Taro Provides Preliminary First Half 2009 Financial Results

Net Sales Increased 9%; Net Income Increased 15% Compared to First Half 2008


HAWTHORNE, N.Y., Aug. 10, 2009 (GLOBE NEWSWIRE) -- Taro Pharmaceutical Industries Ltd. ("Taro," the "Company") (Pink Sheets:TAROF) today provided information on its financial performance for the first half of 2009.

For the six months ended June 30, 2009, Taro estimates net sales of $181.7 million compared to $166.2 million in the same period of the previous year, a 9% increase. Gross profit for the first half of 2009 was $104.4 million, or 57% of net sales, compared to a gross profit of $91.5 million, or 55% of net sales for the same period in 2008, an increase of 14%. Operating income for the six months ended June 30, 2009 was $34.7 million, compared to $29.2 million for the same period in 2008, an increase of 19%. Net income was $23.6 million, or $0.58 per diluted share, compared to $20.6 million, or $0.51 per diluted share for first half 2008, an increase of 15%.

For the second quarter ended June 30, 2009, Taro estimates net sales of $96.8 million compared to $88.1 million, a 10% increase compared to the second quarter of 2008. Gross profit for the second quarter was $57.9 million, or 60% of net sales, compared to $50.6 million, or 57% of net sales for the second quarter of 2008, an increase of 14%. Operating income for the second quarter of 2009 was $20.6 million compared to $17.7 million, an increase of 16% over the prior year. Net income was $12.5 million, or $0.31 per diluted share, compared to $13.0 million, or $0.32 per diluted share for the second quarter of 2008, a decrease of 4%. The decrease in net income is the result of increased financial expenses in the amount of $3.7 million, principally related to the weakening of the U.S. dollar against the Canadian dollar.

The Company noted that its first half 2009 earnings were impacted by $4.2 million of expenses related to operating the Company's Irish facility. In addition, first half 2009 expenses included approximately $13.0 million in professional, consulting and other fees related to the Company's continuing efforts to complete the 2004-2006 audits, and litigation related to its former merger partner, Sun Pharmaceutical Industries Ltd.

The Company also said that it continues to strengthen its balance sheet with net debt (total debt offset by the value of hedging instruments, less cash and cash equivalents) steadily declining from $103.7 million in December 2008 to $90.9 million in June 2009. As of June 30, 2009, Taro had $79.1 million in cash, cash equivalents and restricted cash, after making scheduled debt payments of $17.6 million in 2009. During the first half of 2009, cash provided by operations was $13.5 million. Amortization and depreciation expenses were $9.7 million during the period.

Trade accounts receivable at June 30, 2009 were $82.6 million, which represents 83 days sales outstanding. The increase in accounts receivable reflects the recent launch of carbamazepine extended release tablets as well as the launch of other new products. Inventories were $65.5 million at June 30, 2009, compared to $75.3 million at June 30, 2008, the result of improved inventory management.

The Company cautioned that the financial information presented herein does not constitute complete financial information, has not been reviewed by its independent auditors and is subject to possible change. However, subject to the foregoing caveats, the Company believes that the information above represents the best information currently available to Taro management.

Two Extraordinary General Meetings of Shareholders

The Company announced today that it has scheduled two Extraordinary General Meetings of Shareholders. The first is scheduled to convene on September 13, 2009, at 8:00 a.m. (Israel time), at the offices of the Company in Haifa, Israel. The purpose of the meeting is to elect, consistent with the requirements of Israeli law, two independent external directors to represent the public, as well as to ratify and approve indemnification for non-executive directors.

Taro's Board of Directors has carefully considered the background and qualifications of the two external director candidates, Irith Hausner, Esq. and Yaron Saporta, CPA (Israel), and found them to be highly qualified professionals who can meaningfully contribute to the Company. Ms. Hausner is an experienced attorney and businesswoman. Mr. Saporta, a prominent and experienced accountant and internal auditor, works with both private and public companies in Israel.

The full text of the Company's letter to shareholders, along with the notice of the meeting scheduled to be held on September 13, 2009, and the corresponding proxy statement can be accessed at the Company's website at www.taro.com or at www.sec.gov. Shareholders are urged to read both documents carefully.

A second meeting is scheduled to convene on September 14, 2009, at 8:00 a.m. (Israel time), at the offices of the Company in Haifa, Israel, to update shareholders on the status of the Company's financial statements for 2006-2008. This meeting is being held following receipt of a request by Franklin Templeton Investments.

About Taro

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.

The Taro Pharmaceutical Industries Ltd. logo is available at http://www.globenewswire.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, the Company's financial performance, including its financial performance during the last two years, availability of financial information, estimates of financial results and financial information for outstanding audits, review of results for prior years and estimates of expenses and reserves. 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 audits of 2004-2008 and any related restatement, actions of the Company's lenders, creditors and Sun Pharmaceutical Industries Ltd. ("Sun"), including but not limited to the outcome of litigation with 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 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.



                 TARO PHARMACEUTICAL INDUSTRIES LTD.
              SUMMARY CONSOLIDATED STATEMENTS OF INCOME
           (US dollars in thousands, except per share data)

                                    Unaudited and Unreviewed
                           -------------------------------------------
                             Three Months Ended     Six Months Ended
                                  June 30,              June 30,
                           -------------------------------------------
                              2009       2008       2009       2008
                           ---------- ---------- ---------- ----------

 NET SALES                    $96,817    $88,139   $181,710   $166,198
 Cost of Sales                 38,926     37,579     77,277     74,746
                           ---------- ---------- ---------- ----------
 Gross Profit                  57,891     50,560    104,433     91,452
 Operating Expenses:
  Selling and
   Administrative              27,675     23,800     51,340     43,982
                           -------------------------------------------
 Operating Income before
  Research and Development     30,216     26,760     53,093     47,470
  Research and Development      9,583      9,063     18,439     18,265
                           ---------- ---------- ---------- ----------

 Operating Income              20,633     17,697     34,654     29,205
 Financial Expenses:
  Interest and other
   Financial Expenses           1,873      3,398      4,139      6,725
  Foreign Exchange
   Fluctuations                 5,645        443      3,069       (195)  
 Other Income                       9        126        147        426
                           ---------- ---------- ---------- ----------

                               13,124     13,982     27,593     23,101
 Taxes on Income                  633        933      3,998      2,514
                           ---------- ---------- ---------- ----------

 NET INCOME                   $12,491    $13,049    $23,595    $20,587
                           ==========  ========= ========== ==========

 Basic Earnings Per
  Ordinary Share                $0.32      $0.33      $0.60      $0.53
 Diluted Earnings Per
  Ordinary Share                $0.31      $0.32      $0.58      $0.51

 Weighted Average Number of
  Shares Used to Compute:
 Basic EPS                 39,217,276 39,186,478 39,202,769 39,186,478
 Diluted EPS               40,509,103 40,404,283 40,547,049 40,254,164


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

                                             Unaudited and Unreviewed
                                            --------------------------
                                               As of         As of
                                              June 30,    December 31,
                                                2009          2008
                                            ------------  ------------

 Current Assets:
 Cash and Cash Equivalents                       $72,862       $78,093
 Restricted Short-Term Bank Deposits               6,250         6,250
 Accounts Receivable - Trade                      82,590        67,227
 Accounts Receivable - Other and Prepaid
  Expenses                                        17,133         8,144
 Inventories                                      65,522        69,568
                                            ------------  ------------
 Total Current Assets                            244,357       229,282

 Long-Term Investments                            21,481        19,860
 Property, Plant and Equipment, net              182,406       187,504
 Other Assets                                     29,697        30,897
                                            ------------  ------------
 TOTAL ASSETS                                   $477,941      $467,543
                                            ============  ============

 Liabilities and Shareholders' Equity

 Current Liabilities:
 Short-Term Bank Credits                         $87,285       $91,412
 Current Maturities of Long-Term Liabilities      27,906        29,887
 Accounts Payable and Accrued Expenses            77,868        75,716
                                            ------------  ------------
 Total Current Liabilities                       193,059       197,015

 Long-Term Liabilities                            54,767        66,696
 Deferred Taxes and Other Liabilities             19,043        19,157
                                            ------------  ------------
 Total Liabilities                               266,869       282,868

 Shareholders' Equity                            211,072       184,675
                                            ------------  ------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $477,941      $467,543
                                            ============  ============


                 TARO PHARMACEUTICAL INDUSTRIES LTD.
             SUMMARY CONSOLIDATED STATEMENT OF CASHFLOWS
                      (US dollars in thousands)

                                             Unaudited and Unreviewed
                                            --------------------------
                                             Six Months Ended June 30,
                                                2009          2008
                                            ------------  ------------

 Operating Activities:
 Net income                                      $23,595       $20,587
 Adjustments required to reconcile net
  income to net cash provided by operating
  activities:
   Depreciation and amortization                   9,708        11,700
   Stock based compensation                          152           141
   Increase in fair value of derivative
    instruments                                      292       (11,452)
   Increase in long-term debt due to
    currency fluctuations                         (1,083)       11,920
   Amortization of deferred revenue                   --          (982)
   Decrease (increase) in trade
    receivables                                  (16,105)          194
   Increase in other receivables and
    prepaid tax                                   (4,896)       (1,087)
   Decrease in deferred tax asset                     --          (547)
   Decrease (increase) in inventories              4,886        (6,012)
   Foreign exchange effect on intercompany
    balances                                       2,960        (3,448)
   Increase (decrease) in trade and other
    payables and accruals                         (5,978)        2,102
 ---------------------------------------------------------------------
 Net cash provided by operating activities        13,531        23,116

 Investing Activities:
   Purchase of property plant & equipment,
    net of related grants                         (1,636)       (1,493)
   Investment in other intangible assets            (108)         (339)
   Proceeds from sales of property, plant
    and equipment                                     96            --
 ---------------------------------------------------------------------
 Net cash (used) in investing activities          (1,648)       (1,832)

 Financing Activities:
   Repayments of long term debt                  (14,652)      (16,161)
   Repayments of short-term bank debt, net        (2,962)          794
 ---------------------------------------------------------------------
 Net cash (used) in financing activities         (17,614)      (15,367)

 Effect of exchange rate changes                     500            84
 ---------------------------------------------------------------------
 Net (decrease) increase in cash                  (5,231)        6,001
 Cash at beginning of period                      78,093        45,178
 ---------------------------------------------------------------------

 Cash at end of period                           $72,862       $51,179
                                            ==========================

            

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