Taro Pharmaceutical Industries, an Israel based pharma company fighting takeover battle with India's Sun Pharmaceutical and Industries Ltd, has reported lower net profit of US$ 9.7 million during the third quarter ended September 2009 as against US$ 12.5 million in the corresponding period of last year, a de-growth of 22.4 per cent on account of higher interest cost. Its net sales increased marginally by 3.9 per cent to US$ 93.9 million from US$ 90.4 million. With fall in net profits, its earning per share nosedive to US$ 0.25 from US$ 0.32 in the last period. The total interest cost went up to US$ 7.7 million as against US$ 0.8 million.
The company noted that the year-to-date 2009 earnings were impacted by US$ 6.5 million of net expenses related to operating the company’s Irish facility. In addition, 2009 year-to-date expenses included approximately US$ 14.5 million in professional, consulting and other fees related to the company’s continuing efforts to complete the 2004-2006 audits, and litigation related to the company’s termination of the merger agreement with Sun Pharmaceutical.
For the first nine months ended September 2009, Taro's net sales increased by 7.4 per cent to US$ 275.6 million from US$ 256.6 million in the similar period of last year. Its net profit improved slightly to US$ 33.3 million from US$ 33.1 million. Its earning per share remained unchanged at US$ 0.85 for the first nine months.
Taro's net debt decreased to US$ 58.2 million and its shareholders’ equity increased to US$ 46.7 million. After making all normally scheduled debt principal and interest payments of US$ 16.4 million, cash and cash equivalents were US$ 81.7 million on September 30, 2009, compared to US$ 73.2 million on December 31, 2008. In addition, the company invested US$ 23.1 million in short-term bank deposits. Accordingly, cash and cash equivalents as well as short-term bank deposits increased to US$ 104.8 million, an increase of US$ 31.6 million during the nine-month period.
Net cash provided by operating activities during the nine months ended September 30, 2009, was US$ 46.2 million, compared to US$ 40.7 million for the nine months ended September 30, 2008. The company’s total debt was US$ 175.4 million. After accounting for the value of ongoing currency protection instruments, cash and cash equivalents as well as short-term bank deposits, net debt was US$ 58.2 million.
The company believes that in the ordinary course, 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 financial reporting requirements in certain of its debt instruments due to the lack of audited financial statements and continues to discuss the situation with its lenders. Taro noted that it is current with all its payments to lenders and that in the near term it does not foresee the need for additional sources of outside liquidity to fund its ongoing business operations.
Trade accounts receivable at September 30, 2009 were US$ 79.3 million, representing 78 days sales outstanding. Inventories were US$ 66.9 million, down US$ 2.7 million and US$ 4.1 million as compared to December 31, 2008 and September 30, 2008, respectively. This decrease is the result of the company’s continuing focus on inventory management.
Total shareholders' equity at September 30, 2009 increased US$ 46.7 million to US$ 228.7 million, compared to US$ 182.0 million at December 31, 2008. Shareholders’ equity includes an increase in other comprehensive income of US$ 13.4 million due primarily to foreign currency translation.