Taro first-quarter net income down 7.8% to $10.2 million

Taro Pharmaceutical Industries Ltd. ("Taro," the "Company," Pink Sheets: TAROF) today provided preliminary, unaudited and unreviewed information on its financial performance for the first quarter of 2010.

First Quarter 2010 Results

For the quarter ended March 31, 2010, Taro estimates net sales of approximately $89.3 million, compared to $84.9 million for the same quarter in 2009, an increase of 5.2%. Gross profit for the first quarter of 2010 was approximately $51.3 million, or 57.5% of net sales, compared to $46.5 million, or 54.8% of net sales for the same quarter in 2009, an increase of 10.3%.

Operating income for the first quarter of 2010 was approximately $17.0 million, as compared to $14.0 million, a 21.1% increase.

Net income for the first quarter of 2010 was approximately $10.2 million, compared to $11.1 million for the first quarter of 2009, a 7.8% decrease. Diluted earnings per ordinary share were $0.25 for the first quarter of 2010, compared to $0.27 for the first quarter of 2009.

Net income for the quarter ended March 31, 2010 was adversely impacted by foreign exchange expenses of approximately $3.8 million, while net income for the quarter ended March 31, 2009 was positively impacted by a foreign exchange benefit of approximately $2.6 million. The increase in foreign exchange expenses was principally caused by changes in the rate of exchange between the U.S. dollar and the Canadian dollar and the effect of such changes on intercompany balances among members of the Taro group, expressed according to U.S. GAAP.

Net cash generated from operations in the quarter ended March 31, 2010 was $15.8 million.

Balance Sheet

Cash and cash equivalents were approximately $104.8 million on March 31, 2010, compared to $98.4 million on December 31, 2009. As of March 31, 2010, the Company's total debt was approximately $160.5 million, compared to $157.6 million on December 31, 2009. 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 financial reporting requirements in certain of its debt instruments due to the lack of audited financial statements for 2007 - 2009 and continues to discuss the situation with its lenders. Taro noted that it is current with 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.

Accounts receivable - trade at March 31, 2010 were approximately $71.9 million, compared to $72.7 million at December 31, 2009. Accounts receivable at March 31, 2010 represents 72 days sales outstanding. Inventories were approximately $69.3 million at March 31, 2010, compared to $65.3 million at December 31, 2009. Total liabilities were approximately $279.9 million at March 31, 2010, compared to $270.4 million on December 31, 2009.

The Company cautioned that the financial information presented herein does not constitute complete financial information, has not been reviewed by its independent auditors and is subject to possible change, inter alia as a result of audit related adjustments. However, subject to the foregoing caveats, the Company believes that the information herein represents the best information currently available to Taro management.