Taro fourth quarter net sales increase 44.3% to $148.1 million

Taro Pharmaceutical Industries Ltd. ("Taro," or the "Company," Pink Sheets: TAROF) today provided unaudited financial results for the quarter and full year ended December 31, 2011.

Fourth Quarter 2011 Highlights vs. 2010

• Net sales of $148.1 million, increased $45.5 million, or 44.3%,
• Gross profit, as a percentage of net sales was 71.6%, compared to 59.6%, principally driven by increased selling prices on select products in the U.S. market as overall volumes were flat,
• Selling, marketing, general and administrative expenses decreased $6.2 million, or 22.0%,
• Operating income of $74.5 million, or 50.3% of net sales, compared to $21.6 million, or 21.0% of net sales,
• Net income was negatively impacted by foreign exchange (FX) expense of $6.3 million, compared to $3.7 million,
• Net income attributable to Taro was $62.4 million, compared to $16.5 million, an increase of $45.9 million, resulting in diluted earnings per share of $1.40 compared to $0.38.

Year to Date 2011 Highlights vs. 2010

• Net sales of $505.7 million, increased $113.1 million, or 28.8%,
• Gross profit, as a percentage of net sales was 65.2%, compared to 59.5%,
• Selling, marketing, general and administrative expenses decreased $14.0 million, or 13.0%,
• Operating income of $204.0 million, or 40.3% of net sales, compared to $86.5 million, or 22.0% of net sales,
• Net income was favorably impacted by FX income of $6.9 million, compared to FX expense of $5.3 million - a $12.2 million benefit,
• Net income attributable to Taro was $182.7 million compared to $64.1 million, a $118.6 million increase, resulting in diluted earnings per share of $4.11 compared to $1.53.

Taro's Interim Chief Executive Officer, Jim Kedrowski, stated, "We are very pleased with both 2011's fourth quarter and full year performance. The successful execution of our strategic plans and changes we have implemented are reflected in these solid financial results. The Company's performance across all markets was very positive, however, a significant portion of the quarter's growth in net sales and profits was derived from price increases on select products in the U.S. market and may not be sustainable."

Cash Flows and Balance Sheet Highlights

• Cash flows from operations were $181.4 million compared to $70.5 million in 2010,
• Cash, including marketable securities, increased $170.0 million from December 31, 2010 to $258.8 million,
• Trade accounts receivable increased primarily from increased sales in the U.S.,
• Other receivables and prepaid expenses increased primarily as a result of increases in current deferred tax assets,
• Inventories increased due to our strategic focus to increase inventory levels to better serve our customers,
• Other assets decreased due to the utilization of deferred tax assets in the U.S.,
• Total debt decreased $14.7 million to $44.7 million at December 31, 2011,
• Trade payables and other current liabilities increased largely due to increases in taxes payable in Canada and Israel and Medicaid and indirect rebates in the U.S.

FDA Filings

During the quarter, Taro filed an Abbreviated New Drug Application ("ANDA") for one product with the U.S. Food and Drug Administration ("FDA"). For the year, Taro has filed ANDAs for three products and has received approval for ANDAs representing seven products. Additionally, ANDAs for 23 products (including four tentative approvals) and one New Drug Application await FDA approval.