Taro Provides Results for Three Months Ended March 2012

HAWTHORNE, N.Y.--([ BUSINESS WIRE ])--Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (aTaro,a or the aCompanya) today provided unaudited financial results for the three month period ended March 31, 2012.

"I look forward to working with the entire Taro management team as we continue to move the Company forward, and build upon the progress and success that Taro has achieved, particularly in the past eighteen months."

Quarter Three Months ended March 31, 2012 Highlights - compared to the same period in 2011

Net sales of $145.1 million, increased $37.4 million, or 34.7%
Gross profit, as a percentage of net sales was 68.3%, compared to 58.6%
Selling, marketing, general and administrative expenses increased $0.6 million, however, as a percentage of net sales decreased to 15.9%, compared to 20.8%
Operating income increased 98.3% to $66.2 million, or 45.6% of net sales, compared to $33.4 million, or 31.0% of net sales
Net income attributable to Taro was $47.3 million compared to $25.7 million, a $21.6 million increase, resulting in diluted earnings per share of $1.06 compared to $0.58.

Cash Flow and Balance Sheet Highlights

Cash flow from operations was $78.1 million for the quarter ended March 31, 2012, compared to $24.4 million in the same period in 2011
Cash, including marketable securities, increased $75.5 million to $334.3 million from December 31, 2011.

Mr. Kal Sundaram, Taroas recently appointed Chairman commented, aWe are pleased with the quarteras results and the consistent progress that we continue to make. As we have stated in the past, a portion of our revenue and profit growth is the result of pricing opportunities, the sustainability of which is uncertain. We intend to ramp up our R&D expenditures in order to improve and grow our pipe-line of quality products in order to remain competitive in a highly-competitive market.a

Mr. Sundaram added, aI look forward to working with the entire Taro management team as we continue to move the Company forward, and build upon the progress and success that Taro has achieved, particularly in the past eighteen months.a

FDA Approvals and Filings

During the quarter, Taro received one Supplemental New Drug Application approval from the U.S. Food and Drug Administration (aFDAa) for Daranide (Dichlorphenamide) Tablets 50mg. Taro also received one Abbreviated New Drug Application (aANDAa) approval in May 2012 (Escitalopram Oxalate Oral Solution, 5mg (base)/5mL). The total number of products awaiting approval at the FDA is sixteen ANDAs and one New Drug Application.

Taro Changing its Fiscal Year End to March 31

Taroas Board of Directors approved a change in the Companyas fiscal year end from December 31 to March 31. The new fiscal year end was effectuated to align Taro's fiscal reporting period and its annual budget planning with that of its major shareholder, Sun Pharmaceutical Industries Ltd. (aSun Pharma,a Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE: 524715). A report on Form 20-F with unaudited results will be filed with the U.S. Securities and Exchange Commission (aSECa) by the Company to cover the transition period from January 1, 2012 to March 31, 2012 (aTransition Reporta).

The Company cautions that the foregoing financial information is presented on an unaudited basis and is subject to change. In addition to filing a Transition Report, final audited results for the transition period will be included in the Companyas Annual Report on Form 20-F for the fiscal period from April 1, 2012 to March 31, 2013.

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 Companyas 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 Companyas audited consolidated financial statements included in the Companyas 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 and statements that refer or relate to events or circumstances the Company aestimates,a abelieves,a or aexpectsa to happen or similar language, and statements with respect to the Companyas financial performance, availability of financial information, and estimates of financial results and financial information for 2012.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 the evaluation of the Sun Pharma tender offer by Taroas Board of Directors, acceptance of the offer by Taro shareholders, approval, if any required, by regulatory authorities, actions of the Company's lenders and creditors, 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 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.


TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (U.S. dollars in thousands, except share data)

	Three Months Ended
	March 31,
	2012		2011

Sales, net	$ 145,141		$ 107,727
Cost of sales	45,971		44,617
Gross Profit	99,170		63,110

Operating Expenses:
Research and development, net	9,847		7,258
Selling, marketing, general and administrative	23,101		22,460
Operating Income	66,222		33,392

Financial Expenses, net:
Interest and other financial (income) expense	(107	)	778
Foreign exchange expense	1,107		409

Other (expense) income, net	(94	)	251
Income before income taxes	65,128		32,456
Tax expense	17,791		6,368
Income from continuing operations	47,337		26,088
Net income (loss) from discontinued operations⁽¹⁾	66		(135	)
Net income	47,403		25,953
Net income attributable to non-controlling interest⁽²⁾	151		295
Net income attributable to Taro	$ 47,252		$ 25,658

Net income per ordinary share
from continuing operations attributable to Taro:
Basic	$1.06		$0.58
Diluted	$1.06		$0.58

Net income (loss) per ordinary share
from discontinued operations attributable to Taro:
Basic	$0.00*		($0.00)*
Diluted	$0.00*		($0.00)*

Net income per ordinary share
attributable to Taro:
Basic	$1.06		$0.58
Diluted	$1.06		$0.58

Weighted-average number of ordinary shares used
to compute net income per ordinary share:
Basic	44,476,429		44,284,556
Diluted	44,589,007		44,447,293

⁽¹⁾		In 2010, the Company closed its Ireland manufacturing facility and decided to sell the facility and has therefore classified the losses attributable to its Irish subsidiary as losses from discontinued operations.
⁽²⁾		The impact of the Company adopting FASB ASC Section 810-10-65, which requires the Company to allocate income or loss attributable to a non-controlling interest based on the respective ownership percentages.

*		Amount is less than $0.01.


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

	March 31,		December 31,
	2012		2011
ASSETS	(unaudited)		(audited)
CURRENT ASSETS:
Cash and cash equivalents	$	238,266	$	150,001
Short-term bank deposits		72,440		89,814
Restricted short-term bank deposits		15,780		16,080
Marketable securities		7,835		2,901
Accounts receivable and other:
Trade, net		111,130		120,832
Other receivables and prepaid expenses		98,501		94,344
Inventories		109,638		107,378
Assets held for sale, net⁽¹⁾		71		81
TOTAL CURRENT ASSETS		653,661		581,431

Long-term receivables and other assets		19,972		23,131
Property, plant and equipment, net		150,750		152,532
Other assets		32,041		38,751
TOTAL ASSETS	$	856,424	$	795,845


LIABILITIES AND SHAREHOLDERSa EQUITY

CURRENT LIABILITIES:
Current maturities of long-term debt	$	10,957	$	17,073
Trade payables and other current liabilities		187,942		173,310
TOTAL CURRENT LIABILITIES		198,899		190,383

Long-term debt, net of current maturities		27,949		27,614
Deferred taxes and other long-term liabilities		6,618		6,785
TOTAL LIABILITIES		233,466		224,782

Taro shareholdersa equity		619,008		567,264
Non-controlling interest⁽²⁾		3,950		3,799

TOTAL LIABILITIES AND SHAREHOLDERSa EQUITY	$	856,424	$	795,845

⁽¹⁾		In 2010, the Company closed its Ireland manufacturing facility and decided to sell the facility and therefore has classified the related assets as held for sale.
⁽²⁾		The impact of the Company adopting FASB ASC Section 810-10-65, which requires the Company to allocate income or loss attributable to a non-controlling interest based on the respective ownership percentages.


TARO PHARMACEUTICAL INDUSTRIES LTD. SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (U.S. dollars in thousands)

	Three Months Ended March 31,
	2012			2011

Operating Activities
Net income	$	47,403		$	25,953
Adjustments required to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		4,598			4,709
Stock-based compensation		-			20
Loss on sale of long-lived assets		22			-
Increase in long-term debt due to currency fluctuations		814			1,136
Decrease (increase) in trade receivables		9,879			(8,270	)
Change in derivative instruments, net		(3,392	)		(831	)
Decrease in other receivables, prepaid expenses and other assets		3,268			2,531
Increase in inventories		(1,583	)		(1,592	)
Foreign exchange effect on intercompany balances		2,104			(368	)
Increase in trade and other payables and accruals		14,981			1,070
Net cash provided by operating activities		78,094			24,358

Investing Activities:
Purchase of property plant & equipment, net of related grants		(1,610	)		(887	)
Proceeds from long-term deposits and other assets		18			-
Proceeds from (investment in) short-term and restricted bank deposits		22,059			(10,105	)
Investment in marketable securities		(4,909	)		-
Proceeds from sale of property, plant and equipment		28			-
Net cash provided by (used in) investing activities		15,586			(10,992	)

Financing Activities:
Proceeds from the issuance of shares, net		7			8,554
(Repayments) proceeds of long-term debt		(6,595	)		9
Proceeds of short-term bank debt, net		-			2,428
Net cash (used in) provided by financing activities		(6,588	)		10,991

Effect of exchange rate changes		1,173			371
Net increase in cash		88,265			24,728
Cash at beginning of period		150,001			54,144

Cash at end of period	$	238,266		$	78,872

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Taro Provides Results for Three Months Ended March 2012