**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q**__________________________________________

(Mark One)

**
[X] 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
  
SECURITIES EXCHANGE ACT OF 1934
**

**For the Quarterly Period Ended September 30,2007**

**
[   ]
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
  
SECURITIES EXCHANGE ACT OF 1934
**

**For the transition periodfrom          to        **

**Commission File No. 1-5438**

**    FOREST LABORATORIES,INC.    ** (Exact name of registrant as specified in itscharter)

**
**Delaware***(State or other jurisdiction ofincorporation or organization)*

 

**11-1798614***(I.R.S. EmployerIdentification Number)*
   
**909 Third AvenueNew York, New York***(Address of principal executive offices)*

 

**10022-4731***(Zip code)*
**

**(212) 421-7850***(Registrant's telephone number, including area code)*

*(Former name, former address and former fiscalyear, if changed since last report)*

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed bySection 13 or 15 (d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.Yes    X       No        .. 

Indicate by a check mark whetherthe registrant is a large accelerated filer, an accelerated filer,or a non-accelerated filer. See definition of "accelerated filerand large accelerated filer" in Rule 12b-2 of the Exchange Act.(Check one):

Large acceleratedfiler    X                               Acceleratedfiler                                   Non-acceleratedfiler        

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of theExchangeAct).  Yes           No    X   ..

Number of shares outstanding of Registrant'sCommon Stock as of November 8, 2007: 311,856,910.

** **

**TABLE OFCONTENTS (Q*uick Links*)**

PART I -FINANCIAL INFORMATION

**            **ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

                           BALANCE SHEETS                           STATEMENTS OF INCOME                           STATEMENTS OF COMPREHENSIVE INCOME                           STATEMENTS OF CASH FLOWS                           NOTES TO FINANCIAL STATEMENTS

            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL            CONDITION AND RESULTS OF OPERATIONS

            ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT            MARKET RISK

            ITEM 4. CONTROLS AND PROCEDURES

PART II - OTHER INFORMATION

            ITEM1. LEGAL PROCEEDINGS

            ITEM1A. RISK FACTORS

            ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OFPROCEEDS            AND ISSUER REPURCHASES OF EQUITY SECURITIES

            ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

            ITEM 6. EXHIBITS            EXHIBIT 4.1            EXHIBIT 4.2            EXHIBIT 31.1            EXHIBIT 31.2            EXHIBIT 32.1            EXHIBIT 32.2

 

**PART I- FINANCIAL INFORMATION**

**FOREST LABORATORIES, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets**

| *(In thousands)*                                                                                                                                                                                                                                          | September 30, 2007       (Unaudited)        | March 31, 2007                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
|                                                                                                                                                                                                                                                      |                                                                                                              |                                                              |
| **Assets**                                                                                                                                                                                                                                                |                                                                                                              |                                                              |
|                                                                                                                                                                                                                                                      |                                                                                                              |                                                              |
| Current assets:    Cash (including cash equivalentinvestments        of $958,432 inSeptember and $556,586 in March)                                                                           |  

$   959,763                                                                           | $   563,663                                   |
|     Marketable securities                                                                                                                                                                                                             | 614,898                                                                                                      | 788,951                                                      |
|     Accounts receivable, less allowance fordoubtful accounts        of $19,583 inSeptember and $20,033 in March                                                                               | 422,942                                                                                                      | 382,655                                                      |
|     Inventories, net                                                                                                                                                                                                                  | 447,324                                                                                                      | 434,163                                                      |
|     Deferred income taxes, net                                                                                                                                                                                                        | 212,506                                                                                                      | 226,433                                                      |
|     Other current assets                                                                                                                                                                                                              |        45,481                                                             |        26,852             |
|         Total currentassets                                                                                                                                                                                       |   2,702,914                                                                                        |   2,422,717                                        |
|                                                                                                                                                                                                                                                      |                                                                                                              |                                                              |
| Marketable securities                                                                                                                                                                                                                                     |      784,388                                                                        |      660,392                        |
|                                                                                                                                                                                                                                                      |                                                                                                              |                                                              |
| Property, plant and equipment                                                                                                                                                                                                                             | 550,633                                                                                                      | 532,861                                                      |
|     Less: accumulated depreciation                                                                                                                                                                                                    |      194,344                                                                        |      171,775                        |
|                                                                                                                                                                                                                                                      |      356,289                                                                        |      361,086                        |
| Other assets:    Goodwill                                                                                                                                                                                                             | 14,965                                                                                                       | 14,965                                                       |
|     License agreements, product rights andother        intangibles, lessaccumulated amortization        of $398,807 inSeptember and $377,219 in March |  

135,945                                                                                              | 157,049                                                      |
|     Deferred income taxes                                                                                                                                                                                                             | 52,679                                                                                                       | 27,681                                                       |
|     Other assets                                                                                                                                                                                                                      |          1,100                                                  |          9,482  |
|         Total otherassets                                                                                                                                                                                         |      204,689                                                                        |      209,177                        |
|                                                                                                                                                                                                                                                      |                                                                                                              |                                                              |
|              Totalassets                                                                                                                                                                 | $4,048,280                                                                                                   | $3,653,372                                                   |
|                                                                                                                                                                                                                                                      | ========                                                                                                     | ========                                                     |

*See notes to condensed consolidated financialstatements.*

** **

**FOREST LABORATORIES, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets**

| *(In thousands, except for par values)*                                                                                                                                                  | September 30, 2007       (Unaudited)        | March 31, 2007                                                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|
|                                                                                                                                                                                     |                                                                                                              |                                                                              |
| **Liabilities and Stockholders' Equity**                                                                                                                                                 |                                                                                                              |                                                                              |
|                                                                                                                                                                                     |                                                                                                              |                                                                              |
| Current liabilities:    Accounts payable                                                                                                                             | $   181,591                                                                                   | $   154,614                                                   |
|     Accrued expenses                                                                                                                                                 | 393,746                                                                                                      | 332,995                                                                      |
|     Income taxes payable                                                                                                                                             |          3,104                                                  |      139,999                                        |
|        Total currentliabilities                                                                                                                       |      578,441                                                                        |      627,608                                        |
|                                                                                                                                                                                     |                                                                                                              |                                                                              |
| Long-term liabilities:    Income taxes payable                                                                                                                       |      175,021                                                                        |                  |
|     Deferred income taxes                                                                                                                                            |             975                                  |             951  |
|                                                                                                                                                                                     |      175,996                                                                        |             951  |
|                                                                                                                                                                                     |                                                                                                              |                                                                              |
| Stockholders' equity:    Series preferred stock, $1.00 par; sharesauthorized 1,000;        no shares issued oroutstanding    |                                                                                                              |                                                                              |
|     Common stock, $.10 par; sharesauthorized 1,000,000; issued        421,366 shares inSeptember and 420,695 shares in March | 42,136                                                                                                       | 42,069                                                                       |
|     Additional paid-in capital                                                                                                                                       | 1,410,201                                                                                                    | 1,354,264                                                                    |
|     Retained earnings                                                                                                                                                | 5,136,966                                                                                                    | 4,657,356                                                                    |
|     Accumulated other comprehensiveincome                                                                                                                            |         30,356                                                       | 21,879                                                                       |
|     Treasury stock, at cost                                                                                                                                          |                                                                                                              |                                                                              |
|       (107,899 shares inSeptember and 101,143 shares in March)                                                                                        | (  3,325,816)                                                                                           | (  3,050,755)                                                           |
|             Totalstockholders' equity                                                                                        |   3,293,843                                                                                        |   3,024,813                                                        |
|                                                                                                                                                                                     |                                                                                                              |                                                                              |
|                 Totalliabilities and stockholders' equity                                                | $4,048,280                                                                                                   | $3,653,372                                                                   |
|                                                                                                                                                                                          | ========                                                                                                     | ========                                                                     |

*See notes to condensed consolidated financialstatements.*

 

**FORESTLABORATORIES, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Income(Unaudited)**

| *(In thousands, except per share amounts)*                              |    Three MonthsEnded         September 30,        |  Six MonthsEnded                September30,          |
|------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                         |        2007                                                                                              |        2006                                                                                                                                |           2007  |           2006  |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
| Net sales                                                                    | $842,337                                                                                                                                    | $778,676                                                                                                                                                                      | $1,684,953  | $1,537,444  |
| Contract revenue                                                             | 50,313                                                                                                                                      | 48,909                                                                                                                                                                        | 103,690  | 91,571  |
| Interest income                                                              | 24,932                                                                                                                                      | 19,100                                                                                                                                                                        | 51,670  | 33,753  |
| Other income                                                                 |       1,378                                                                                                   |          290                                                                                                                     |          6,921  |             545  |
|                                                                         |   918,960                                                                                                                         |   846,975                                                                                                                                                           |   1,847,234  |   1,663,313  |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
| Costs and expenses:    Cost of sales                     | 189,992                                                                                                                                     | 185,098                                                                                                                                                                       | 376,232  | 360,783  |
|     Selling, general and administrative                  | 280,439                                                                                                                                     | 259,008                                                                                                                                                                       | 541,767  | 503,391  |
|     Research and development                             |   170,738                                                                                                                         |     93,752                                                                                                                                                |      307,646  |      232,834  |
|                                                                         |   641,169                                                                                                                         |   537,858                                                                                                                                                           |   1,225,645  |   1,097,008  |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
| Income before income tax expense                                             | 277,791                                                                                                                                     | 309,117                                                                                                                                                                       | 621,589  | 566,305  |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
| Income tax expense                                                           |     52,547                                                                                                              |     68,006                                                                                                                                                |      128,183  |      124,587  |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
| Net income                                                                   | $225,244                                                                                                                                    | $241,111                                                                                                                                                                      | $   493,406  | $   441,718  |
|                                                                         | =======                                                                                                                                     | =======                                                                                                                                                                       | ========  | ========  |
| Net income per common share:                                                 |                                                                                                                                             |                                                                                                                                                                               |   |   |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
|     Basic                                                | $0.71                                                                                                                                       | $0.76                                                                                                                                                                         | $1.55  | $1.38  |
|                                                                         | ====                                                                                                                                        | ====                                                                                                                                                                          | ====  | ====  |
|     Diluted                                              | $0.71                                                                                                                                       | $0.75                                                                                                                                                                         | $1.54  | $1.36  |
|                                                                         | ====                                                                                                                                        | ====                                                                                                                                                                          | ====  | ====  |
| Weighted average number of common    shares outstanding: |                                                                                                                                             |                                                                                                                                                                               |   |   |
|                                                                         |                                                                                                                                             |                                                                                                                                                                               |   |   |
|     Basic                                                | 315,510                                                                                                                                     | 317,809                                                                                                                                                                       | 317,534  | 319,623  |
|                                                                         | ======                                                                                                                                      | ======                                                                                                                                                                        | ======  | ======  |
|     Diluted                                              | 316,852                                                                                                                                     | 322,581                                                                                                                                                                       | 319,375  | 324,256  |
|                                                                         | ======                                                                                                                                      | ======                                                                                                                                                                        | ======  | ======  |

*See notes to condensed consolidated financialstatements.*

** **

**FOREST LABORATORIES, INC.AND SUBSIDIARIESCondensed Consolidated Statements of Comprehensive Income(Unaudited)**

| *(In thousands)*           | Three Months Ended           September30,          |      Six MonthsEnded             September30,          |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |        2007                                                                                               |        2006                                                                                                                                      |        2007  |        2006  |
|                       |                                                                                                                                              |                                                                                                                                                                                     |   |   |
| Net income                 | $225,244                                                                                                                                     | $241,111                                                                                                                                                                            | $493,406  | $441,718  |
| Other comprehensive income |       6,498                                                                                                    |         971                                                                                                                                 |       8,477  |       7,971  |
|                       |                                                                                                                                              |                                                                                                                                                                                     |   |   |
| Comprehensive income       | $231,742                                                                                                                                     | $242,082                                                                                                                                                                            | $501,883  | $449,689  |
|                       | =======                                                                                                                                      | =======                                                                                                                                                                             | =======  | =======  |

*See notes to condensed consolidated financialstatements.*

** **

**FORESTLABORATORIES, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(Unaudited)**

|                                                                                                                                               |     Six MonthsEnded                                                                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *(In thousands)*                                                                                                                                   |              September30,            |
|                                                                                                                                               |            2007                                                                                       |             2006 |
| Cash flows from operating activities:                                                                                                              |                                                                                                                                                         |   |
|    Net income                                                                                                                       | $   493,406                                                                                                                              | $   441,718  |
|    Adjustments to reconcile net income to                                                                                           |                                                                                                                                                         |   |
|      net cash provided by operatingactivities:                                                                            |                                                                                                                                                         |   |
|        Depreciation                                                                                             | 23,075                                                                                                                                                  | 22,557  |
|        Amortization andimpairments                                                                              | 21,588                                                                                                                                                  | 33,627  |
|        Stock-basedcompensation expense                                                                          | 20,078                                                                                                                                                  | 17,898  |
|        Deferred income taxbenefit                                                                               | (         5,304)                                                                                                | (        1,272) |
|        Foreign currencytransaction gain                                                                         | (            137)                                                                                | (           380) |
|        Net change inoperating assets and liabilities:                                                           |                                                                                                                                                         |   |
|           Decrease(increase) in:                                                                 |                                                                                                                                                         |   |
|              Accountsreceivable, net                                              | (       40,287)                                                                                                           | 5,135  |
|              Inventories,net                                                      | (       13,161)                                                                                                           | 126,493  |
|              Othercurrent assets                                                  | (       18,629)                                                                                                           | (      15,695) |
|              Otherassets                                                          | 8,382                                                                                                                                                   | 98  |
|           Increasein:                                                                            |                                                                                                                                                         |   |
|              Accountspayable                                                      | 26,977                                                                                                                                                  | 32,561  |
|              Accruedexpenses                                                      | 60,751                                                                                                                                                  |     31,277  |
|              Incometaxes payable                                                  |        24,330                                                                                                        |        19,022  |
|                 Netcash provided by operating activities           |      601,069                                                                                                                   |      713,039  |
|                                                                                                                                               |                                                                                                                                                         |   |
| Cash flows from investing activities:                                                                                                              |                                                                                                                                                         |   |
|    Purchase of property, plant and equipment,net                                                                                    | (       17,791)                                                                                                           | (       16,941) |
|    Purchase of marketable securities                                                                                                | (  1,244,988)                                                                                                                                      | (  1,184,573) |
|    Redemption of marketable securities                                                                                              |   1,295,045                                                                                                                                   |      900,697  |
|                 Netcash provided by (used in) investing activities |        32,266                                                                                                        | (     300,817) |
|                                                                                                                                               |                                                                                                                                                         |   |
| Cash flows from financing activities:                                                                                                              |                                                                                                                                                         |   |
|    Net proceeds from common stock optionsexercised      by employees under stock optionplans          | 24,856                                                                                                                                                  | 62,891  |
|    Tax benefit realized from the exercise ofstock      options by employees                           |         5,071                                                                                                   | 16,180  |
|    Purchase of treasury stock                                                                                                       | (     274,804)                                                                                                                      | (     409,225) |
|                 Netcash used in financing activities               | (     244,877)                                                                                                                      | (     330,154) |
|                                                                                                                                               |                                                                                                                                                         |   |
| Effect of exchange rate changes on cash                                                                                                            |          7,642                                                                                             |          7,317  |
| Increase in cash and cash equivalents                                                                                                              |      396,100                                                                                                                   | 89,385  |
| Cash and cash equivalents, beginning of period                                                                                                     |      563,663                                                                                                                   |      414,579  |
| Cash and cash equivalents, end of period                                                                                                           | $    959,763                                                                                                                        | $    503,964  |
|                                                                                                                                               | ========                                                                                                                                                | ========  |
|                                                                                                                                               |                                                                                                                                                         |   |

|                                               |           |          |
|----------------------------------------------------|----------------|---------------|
| Supplemental disclosures of cash flow information: |           |          |
|                                               |           |          |
| Cash paid during the period for:                   |           |          |
|     Income taxes               | $104,082  | $90,835  |
|                                               |           |          |
|                                               |           |          |
|                                               |           |          |
|                                               |           |          |

*See notes to condensed consolidated financialstatements.*

 

**FOREST LABORATORIES, INC. ANDSUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

**1.   Basis of Presentation***(Inthousands)***:**

The accompanying unaudited condensed consolidated financialstatements have been prepared in accordance with U.S. generallyaccepted accounting principles for interim financial informationand with the instructions to Form 10-Q and Rule 10-01 of RegulationS-X. Accordingly, they do not include all of the information andfootnotes required by generally accepted accounting principles forcomplete financial statements. In the opinion of Management, alladjustments (consisting of only normal recurring accruals)considered necessary for a fair presentation have been included.Operating results for the six-month period ended September 30, 2007are not necessarily indicative of the results that may be expectedfor the year ending March 31, 2008. For further information referto the consolidated financial statements and footnotes theretoincorporated by reference in the Company's Annual Report on Form10-K for the year ended March 31, 2007.

**2.   AccountsReceivable:**

Accounts receivable, net, consists of thefollowing:

|             | September 30, 2007                                                                                    |                             |
|------------------|-------------------------------------------------------------------------------------------------------|----------------------------------|
| *(In thousands)* |        (Unaudited)         | March 31, 2007    |
|             |                                                                                                  |                             |
| Trade            | $360,858                                                                                              | $330,580                         |
| Other            |     62,084                                                                        |     52,075   |
|             | $422,942                                                                                              | $382,655                         |
|             |  =======                                                                                    | =======                     |

**3.   Inventories:**

Inventories, net of reserves for obsolescence,consist of the following:

|             | September 30, 2007                                                                                    |                                      |
|------------------|-------------------------------------------------------------------------------------------------------|-------------------------------------------|
| *(In thousands)* |        (Unaudited)         | March 31, 2007             |
|             |                                                                                                  |                                      |
| Raw materials    | $222,722                                                                                              | $257,042                                  |
| Work in process  |       6,934                                                             |       8,449 |
| Finished goods   |   217,668                                                                                   |   168,672                       |
|             | $447,324                                                                                              | $434,163                                  |
|             |  =======                                                                                    | =======                              |

**4.   Net Income Per Share***(Inthousands)***:**

A reconciliation of shares used in calculating basic and dilutednet income per share follows:

|                                                                    | Three Months Ended         September 30,      | Six Months Ended        September30,      |
|-------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|                                                                    |      2007                                                                                  |      2006                                                                    |      2007 |      2006 |
| Basic                                                                   | 315,510                                                                                                             | 317,809                                                                                               | 317,534 | 319,623 |
| Effect of assumed conversion of   employee stock options |     1,342                                                                                       |     4,772                                                                         |     1,841 |     4,633 |
| Diluted                                                                 | 316,852                                                                                                             | 322,581                                                                                               | 319,375 | 324,256 |
|                                                                    | ======                                                                                                              | ======                                                                                                | ====== | ====== |

Options to purchase approximately 12,238 shares of common stockat exercise prices ranging from $36.50 to $76.66 per share andoptions to purchase approximately 10,149 shares of common stock atexercise prices ranging from $36.50 to $76.66 per share that wereoutstanding during a portion of the three and six-month periodsended September 30, 2007, respectively, were not included in thecomputation of diluted net income per share because they wereanti-dilutive. These options expire through 2017. Options topurchase approximately 3,761 shares of common stock at exerciseprices ranging from $48.34 to $76.66 per share and options topurchase approximately 5,955 shares of common stock at exerciseprices ranging from $43.30 to $76.66 per share that wereoutstanding during a portion of the three and six-month periodsended September 30, 2006, respectively, were not included in thecomputation of diluted net income per share because they wereanti-dilutive. These options expire through 2016.

**5.   Stock-Based Compensation***(Inthousands)***:**

In August 2007 the stockholders of the Company voted to adoptthe 2007 Equity Incentive Plan (the 2007 Plan) which replaces andsupersedes all prior Stock Option Plans.  The 2007 Planprovides for the granting of incentive and nonqualified stockoptions, restricted stock, stock appreciation rights and stockequivalent units.  These awards generally vest in three tofive years.  Stock option grants may be exercisable for up toten years from the date of issuance.  As of September 30,2007, 13,950 shares were authorized and 12,928 were available forgrant under the 2007 Plan.

Effective April 1, 2006, the Company adopted the provisions ofStatement of Financial Accounting Standards No. 123(R),"Share-Based Payment" (SFAS 123R).  During the six monthsended September 30, 2007, the Board of Directors awarded stockoptions to employees and stock options and restricted stock tonon-employee directors.  The fair value for stock options iscalculated using the Black-Scholes valuation model and restrictedstock is accounted for at fair value based upon the average highand low stock price on the date of grant.  These compensationcosts are amortized on an even basis (net of estimated forfeitures)over the requisite service period. The Company has neverawarded stock options or restricted stock below market price on thedate of grant.

Compensation expense of $9,402 ($8,104 net of tax) and $20,078($16,996 net of tax) was recorded for the three and six-monthperiods ended September 30, 2007. For the three and six-monthperiods ended September 30, 2006, compensation expense of $9,139($7,789 net of tax) and $17,898 ($15,215 net of tax) was recorded.This expense was charged to cost of sales, selling, general andadministrative and research and development expense, asappropriate. Amounts capitalized as part of inventory costs werenot significant.

The weighted average number of diluted common shares outstandingis reduced by the treasury stock method which, in accordance withSFAS 123R, takes into consideration the compensation costattributed to future services not yet recognized.

**6.   Business Segment Information:**

The Company operates in only one segment. Below is a breakdownof net sales by therapeutic class:

| *(In thousands)*             |   Three Months Ended         September30,        |  Six MonthsEnded              September30,         |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |        2007                                                                                             |        2006                                                                                                                        |           2007 |           2006 |
|                         |                                                                                                                                       |                                                                                                                                                                  |   |   |
| Central nervous system (CNS) | $756,969                                                                                                                                   | $685,134                                                                                                                                                              | $1,504,477 | $1,349,063 |
| Cardiovascular               | 6,849                                                                                                                                      | 14,536                                                                                                                                                                | 15,268 | 29,321 |
| Other                        |     78,519                                                                                                             |     79,006                                                                                                                                        |      165,208 |      159,060 |
|                         | $842,337                                                                                                                                   | $778,676                                                                                                                                                              | $1,684,953 | $1,537,444 |
|                         | =======                                                                                                                                    | =======                                                                                                                                                               | ======== | ======== |

** **

**7.   IncomeTaxes***(In thousands)***:**

On April 1, 2007, the Company adopted the provisions ofFinancial Accounting Standards Board (FASB) Interpretation (FIN48), "Accounting for Uncertainty in Income Taxes - aninterpretation of FASB Statement No. 109". As a result of theadoption of FIN 48, the Company increased its tax liabilities by$13,796 with a corresponding reduction to the April 1, 2007 balanceof retained earnings. In addition, accrued interest related tounrecognized tax benefits totaled $11,576 as of April 1, 2007.Interest and penalties, if any, are recorded in income tax expenseand are classified on the balance sheet with the related taxliability. Unrecognized tax benefits totaling $152,695 have beenreclassified from current income taxes payable to long-term incometaxes payable and totaled $175,021 at September 30, 2007 based onthe Company’s expectation of cash payments within the nexttwelve months.

The Company and its subsidiaries file a consolidated U.S.federal income tax return.

The Company is subject to income taxes both in the United Statesand several foreign jurisdictions. Significant judgment is requiredin determining the worldwide provision for income taxes. TheCompany’s tax returns are routinely audited by U.S. federaland state as well as foreign tax authorities. The Company accruesliabilities for identified tax contingencies that result frompositions taken by the Company that are being challenged or couldbe challenged by tax authorities. The Company believes that itsaccrual for tax liabilities is adequate for all open years, basedon management’s assessment of many factors, including itsinterpretations of the tax law and judgments about potentialactions by tax authorities. However, it is possible that theultimate resolution of any tax audit may be materially greater orless than the amount accrued.

The Company’s income tax returns for fiscal years prior to1999 are no longer subject to review as such fiscal years aregenerally closed. Tax authorities in various jurisdictions are inthe process of reviewing the Company’s tax returns forvarious post-1999 fiscal years, including the Internal RevenueService (IRS), which has recently concluded its examination of theCompany’s U.S. federal income tax returns for fiscal years2002 and 2003.

In connection with that examination, in July 2007, the IRSissued a notice of proposed adjustment primarily relating to theCompany’s intercompany transfer pricing methodology. OnNovember 5, 2007, the IRS issued a Revenue Agent Report which seeksto assess approximately $206.7 million of additional U.S.corporation income tax relating to the examination period,excluding interest and penalties.

The Company continues to disagree with the IRS position andadjustment because it believes that it is inconsistent withapplicable tax laws and the Company intends to defend its positionvigorously. While the resolution of this issue may result in taxliabilities that are greater or less than the reserves established,Management believes that the ultimate resolution will not have amaterial effect on the Company’s financial position orliquidity. If the IRS prevails in a position that increases theU.S. tax liability in excess of established reserves, it is likelythat the IRS could make similar claims for years subsequent tofiscal 2003 which could be material.

** **

**FOREST LABORATORIES,INC. AND SUBSIDIARIESMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS*(Dollar amounts in thousands)***

Total net revenues increased for the quarter and six monthsended September 2007 due to growth of our key marketed productsLexapro® and Namenda® and higher co-promotion income fromBenicar®. During the September 2007 quarter, we entered into acollaboration agreement with Microbia, Inc. (Microbia) toco-develop and co-market the compound linaclotide. Linaclotide,which is currently in Phase II testing, is being investigated forthe treatment of constipation-predominant irritable bowel syndromeand chronic constipation. In connection with the signing of thisagreement, Forest recorded a $70,000 licensing fee, which wascharged to research and development expense. As a result of thischarge, net income during the September 2007 quarter was lower thannet income during the September 2006 quarter. For the six monthsended September 2007 net income increased 12% when compared withthe same six-month period of the prior year. Last year’s sixmonths research and development expense included a licensingpayment of $60,000 to Laboratorios Almirall, S.A. (Almirall) forthe U.S. rights to aclidinium, a long-acting muscarinic antagonistbeing developed for the treatment of chronic obstructive pulmonarydisease (COPD).

In October 2007, we signed an agreement with Daiichi Sankyo toco-promote its recently approved product, AzorTM. Azor is aonce-daily combination of amlodipine and olmesartan medoxomil(Benicar) for the treatment of hypertension. Under the terms of theagreement, we will co-promote the product for a period of threeyears and receive co-promotion fees based on net sales. We willreceive residual fees at a reduced rate for the three yearsfollowing the co-promotion period. In conjunction with the signingof the agreement, we paid Daiichi Sankyo $20,000.

**Financial Condition and Liquidity**

Net current assets increased by $329,364 from March 31, 2007.Cash and cash equivalents increased while short-term marketablesecurities decreased in order to fund the 2007 Repurchase Programdescribed below. During the June 2007 quarter, we repurchased 1.8million shares at a cost of $86,003 and in the current quarter werepurchased another 4.95 million shares at a cost of $188,801,leaving 17.9 million shares still available for repurchase.Long-term marketable securities increased as certain funds, notrequired to fund the share repurchase program, were shifted tolonger-term, principally auction rate notes, in order to receivemore favorable rates of return. Of our total cash and marketablesecurities position at September 30, 2007, 31%, or about $736,000,is domiciled domestically, with the remainder held by ourinternational subsidiaries. Trade accounts receivable increasedprimarily due to higher sales of our principal branded products.Finished good inventory increased in order to support continueddemand for our products. We believe that current inventory levelsare adequate to support the growth in our ongoing business.Deferred tax assets increased as a result of the Microbia licensingagreement. Other current assets increased principally due to therenewal of insurance programs in the June 2007 quarter, which arepaid in full at the time of renewal and expensed over the life ofthe policy years. Increases in accounts payable and accruedexpenses were due to normal operating activities.

Property, plant and equipment before accumulated depreciationincreased slightly from March 31, 2007. During the September 2007quarter, we completed the refurbishment of a 90,000 square footfacility in Ireland which will provide additional capacity for themanufacturing of Lexapro and Namenda and capacity for futureproducts, subject to FDA qualification of the facility. We alsocontinued to make technology investments to expand our principaloperating systems to include salesforce applications.

On April 1, 2007, we adopted the provisions of FinancialAccounting Standards Board (FASB) Interpretation (FIN 48),"Accounting for Uncertainty in Income Taxes - an interpretation ofFASB Statement No. 109". As a result of the adoption of FIN 48, weincreased our tax liabilities by $13,796 with a correspondingreduction to the April 1, 2007 balance in retained earnings. Inaddition, accrued interest, related to unrecognized tax benefitstotaled $11,576 as of April 1, 2007. Interest and penalties, ifany, are recorded in income tax expense and are classified on thebalance sheet with the related tax liability. Unrecognized taxbenefits totaling $152,695 have been reclassified from currentincome taxes payable to long-term income taxes payable and totaled$175,021 at September 30, 2007 based on our expectation of cashpayments within the next twelve months.

During fiscal 2007 our Board of Directors (Board) approved the2007 Repurchase Program which authorized the purchase of up to 25million shares of common stock. On August 13, 2007 the Boardauthorized the purchase of an additional 10 million shares ofcommon stock. In the June 2007 quarter, we repurchased 1.8 millionshares at a cost of $86,003 and in the current quarter werepurchased 4.95 million shares at a cost of $188,801. As ofNovember 8, 2007, we have repurchased a total of 18.7 millionshares at a cost of $809,748 under the 2007 Repurchase Program,leaving us the authority to purchase 16.3 million more shares.

Management believes that current cash levels, coupled with fundsto be generated by ongoing operations, will continue to provideadequate liquidity to facilitate potential acquisitions ofproducts, payment of achieved milestones, capital investments andthe continued share repurchases.

**Results of Operations**

Net sales for the three and six-month periods ended September30, 2007 increased 8% and 10%, respectively, from the same periodslast year to $842,337 and $1,684,953, primarily due to strong salesof Lexapro and Namenda. Lexapro, our SSRI for the treatment ofdepression and anxiety in adults and our most significant product,with net sales of $559,063 and $1,111,376 for the quarter and sixmonths, grew 7% and 8%, respectively, and contributed $36,401 and$81,681 to the net sales change, of which $9,021 and $25,990 wasdue to volume and $27,380 and $55,691 was due to price. In fiscal2004, we, along with our licensing partner, H. Lundbeck A/S(Lundbeck) filed suit against Teva Pharmaceuticals (Teva) forpatent infringement related to our Lexapro patent. A trial was heldregarding the patent litigation with Teva in March 2006 and on July13, 2006, the U.S. District Court for the District of Delawaredetermined that the patent covering Lexapro is valid andenforceable. Lexapro’s patent is set to expire in March 2012.Teva filed an appeal of the court’s ruling, and on September5, 2007 a federal appeals court upheld the patent’s validity.Another generic manufacturer, Caraco Pharmaceutical Laboratories,Ltd. (Caraco), has filed an ANDA with a Paragraph IV Certificationfor a generic equivalent to Lexapro. Forest and Lundbeck have fileda lawsuit in the U.S. District Court for the Eastern District ofMichigan against Caraco for patent infringement.

Net sales of Namenda, an N-methyl-D-aspartate (NMDA) receptorantagonist for the treatment of moderate to severe Alzheimer'sdisease, grew 24% and 25% in the current quarter and six months,respectively, and totaled $192,872 and $384,591. This represents anincrease of $37,286 and $77,923 as compared to the same periodslast year, of which $26,516 and $59,833 was due to volume and$10,770 and $18,090 was due to price. The remainder of the netsales change for the period was due principally to pricefluctuations of our older non-promoted product lines.

Contract revenue for the three and six months ended September30, 2007 was $50,313 and $103,690, respectively, compared to$48,909 and $91,571 in the same periods last year primarily due toco-promotion income from our co-marketing agreement with DaiichiSankyo for Benicar of $49,572 and $102,115, respectively, ascompared to $48,315 and $90,031 last year. Under the terms of theagreement, fiscal 2008 is the final year of co-promotion activitiesand accordingly, beginning in fiscal 2009 we will receive a reducedshare of product profits over the remaining six year term of theagreement.

Interest income for the current quarter increased over the sameperiod last year primarily due to higher interest received onhigher levels of invested funds and more favorable rates of return.Other income for the current six-month period included a milestonepayment received related to our European development program for aninhaled cystic fibrosis product.

Cost of sales as a percentage of net sales was 22.6% and 22.3%for the three and six-month periods of the current year as comparedwith 23.8% and 23.5% for the prior year due mainly to manufacturingand operational efficiency gains, as well as cost savings relatedto the closure of our Inwood manufacturing facilities.

Selling, general and administrative expenses increased $21,431and $38,376 for the three and six-month periods ended September 30,2007 as compared to the same periods last year. The increase wasprimarily attributable to salesforce activity and promotionalsupport for products currently marketed and pre-launch costs fornebivolol and milnacipran.

Research and development expense increased $76,986 and $74,812in the three and six-month periods ended September 30, 2007. InSeptember 2007 we recorded a $70,000 licensing charge in connectionwith the collaboration agreement with Microbia for the right toco-develop and co-market linaclotide. Linaclotide, which iscurrently in Phase II testing, is being investigated for thetreatment of constipation-predominant irritable bowel syndrome andchronic constipation. During the June 2007 quarter we recordedapproximately $28,000 in milestone expenses related to theaclidinium and milnacipran development programs. In April 2006 werecorded a $60,000 licensing charge in connection with ourcollaboration agreement with Almirall for the U.S. rights toaclidinium.

Research and development expense also reflects thefollowing:

> 
· During the fourth quarter offiscal 2006, we entered into an agreement with Mylan Laboratories,Inc. (Mylan) for the commercialization, development anddistribution rights for nebivolol, a novel beta blocker. In May2005, Mylan received an "approvable" letter from the FDA fornebivolol for the treatment of hypertension. Final approval iscontingent upon the review of certain additional data requested bythe FDA. We and Mylan expect the FDA to complete its review priorto the end of calendar 2007. Nebivolol is also being studied forthe treatment of congestive heart failure (CHF). We have completedthe data analysis of a Phase III study and are continuing to assessthe appropriate timing of a submission for this indication.

· On May 22, 2007 we announcedthat top-line results of a Phase III study demonstratedstatistically significant therapeutic effects of milnacipran as atreatment of fibromyalgia syndrome (FMS). Subject to a favorablereview of the full study results and based in part on communicationwith the FDA, we plan to submit an NDA including data from thisstudy and an earlier Phase III study around the end of calendar2007. A third randomized pivotal Phase III study, which wascommenced in early 2006, is expected to have results in the middleof 2008.

· In connection with ouracquisition of Cerexa, Inc. in January 2007, we acquired worldwidedevelopment and marketing rights (excluding Japan) to ceftaroline,a next generation, broad spectrum, hospital-based injectablecephalosporin antibiotic. Two Phase III studies of ceftaroline incomplicated skin and skin structure infections have completedenrollment. The first of two Phase III studies in patients withcommunity acquired pneumonia (CAP) has begun enrollment. A secondPhase III study in CAP will begin enrollment shortly. We anticipatethe skin and skin structure results in calendar 2008 and the CAPresults in 2009.

· In April 2006, we enteredinto a collaboration agreement with Almirall for the U.S. rights toaclidinium, a long-acting muscarinic antagonist which is beingdeveloped as an inhaled therapy for the treatment of chronicobstructive pulmonary disease (COPD). Enrollment of two large PhaseIII international studies has been completed and we expect to havetop-line results for these studies in the second half of calendar2008. We and Almirall are also pursuing the development of afixed-dose combination of aclidinium and the beta-agonistformotorol, which is currently in Phase I testing.

· A once-daily formulation ofNamenda is being evaluated in a Phase III Alzheimer’s diseasestudy which is now fully enrolled, and results are expected to beavailable in early calendar 2008.

· During the third quarter offiscal 2005, Forest entered into a collaboration agreement withGedeon Richter Limited for the North American rights to RGH-188, acompound which is being developed for the treatment ofschizophrenia, bipolar mania and other psychiatric conditions. Areview of top-line results of a Phase II study in schizophreniaindicated that RGH-188 demonstrated a nominally statisticallysignificant (i.e., not adjusted for multiple comparisons)therapeutic effect compared to placebo in the low-dose arm and anumerical improvement compared to placebo in the high-dose arm thatdid not reach nominal statistical significance. Based on theseresults, and subject to a complete review of the full studyresults, we intend to continue the development of RGH-188 as atreatment of schizophrenia. A second Phase II study of RGH-188 forthe treatment of bipolar mania study was commenced in April 2007and we expect results by the middle of calendar 2008.

· We anticipate starting aproof of concept study of neramexane in Alzheimer’s diseasein the first half of calendar 2008.

· During the second quarter offiscal 2005, Forest entered into a collaboration agreement withGlenmark Pharmaceuticals S.A. for the North American developmentand marketing of GRC3886, a PDE4 inhibitor for the treatment ofasthma and COPD. The FDA had requested additional preclinical workwhich we completed and submitted. FDA has now reviewed thisadditional data and has given us a response which allows us to moveforward with a larger Phase II proof of concept study in COPD, withsome limitations.

 

Other research and development projects we continue to supportinclude: RGH-896, a compound being developed for the treatment ofchronic pain and other CNS conditions; a group of novel compoundsthat target the group 1 metabotropic glutamate receptors(mGLUR1/5); and ME1036, an injectable antibiotic which hasdemonstrated excellent pre-clinical activity against bothGram-positive and Gram-negative bacteria. In addition, we haveentered into several collaborations to conduct pre-clinical drugdiscovery.

Our effective tax rate was 19% and 21% for the respective threeand six-month periods ended September 30, 2007, as compared to 22%for the same periods last year. The decrease was primarilyattributable to the Microbia licensing charge in September 2007.Effective tax rates can be affected by ongoing tax audits. See Note7 to the Condensed Consolidated Financial Statements(Unaudited).

We expect to continue our profitability in the current fiscalyear with continued growth in our principal promoted products.

Inflation has not had a material effect on our operations forthe periods presented.

**Critical Accounting Policies**

The following accounting policies are important in understandingour financial condition and results of operations and should beconsidered an integral part of the financial review. Refer to thenotes to the consolidated financial statements for additionalpolicies.

Estimates and Assumptions

The preparation of financial statements in conformity withgenerally accepted accounting principles requires us to makeestimates and assumptions that affect the reported amounts ofassets and liabilities and of revenues and expenses during thereporting period. Estimates are made when accounting for salesallowances, returns, rebates and other pricing adjustments,depreciation, amortization and certain contingencies. Forest issubject to risks and uncertainties, which may include but are notlimited to competition, federal or local legislation andregulations, litigation and overall changes in the healthcareenvironment that may cause actual results to vary from estimates.We review all significant estimates affecting the financialstatements on a recurring basis and record the effect of anyadjustments when necessary. Certain of these risks, uncertaintiesand assumptions are discussed further under the section entitled"Forward Looking Statements".

Revenue Recognition

Revenues are recorded in the period the merchandise is shipped.As is typical in the pharmaceutical industry, gross product salesare subject to a variety of deductions, primarily representingrebates and discounts to government agencies, wholesalers andmanaged care organizations. These deductions represent estimates ofthe related liabilities and, as such, judgment is required whenestimating the impact of these sales deductions on gross sales fora reporting period. Historically, our adjustments for actual futuresettlements have not been material, and have resulted in either anet increase or a net decrease to net income. If estimates are notrepresentative of actual settlement, results could be materiallyaffected. Provisions for estimated sales allowances, returns,rebates and other pricing adjustments are accrued at the timerevenues are recognized as a direct reduction of such revenue.

The accruals are estimated based on available information,including third party data, regarding the portion of sales on whichrebates and discounts can be earned, adjusted as appropriate forspecific known events and the prevailing contractual discount rate.Provisions are reflected either as a direct reduction to accountsreceivable or, to the extent that they are due to entities otherthan customers, as accrued expense. Adjustments to estimates arerecorded when customer credits are issued or payments are made tothird parties.

The sensitivity of estimates can vary by program and type ofcustomer. However, estimates associated with Medicaid and contractrebates are most at risk for adjustment because of the extensivetime delay between the recording of the accrual and its ultimatesettlement, an interval that can range up to one year. Because ofthis time lag, in any given quarter, adjustments to actual mayincorporate revisions of prior quarters.

Provisions for Medicaid and contract rebates during a period arerecorded based upon the actual historical experience ratio ofrebates paid and actual prescriptions written. The experience ratiois applied to the period's sales to determine the rebate accrualand related expense. This experience ratio is evaluated regularlyto ensure that the historical trends are as current as practicable.As appropriate, we will adjust the ratio to more closely match thecurrent experience or expected future experience. In assessing thisratio, we consider current contract terms, such as the effect ofchanges in formulary status, discount rate and utilization trends.Periodically, the accrual is adjusted based upon actual paymentsmade for rebates. If the ratio is not indicative of futureexperience, results could be affected. Rebate accruals for Medicaidwere $27,877 at September 30, 2007 and $31,642 at September 30,2006. Commercial discounts and other rebate accruals were $146,203at September 30, 2007 and $86,336 at September 30, 2006. These andother rebate accruals are established in the period the relatedrevenue was recognized, resulting in a reduction to sales and theestablishment of a liability, which is included in accruedexpenses.

 

The following table summarizes the activity for the six-monthperiod in the accounts related to accrued rebates, sales returnsand discounts *(In thousands)*:

|                  |   Beginning balance Provision for rebatesChanges in estimatesSettlements  Provision for returnsChanges in estimatesSettlements  Provision for chargebacks and discountsChanges in estimatesSettlements  Ending balance | September 30, 2007        $208,063          203,261      (   175,888)            27,373            16,406      (     17,900)      (       1,494)            168,801       (      7,700)       (  172,020)       (    10,919)        $223,023        ======= | September 30, 2006        $158,277          179,999              3,301      (   162,174)            21,126            14,897       (       1,264)       (    11,027)              2,606          193,994       (      4,000)       (  186,110)              3,884        $185,893        ======= |
|--------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | Deductions for chargebacks (primarily discounts to grouppurchasing organizations and federal government agencies) aregenerally settled within 2-3 weeks of incurring the liability.Based on current contracting trends and chargeback activity, theCompany reduced the estimated liability at September 30, 2007 tomore closely reflect Management’s estimate of futurechargeback settlements.Forest's policy relating to the supply of inventory at wholesalersis to maintain stocking levels of up to three weeks and to keepmonthly levels consistent from year to year, based on patterns ofutilization. We have historically closely monitored wholesalecustomer stocking levels by purchasing information directly fromcustomers and by obtaining other third party information. Unusualor unexpected variations in buying patterns or utilizations areinvestigated.Sales incentives are generally given in connection with a newproduct launch. These sales incentives are recorded as a reductionof revenues and are based on terms fixed at the time goods areshipped. New product launches may result in expected temporaryincreases in wholesaler inventories, which as described above, areclosely monitored and have not resulted in increased productreturns. |
|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

** **

**Forward Looking Statements**

Except for the historical information contained herein, theManagement Discussion and other portions of this Form 10-Q containforward looking statements that involve a number of risks anduncertainties, including the difficulty of predicting FDAapprovals, acceptance and demand for new pharmaceutical products,the impact of competitive products and pricing, the timelydevelopment and launch of new products, changes in laws andregulations affecting the healthcare industry, and the risk factorslisted from time to time in our filings with the SEC, including theAnnual Report on Form 10-K for the fiscal year ended March 31,2007.

**Quantitative andQualitative Disclosures About Market Risk**

In the normal course of business, operations may be exposed tofluctuations in currency values and interest rates. Thesefluctuations can vary the costs of financing, investing andoperating transactions. Because we had no debt and only minimalforeign currency transactions, there was no material impact onearnings due to fluctuations in interest and currency exchangerates.

**Controls andProcedures**

As of the end of the period covered by this report, the Companyconducted an evaluation, under the supervision and with theparticipation of the principal executive officer and principalfinancial officer, of the Company's disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934 (the Exchange Act)). Based on thisevaluation, the principal executive officer and principal financialofficer concluded that the Company's disclosure controls andprocedures are effective to ensure that information required to bedisclosed by the Company in reports that it files or submits underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms. There was no change in the Company'sinternal control over financial reporting during the Company's mostrecently completed fiscal quarter that has materially affected, oris reasonably likely to materially affect, the Company's internalcontrol over financial reporting.

**Part II -Other Information**

Item 1.  LegalProceedings

              Forestis party to certain legal proceedings previously disclosed in ourAnnual Report on Form              10-Kfor the fiscal year ended March 31, 2007 and our report on Form10-Q for the quarter              endedJune 30, 2007.

Item 1A.Risk Factors

              Therehave been no material changes with respect to the risk factorsdisclosed in our Annual              Reporton Form 10-K for the fiscal year ended March 31, 2007, except thatthe risk factor              captioned*The Effective Rate of Taxation upon Our Results of Operations isDependent on*              *Multi-National Tax Considerations* is hereby revised to read asfollows:

              Aportion of our earnings is taxed at more favorable rates applicableto the activities              undertakenby our subsidiaries based or incorporated in the Republic ofIreland. Changes              intax laws or in their application or interpretation, such as to thetransfer pricing between              Forest’snon-U.S. operations and the United States, could increase oureffective tax rate and              negativelyaffect our results of operations. The transfer pricing issue is thesubject of an              ongoingaudit by the Internal Revenue Service. See Note 7 to the CondensedConsolidated              FinancialStatements (Unaudited).

Item2.  Unregistered Sales of Equity Securities, Use ofProceeds and Issuer Repurchases of Equity             Securities

*             Purchaseof equity securities by Forest:*

             InMay 2006 our Board of Directors authorized a new share repurchaseprogram (the 2007             RepurchaseProgram) for up to 25 million shares of our common stock. On August13, 2007             theBoard authorized an additional 10 million shares to be availablefor repurchase. As of             November8, 2007, 16.3 million shares were available for repurchase underthe 2007             RepurchaseProgram.

             Thefollowing table summarizes the repurchase of common stock under the2007 Repurchase             Programduring the second quarter of the fiscal year covered by thisreport:

|   | **Period**           | **Totalnumber ofsharespurchased(1)**                                                              | **Averageprice paidper share**                                            | **Total number ofshares purchased aspart of publiclyannounced plans orprograms**                  | **Maximumnumber ofshares that mayyet be purchasedunder theprogram** |
|--------|----------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|
|   | 7/1/07through7/31/07 |    600,000                                                                         | $41.52                                                                    |   600,000                                                                               | 12,284,700                                                          |
|   | 8/1/07through8/31/07 | 4,349,700                                                                                         | $38.41                                                                    | 4,349,700                                                                                         | 17,935,000 (2)                                                      |
|   | 9/1/07through9/30/07 |            -      |        -      |            -      | 17,935,000                                                          |

 

 (1)  All shares were purchased pursuant to thepublicly announced 2007 Repurchase Program, which        was effective as ofMay 18, 2006 and has no set expiration date. We are authorized topurchase        up to 35 millionshares of our common stock under the 2007 Repurchase Program.

 (2)  On August 13, 2007, the Board authorized anadditional 10 million shares to be available for        repurchase underthe 2007 Repurchase Program. This brings the total number ofshares        authorized underthis program to 35 million shares.

Item4.  Submission of Matters to a Vote of SecurityHolders             (a)    TheCompany held its Annual Meeting of Stockholders on August 13,2007.             (c)    Atthe annual meeting, holders of the Company's Common Stock voted forthe                     electionof eight members of the Company's Board of Directors to serveuntil                     thenext annual meeting and until their successors are duly elected andqualified.                     Holdersof the Company's Common Stock voted to adopt the 2007 Equity                     IncentivePlan for the ratification of BDO Seidman, LLP to serve as theCompany's                     independentregistered public accounting firm for the fiscal year ending                     March31, 2008.

                     Atthe meeting, the following votes for and against, as well as thenumber of                     abstentionsand broker non-votes were recorded for each matter as set forthbelow:

| ** ** | **Matter**                                                   | **For**     | **  Against** | **Abstain** | **Withholdauthority** | **Brokernon-votes** |
|------------|--------------------------------------------------------------|-------------|-------------------------|-------------|-----------------------|---------------------|
|       | Election of Directors:                                       |        |                    |        |                  |                |
|       |     Howard Solomon                       | 267,352,840 |                    |        | 20,671,436            |                |
|       |     Lawrence S. Olanoff,M.D., Ph.D.      | 268,041,500 |                    |        | 19,982,776            |                |
|       |     Nesli Basgoz,M.D.                    | 274,135,865 |                    |        | 13,888,411            |                |
|       |     William J. Candee,III                | 260,048,427 |                    |        | 27,975,849            |                |
|       |     George S.Cohan                       | 270,400,742 |                    |        | 17,623,534            |                |
|       |     Dan L.Goldwasser                     | 270,574,419 |                    |        | 17,449,857            |                |
|       |     Kenneth E.Goodman                    | 257,502,122 |                    |        | 30,522,154            |                |
|       |     Lester B. Salans,M.D.                | 273,944,161 |                    |        | 14,080,115            |                |
|       |                                                         |        |                    |        |                  |                |
|       | Adoption of the 2007Equity Incentive Plan                    | 244,418,161 | 14,694,284              | 7,167,044   |                  |   21,744,787   |
|       |                                                         |        |                    |        |                  |                |
|       | Ratification of Independent Registered PublicAccounting Firm | 280,718,210 | 330,872                 | 6,975,093   |                  |                |

Item 6.  Exhibits

             Exhibit4.1     Form of Director Stock OptionAgreement under the 2007 Equity Incentive Plan             Exhibit4.2     Form of Employee Stock OptionAgreement under the 2007 Equity Incentive Plan             Exhibit31.1   Certification Pursuant to Section 302 of theSarbanes-Oxley Act of 2002             Exhibit31.2   Certification Pursuant to Section 302 of theSarbanes-Oxley Act of 2002             Exhibit32.1   Certification Pursuant to Section 906 of theSarbanes-Oxley Act of 2002             Exhibit32.2   Certification Pursuant to Section 906 of theSarbanes-Oxley Act of 2002

 

 

                                                                                                   SIGNATURES

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto dulyauthorized.

Date: November 9, 2007

> 
Forest Laboratories, Inc.(Registrant)

/s/ HowardSolomon       Howard SolomonChairman of the Board,Chief Executive Officerand Director

/s/ Francis I. Perier,Jr.               Francis I. Perier, Jr.Senior Vice President - Finance andChief Financial Officer