and Unaudited and
Unreviewed Unreviewed
December 31, December 31,
2007 2006
------------- -------------
Current Assets:
Cash and Cash Equivalents $ 45,178 $ 16,911
Restricted Short-term Bank Deposits -- 152
Accounts Receivable - Trade 68,497 43,687
Accounts Receivable - Other and Prepaid
Expenses 26,733 15,284
Inventories 66,036 60,017
------------- -------------
Total Current Assets 206,444 136,051
Long-term Investments 18,765 23,390
Property, Plant and Equipment, net 212,437 226,980
Other Assets 47,625 52,467
------------- -------------
TOTAL ASSETS $485,271 $438,888
============= =============
Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Bank Credits $ 95,320 $110,576
Current Maturities of Long-Term
Liabilities 28,564 26,339
Accounts Payable and Accrued Expenses 72,543 87,702
------------- -------------
Total Current Liabilities 196,427 224,617
Long-Term Liabilities 94,048 108,383
Deferred Taxes and Other Liabilities 8,402 7,517
------------- -------------
Total Liabilities 298,877 340,517
Shareholders' Equity (Note 1) 186,394 98,371
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $485,271 $438,888
============= =============
Note 1: In 2007, Shareholders' equity is net of $2.4 million of
fees associated with Sun's equity investment in Taro.