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Taro Provides Preliminary 2007 Full Year Results

HAWTHORNE, N.Y., Feb. 19, 2008 (PRIME NEWSWIRE) -- Taro Pharmaceutical Industries Ltd. ("Taro," the "Company,") (Pink Sheets:TAROF) today provided information for the year ended December 31, 2007.

The Company cautioned that the financial information being presented is both unaudited and subject to further review and possible change. Additionally, these results do not provide complete financial information and both the 2006 and the 2007 results are subject to audit by the Company's outside auditors. These results have not been and will not be subject to quarterly review procedures. However, subject to the foregoing caveats, the Company believes that the information below represents the best information currently available to Taro management.

2007 Financial Performance

For the year ended December 31, 2007, Taro estimates net sales of approximately $313 million, gross profit of approximately $168 million, or 53.7% of sales, and net income of approximately $21.1 million. The Company noted that in the year ended December 31, 2007, there were approximately $12 million of one-time charges and non-recurring expenses, including significantly higher professional fees due to a restatement of 2003 and 2004 results, a related investigation and the proposed transaction with Sun Pharmaceutical Industries Ltd. ("Sun," Reuters: SUN.BO, Bloomberg: SUNP IN, NSE: SUNPHARMA, BSE: 524715). Depreciation and amortization expenses were approximately $27 million during 2007. Capital expenditures during 2007 were approximately $5 million. The Company believes that the substantially improved results it is providing for the year ended December 31, 2007 reflect the actions that were previously described in the "Outlook for 2007" section of its March 20, 2007 press release and which were subsequently discussed in its December 6, 2007 press release.

In May 2007, Sun made an equity investment of approximately $41 million to help the Company avoid an impending payment default on certain of its debt obligations. In August 2007, Sun provided $18 million more to the Company through the exercise of warrants. Thus, since May 2007, Sun has made equity investments in Taro totaling approximately $59 million. Sun and Taro continue to work towards implementing the transactions contemplated by the Company's merger agreement with Sun. As of December 31, 2007, Taro had $45 million in cash or cash equivalents, after making normally scheduled and required principal debt payments of approximately $35 million since December 2006 and sustaining a number of one-time expenses. For 2008, Taro is scheduled to make principal and interest payments totaling $42 million. In addition, the Company notes that it has a separate $28 million credit facility due in late 2008, which it expects to be able to refinance. As of December 31, 2007, the Company's total debt was approximately $218 million. The Company believes, in the ordinary course, that 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 of its debt instruments and continues to discuss the situation with its lenders.

A New Drug Application for Flo-Pred(tm) (prednisolone acetate oral suspension) was approved by the U.S. Food and Drug Administration in the first quarter of 2008 which the Company expects to market in the third quarter of 2008.

Status of 2006 Financial Statements

As the Company previously disclosed, the completion of its financial statements for the year ended December 31, 2006 has been delayed because the Company is continuing to review the adequacy of estimates for accruals recorded in 2005 and prior years for sales returns, chargebacks, rebates and administrative fees. The eventual outcome of this review cannot be predicted with any certainty at this time. Taro stated that on the basis of present information, changes in the estimates for those years, if made, may be material. However, the Company does not expect that any such changes would affect the results for 2006 and prior years, when taken in the aggregate. Furthermore if any such changes were to be made, they would likely reduce the amount of the loss in 2006 as presented herein. The Company added that it believes such changes would not impact the financial results for 2007.

Taro emphasized that its review of accruals described above has not yet been completed, and is subject to audit by its outside auditors. The Company stated that, as a result of this review, it cannot predict when it will be in a position to issue its 2006 or its 2007 audited financial statements.

Taro Pharmaceutical Industries Ltd. logo is available at http://www.primenewswire.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, and statements with respect to the availability of financial information, completion of the 2006 or 2007 audit(s), estimates of financial results and financial information for 2003-2007, review of results for prior years, estimates of expenses and one-time charges, and completion of the transaction with Sun described in this press release. 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 the audits of 2006 and/or 2007, inability to complete the transaction with Sun, actions of the Company's lenders, creditors and 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 or Sun operates, litigation, regulatory actions and legislative actions in the countries in which Taro or Sun operate, 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 OPERATIONS
               (U.S. dollars in thousands, except per share data)

                                           Unaudited         Unaudited
                                              and               and
                                           Unreviewed        Unreviewed

                                           Year Ended        Year Ended
                                          December 31,      December 31,

                                             2007              2006
                                           ---------         ---------


 SALES                                     $ 312,955         $ 184,122
 Cost of Sales                               144,470           141,938
                                           ---------         ---------
 Gross Profit                                168,485            42,184
 Operating Expenses:
  Selling and Administrative (Notes 1 & 2)    94,444           134,922
                                           ---------         ---------
  Operating Income (Loss) before Research
   and Development                            74,041           (92,738)

  Research and Development                    29,302            36,220
                                           ---------         ---------

 Operating Income (Loss)                      44,739          (128,958)
 Financial Expenses                           23,892            13,404
 Other Income - Net (note 3)                   5,243                --
                                           ---------         ---------
                                              26,090          (142,362)
 Tax Expense (Benefit) on Income (Loss)        4,951            (1,640)
                                           ---------         ---------

 NET INCOME (LOSS)                         $  21,139         $(140,722)
                                           =========         =========


 Basic Earnings (Loss) Per Ordinary Share  $    0.61         $   (4.80)
 Diluted Earnings Per Ordinary Share       $    0.60

 Weighted average number of shares-
 Basic EPS                                34,721,189        29,315,224
 Diluted EPS                              35,281,464        29,501,777

 Note 1: In 2006, includes charges for asset impairments in the amount
 of $38 million.

 Note 2: In 2007, includes approximately $12 million of one-time
 charges and non-recurring expenses, including professional fees
 related to the Company's investigations and its proposed transaction
 with Sun Pharmaceutical Industries Ltd. ("Sun"). The administrative
 expenses include audit and tax related services of approximately $1.7
 million for 2006 and approximately $3.3 million for 2007. No material
 non-audit related services were performed by the external auditors.

 Note 3: In 2007, includes a one-time gain of approximately $4 million
 resulting from the sale of a parking lot in Ireland.

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

                                         Unaudited and   Unaudited and
                                           Unreviewed      Unreviewed

                                          December 31,    December 31,
                                              2007            2006
                                         -------------   -------------


 Current Assets:
 Cash and Cash Equivalents                    $ 45,178        $ 16,911
 Restricted Short-term Bank Deposits                --             152
 Accounts Receivable - Trade                    68,497          43,687
 Accounts Receivable - Other and Prepaid
  Expenses                                      26,733          15,284
 Inventories                                    66,036          60,017
                                         -------------   -------------
 Total Current Assets                          206,444         136,051

 Long-term Investments                          18,765          23,390
 Property, Plant and Equipment, net            212,437         226,980
 Other Assets                                   47,625          52,467
                                         -------------   -------------
 TOTAL ASSETS                                 $485,271        $438,888
                                         =============   =============


 Liabilities and Shareholders' Equity

 Current Liabilities:
 Short-Term Bank Credits                      $ 95,320        $110,576
 Current Maturities of Long-Term
  Liabilities                                   28,564          26,339
 Accounts Payable and Accrued Expenses          72,543          87,702
                                         -------------   -------------
 Total Current Liabilities                     196,427         224,617

 Long-Term Liabilities                          94,048         108,383
 Deferred Taxes and Other Liabilities            8,402           7,517
                                         -------------   -------------
 Total Liabilities                             298,877         340,517

 Shareholders' Equity  (Note 1)                186,394          98,371
                                         -------------   -------------
 TOTAL LIABILITIES AND SHAREHOLDERS'
  EQUITY                                      $485,271        $438,888
                                         =============   =============

 Note 1: In 2007, Shareholders' equity is net of $2.4 million of
 fees associated with Sun's equity investment in Taro.
CONTACT:  Kekst and Company
          Roanne Kulakoff
          (212) 521-4827
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