FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of February, 2005
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 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 Reports 4th Quarter and Full Year 2004 Results
HAWTHORNE, N.Y.--(BUSINESS WIRE)--Feb. 24, 2005--Taro
Pharmaceutical Industries Ltd. ("Taro," the "Company," NASDAQ: TARO)
today reported fourth quarter and full year results for 2004.
Fourth Quarter 2004 Results
Taro's fourth quarter sales were $77.7 million, compared with
$88.6 million for the fourth quarter of 2003. Gross profit for the
quarter was $42.3 million, compared with $62.1 million for the fourth
quarter of 2003.
Selling, general and administrative ("SGA") expenses were $29.0
million, compared with $32.1 million for the year-ago quarter. R&D
expenses were $9.2 million, compared with $11.1 million for the fourth
quarter of 2003.
Net income for the quarter was $4.8 million, or $0.16 per diluted
share, compared with $16.6 million, or $0.56 per diluted share, for
the fourth quarter of 2003.
Sales in the United States continued to increase sequentially in
the fourth quarter compared with the third and second quarters of
2004. Gross margin in the fourth quarter was affected by higher unit
costs as the Company decreased production in line with the inventory
reduction program initiated in the third quarter, and by price
erosion, which is inherent in the generic pharmaceutical industry.
Cost of goods was increased by several additional factors, including
the decrease in value of the U.S. dollar, the cost of transferring
production from the Company's Long Island, NY facility to its Toronto
facility, and costs related to a reduction in manufacturing personnel.
The decrease in SGA expenses compared with the year-ago quarter
and the third quarter of 2004 primarily reflects the cost reduction
measures implemented by Taro in 2004. The decrease in net income
compared with the year-ago quarter primarily results from the decrease
in revenues, the increase in unit costs, changes in product mix, and
price erosion.
Full Year 2004 Results
Taro's sales were $284.1 million for the year ended December 31,
2004, compared with sales of $315.5 million for 2003. Gross profit for
2004 was $164.7 million, compared with $213.0 million for 2003.
SGA expenses for the year were $123.4 million, compared with $97.7
million for 2003. R&D expenses were $41.9 million, compared with $40.6
million for 2003.
Net income for 2004 was $11.1 million, or $0.37 per diluted share,
compared with $61.2 million, or $2.06 per diluted share, for 2003.
"Taro's performance in the second half improved compared to the
first half of the year. Beginning in the first half of the year, Taro
experienced an unexpected shortfall in U.S. sales at a time when the
Company was undertaking a major initiative in the marketing of
proprietary consumer products. These factors, combined with our
continuing commitment to research, led to the decline in profits,"
said Barrie Levitt, M.D., Chairman of the Company. "Nevertheless, the
improvement we witnessed in the second half came primarily from the
corrective actions we took. Long-term, we continue to focus on the
Company's prescription pharmaceutical business. We believe that our
research and marketing initiatives, combined with our cost reduction
measures, will return Taro to meaningful, sustainable and profitable
growth."
Prescriptions for Taro products grew more than 19 percent in the
United States in 2004, according to industry sources.
Balance Sheet
At December 31, 2004, Taro's total assets were $695.0 million, an
increase of $78.5 million, compared with $616.5 million at December
31, 2003. Included in Deferred Taxes and Other Assets is the value of
the Company's product acquisitions. Total liabilities were $326.2
million, an increase of $58.8 million, compared with $267.4 million at
the end of 2003.
Shareholders' equity was $368.1 million at December 31, 2004, an
increase of $20.7 million, compared with $347.4 million at the end of
2003.
Proprietary Research
T2000 is the first compound in a group of long-acting,
non-sedating barbiturates under development at Taro. The Company is
refining the study design for its Canadian Phase III trial of T2000 in
essential tremor. There can be no assurance that T2000, or any members
of its class, will be successful in any current or future clinical
trials, or will be commercialized for any indication.
4th Quarter FDA Approvals and Generic Elocon(R) Supply Agreement
In the fourth quarter, Taro received final Abbreviated New Drug
Application ("ANDA") approvals for five topical products:
betamethasone dipropionate ointment (augmented), 0.05%, a generic
version of Schering-Plough's Diprolene(R) ointment; halobetasol
propionate ointment, 0.05%, a generic version of Bristol-Myers
Squibb's Ultravate(R) ointment; hydrocortisone butyrate ointment,
0.1%, a generic version of Ferndale Laboratories' Locoid(R) ointment;
and, mometasone furoate ointment, 0.1% and mometasone furoate cream,
0.1%, generic versions of Schering-Plough's Elocon(R) ointment and
cream, respectively.
In December 2004, Taro entered into a supply agreement with Agis
Industries (1983) Ltd. ("Agis") regarding the generic Elocon(R) cream
product. As part of the agreement with Taro, Agis relinquished its
right to 180-day generic exclusivity, permitting the FDA to grant
final approval for Taro's ANDA. Under the agreement, Taro is supplying
the product to Agis. An Agis subsidiary, Clay Park Labs, Inc., is
distributing the product in the U.S.
U.S. FDA Filings
During 2004, Taro filed 10 ANDAs and received approvals for 15
ANDAs and one New Drug Application. Six of the ANDA approvals were for
first-to-market generics. Taro currently has 27 filings submitted to
the FDA: 26 ANDAs, including two tentative approvals, plus one NDA for
a NonSpil(TM)-related product. Fourteen of the filings are for topical
products and 13 are for products in oral and other dosage forms. The
ANDAs address markets with annual U.S. sales of more than one billion
dollars. In addition, Taro has regulatory filings in Canada, Israel
and other countries.
Acquisition of New York Facility
In February 2005, Taro completed the acquisition of 3 Skyline
Drive, the 124,000 square foot building in which the Company had
initially acquired a 32% interest in 2002. The Company is
consolidating its New York operations into this laboratory and office
building.
Conference Call
The Company will conduct a conference call to discuss fourth
quarter and year-end results on Thursday, February 24, 2005 at 11:00
a.m. Eastern Time (8:00 a.m. Pacific Time).
The call will be available live via the Internet by accessing
www.taro.com.
Online and telephone replays of the call will be available from
approximately 1:00 p.m. on February 24th through March 3, 2005. The
online replay can be accessed at www.taro.com. The telephone replay
can be heard by dialing 888-286-8010 (domestic U.S.) or +617-801-6888
(international) and providing the passcode 77052125 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.
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 "believes" may happen.
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, 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)
DECEMBER DECEMBER
31, 31,
2004 2003
--------- ---------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 98,630 $ 159,121
Restricted short-term bank deposits 6,598 2,518
Accounts Receivable - Trade 122,847 120,522
Accounts Receivable - Other and
prepaid expenses 16,621 17,046
Inventories 86,591 84,486
------------------------------------- --------- ---------
Total Current Assets 331,287 383,693
Long Term Investments 19,836 2,888
Property, Plant and Equipment, net 241,966 182,306
Deferred Taxes and Other Assets 101,930 47,636
------------------------------------- --------- ---------
TOTAL ASSETS $ 695,019 $ 616,523
===================================== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-Term Bank Credits $ 64,961 $ 19,124
Current Maturities of Long-Term
Liabilities 16,944 24,420
Accounts Payable and Accrued Expenses 47,796 60,194
------------------------------------- --------- ---------
Total Current Liabilities 129,701 103,738
Long-Term Liabilities 187,346 156,937
Other Liabilities 9,159 6,737
------------------------------------- --------- ---------
TOTAL LIABILITIES 326,206 267,412
Minority Interest 694 1,711
Shareholders' Equity 368,119 347,400
------------------------------------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 695,019 $ 616,523
===================================== ========= =========
TARO PHARMACEUTICAL INDUSTRIES LTD.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(US dollars in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
-------- -------- --------- ---------
SALES $ 77,668 $ 88,621 $ 284,130 $ 315,458
Cost of Sales 35,334 26,561 119,404 102,454
-------- -------- --------- ---------
Gross Profit 42,334 62,060 164,726 213,004
Operating Expenses:
Selling and
Administrative 29,036 32,097 123,387 97,718
-------- -------- ---------- ---------
Operating Income
before Research
and Development 13,298 29,963 41,339 115,286
Research and
Development 9,211 11,062 41,943 40,601
-------- -------- ---------- ---------
Operating Income
(loss) 4,087 18,901 (604) 74,685
Financial and Other
Expenses - net 684 561 6,329 1,729
-------- -------- ---------- ---------
3,403 18,340 (6,933) 72,956
Taxes on Income (1,340) 1,730 (16,991) 11,475
-------- -------- ---------- ---------
4,743 16,610 10,058 61,481
Minority Share in
Profit (Loss) of
Subsidiary (43) (3) (1,017) 326
-------- -------- ---------- ---------
NET INCOME $ 4,786 $ 16,613 $ 11,075 $ 61,155
======== ======== ========== =========
Earnings per Ordinary
Share $ 0.16 $ 0.57 $ 0.38 $ 2.12
Diluted Earnings per
Ordinary Share $ 0.16 $ 0.56 $ 0.37 $ 2.06
Weighted Average
Number of Shares
BASIC EPS 29,146,349 28,934,811 29,057,564 28,872,839
DILUTED EPS 29,618,811 29,817,095 29,657,486 29,674,148
CONTACT: Taro Pharmaceutical Industries Ltd.
Daniel Saks, 914-345-9000 ext. 6208
or
Kevin Connelly, 914-345-9000 ext. 6338
SIGNATURES
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: February 24, 2005
Taro Pharmaceutical Industries Ltd.
By: /s/ Kevin Connelly
------------------------------
Name: Kevin Connelly
Title: Senior Vice President
Chief Financial Officer