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 August, 2018
 
 
 
Commission File Number 001-35463
 
 
Taro Pharmaceutical Industries Ltd.
 
(Translation of registrant’s name into English)

14 Hakitor Street, Haifa Bay 2624761, 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   ☒     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   ☒


  
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
Hawthorne, New York 10532
(NYSE: TARO)

FOR IMMEDIATE RELEASE

CONTACTS:
Mariano A. Balaguer
 
William J. Coote
VP, CFO
 
AVP, Business Finance, Treasurer and Investor Relations
(914) 345-9001
 
(914) 345-9001
Mariano.Balaguer@taro.com
 
 William.Coote@taro.com
 
 
TARO PROVIDES RESULTS FOR QUARTER ENDED JUNE 2018

Hawthorne, NY, August 9, 2018 - Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro” or the “Company”) today provided unaudited financial results for the quarter ended June 30, 2018.
 
Quarter ended June 30, 2018 Highlights - compared to June 30, 2017
·
Net sales of $154.6 million, decreased $6.7 million, or 4.2%, the result of continuing increased competition and the challenging pricing environment; despite an overall increase in volumes of 11.1%.
·
Gross profit of $100.1 million, decreased $16.5 million and as a percentage of net sales, was 64.7% compared to 72.2%.
·
Research and development expenses of $13.3 million decreased $1.3 million.
·
Selling, marketing, general and administrative expenses of $23.6 million decreased $0.7 million.
·
Operating income of $63.2 million decreased $14.5 million and as a percentage of net sales was 40.8% as compared to 48.1%.
·
Interest and other financial income increased $3.3 million to $7.8 million.
·
Foreign Exchange (FX) income of $10.0 million compared to FX expense of $19.6 million ─ a favorable impact of $29.6 million, principally the result of the weakening of the Canadian dollar vs. the U.S. dollar.
·
Tax expense of $14.1 million increased $4.1 million with the effective tax rate increasing to 17.3% from 15.5%.
·
Net income attributable to Taro was $67.3 million compared to $54.5 million, resulting in diluted earnings per share of $1.71 compared to $1.35.

Cash Flow and Balance Sheet Highlights
·
Cash flow provided by operations was $82.4 million compared to $72.7 million for the three months ended June 30, 2017.
·
As of June 30, 2018, cash, including short-term and long-term bank deposits and marketable securities, increased $63.6 million to $1.7 billion from March 31, 2018.  Cash reflects the $24.7 million impact from the Company’s share repurchases during the current quarter.

Mr. Uday Baldota, Taro’s CEO stated, “We continue to face an overall market trend, particularly in the U.S, that is not dramatically changing, and depending on the product(s), price deflation continues to be a challenge.  We continue to maintain a development pipeline investing only in those products which are viable. From a business development perspective, we will continue to evaluate opportunities that make strategic sense and remain disciplined in our approach.”
 
- more -
 
Taro Pharmaceutical Industries Ltd.
Page 2 of 5
 
FDA Approvals and Filings

The Company recently received two approvals from the U.S. Food and Drug Administration (“FDA”) for Abbreviated New Drug Applications (“ANDAs”); Benzoyl Peroxide; Clindamycin Phosphate Topical Gel 5%; 1% and Clindamycin Phosphate and Benzoyl Peroxide Gel, 1.2%/3.75%.  The Company currently has a total of thirty-two ANDAs awaiting FDA approval, including five tentative approvals.

Share Repurchase Program - Returning Capital to Shareholders

On November 23, 2016, the Company announced that its Board of Directors approved a $250 million share repurchase of ordinary shares.  Under this authorization, repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its stock, and general market conditions.  The repurchase authorization enables the Company to purchase its ordinary shares through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws or other restrictions.  On November 7, 2017, the Board extended the share repurchase program for one year.

During the quarter, the Company repurchased 202,325 shares at an average price of $100.34.  Through June 30, 2018, in total under the authorization, the Company has repurchased 1,806,984 shares at an average price of $102.86; with $64.1 million remaining.

Form 20-F Filings with the SEC

On June 21, 2018, the Company filed its Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended March 31, 2018.

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change.
************************

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 STATEMENT
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 Annual 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 or 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 information for fiscal year 2019.  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 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 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 OPERATIONS
  
(Unaudited)
  
(U.S. dollars in thousands, except share data)
  
             
   
Three Months Ended June 30,
  
   
2018
    
2017
  
Sales, net
  
$
154,618
    
$
161,321
  
Cost of sales
    
54,536
      
44,778
  
Gross profit
    
100,082
      
116,543
  
                 
Operating Expenses:
                
   Research and development
    
13,345
      
14,658
  
   Selling, marketing, general and administrative
    
23,582
      
24,249
  
Operating income
    
63,155
      
77,636
  
                 
Financial (income) expense, net:
                
  Interest and other financial income
    
(7,804
)
    
(4,476
)
  Foreign exchange (income) expense
    
(9,962
)
    
19,642
  
Other gain, net
    
603
      
2,119
  
Income before income taxes
    
81,524
      
64,589
  
Tax expense
    
14,096
      
9,987
  
Income from continuing operations
    
67,428
      
54,602
  
Net loss from discontinued operations attributable to Taro
    
—
      
(47
)
Net income
    
67,428
      
54,555
  
Net  income attributable to non-controlling interest
    
151
      
58
  
Net income attributable to Taro
  
$
67,277
    
$
54,497
  
                 
Net income per ordinary share from continuing operations attributable to Taro:
                
Basic and Diluted
  
$
1.71
    
$
1.35
  
                 
Net loss per ordinary share from discontinued operations attributable to Taro:
                
Basic and Diluted
  
$
—
    
$
(0.00
)*
                 
Net income per ordinary share attributable to Taro:
                
Basic and Diluted
  
$
1.71
    
$
1.35
  
                 
Weighted-average number of shares used to compute net income per share:
                
Basic and Diluted
    
39,260,218
      
40,489,470
  
                 
* Amount is less than $0.01
                
May not foot due to rounding.
                
 
 
Taro Pharmaceutical Industries Ltd.
Page 4 of 5
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
  
SUMMARY CONSOLIDATED BALANCE SHEETS
  
(U.S. dollars in thousands)
  
             
   
June 30,
    
March 31,
  
   
2018
    
2018
  
ASSETS
  
(unaudited)
    
(audited)
  
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
641,989
    
$
576,611
  
Short-term and current maturities of long-term bank deposits
    
174,158
      
296,188
  
Marketable securities
    
597,533
      
549,821
  
Accounts receivable and other:
                
   Trade, net
    
209,135
      
206,455
  
   Corporate tax receivable
    
44,166
      
100,380
  
   Other receivables and prepaid expenses
    
25,184
      
22,585
  
Inventories
    
141,034
      
144,595
  
TOTAL CURRENT ASSETS
    
1,833,199
      
1,896,635
  
Long-term deposits and marketable securities
    
298,145
      
225,639
  
Property, plant and equipment, net
    
194,797
      
193,727
  
Deferred income taxes
    
122,408
      
87,257
  
Other assets
    
29,340
      
29,952
  
TOTAL ASSETS
  
$
2,477,889
    
$
2,433,210
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Trade payables
  
$
26,513
    
$
25,697
  
Other current liabilities
    
166,116
      
190,059
  
TOTAL CURRENT LIABILITIES
    
192,629
      
215,756
  
Deferred taxes and other long-term liabilities
    
5,196
      
7,055
  
TOTAL LIABILITIES
    
197,825
      
222,811
  
                 
Taro shareholders' equity
    
2,274,672
      
2,205,158
  
Non-controlling interest
    
5,392
      
5,241
  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
2,477,889
    
$
2,433,210
  
 
 
Taro Pharmaceutical Industries Ltd.
Page 5 of 5
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
  
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited)
  
(U.S. dollars in thousands)
  
             
   
Three Months Ended June 30,
  
   
2018
    
2017
  
Cash flows from operating activities:
            
Net income
  
$
67,428
    
$
54,555
  
Adjustments required to reconcile net income to net cash provided by operating activities:
                
     Depreciation and amortization
    
4,299
      
3,775
  
     Realized gain on sale of marketable securities and long-lived assets
    
(7
)
    
(247
)
     Change in derivative instruments, net
    
3,546
      
(3,093
)
     Effect of change in exchange rate on inter-company balances, marketable securities and bank deposits
    
(28,918
)
    
22,078
  
     Deferred income taxes, net
    
1,575
      
4,825
  
     (Increase) decrease in trade receivables, net
    
(2,897
)
    
18,270
  
     Decrease (increase) in inventories, net
    
2,653
      
(2,114
)
     Decrease (increase) in other receivables, income tax receivable, prepaid expenses and other
    
52,479
      
(21,483
)
     Decrease in trade, income tax, accrued expenses, and other payables
    
(17,408
)
    
(3,377
)
     Income from marketable securities, net
    
(310
)
    
(521
)
Net cash provided by operating activities
    
82,440
      
72,668
  
                 
Cash flows from investing activities:
                
     Purchase of plant, property & equipment
    
(6,078
)
    
(4,557
)
     Investment in other intangible assets
    
(45
)
    
(2,056
)
     Proceeds from short-term bank deposits, net
    
51,345
      
46,940
  
     Proceeds from long-term deposits and other assets
    
70,685
      
—
  
     Investment in marketable securities, net
    
(107,644
)
    
(275,128
)
Net cash used in investing activities
    
8,263
      
(234,801
)
                 
Cash flows from financing activities:
                
     Purchase of treasury stock
    
(24,655
)
    
(8,489
)
Net cash used in financing activities
    
(24,655
)
    
(8,489
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(670
)
    
936
  
Increase (decrease) in cash and cash equivalents
    
65,378
      
(169,686
)
Cash and cash equivalents at beginning of period
    
576,611
      
600,399
  
Cash and cash equivalents at end of period
  
$
641,989
    
$
430,713
  
                 
Cash Paid during the year for:
                
Income taxes
  
$
36,830
    
$
29,595
  
Cash Received during the year for:
                
Income taxes
  
$
60,544
    
$
—
  
Non-cash investing transactions:
                
Purchase of property, plant and equipment included in accounts payable
  
$
1,823
    
$
1,180
  
Non-cash financing transactions:
                
Purchase of marketable securities
  
$
8,629
    
$
—
  
 
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: August 9, 2018
 
TARO PHARMACEUTICAL INDUSTRIES LTD.
By:
 
/s/ Uday Baldota
 
 
Name: Uday Baldota
 
 
Title: Chief Executive Officer and Director