GENERAL

The Cooper Companies, Inc. and subsidiaries (the “Company,” “Cooper” or “we” and similar pronouns), through its principal business segments, develop, manufacture and market healthcare products. CooperVision (“CVI”) markets a range of specialty contact lenses to correct visual defects, including toric lenses that correct astigmatism, cosmetic lenses that change or enhance the appearance of the eyes’ natural color and aspheric lenses that improve vision in low light conditions. CooperSurgical (“CSI”) markets diagnostic products and surgical instruments and accessories to the women’s healthcare market.

CONSOLIDATION

The financial statements in this report include the accounts of all the Company’s consolidated entities. Intercompany transactions and balances are eliminated in consolidation.

FOREIGN CURRENCY TRANSLATION

We translate assets and liabilities of our operations located outside the United States into U.S. dollars at prevailing year-end exchange rates. We translate income and expense accounts at weighted average rates for each year. We record gains and losses from the translation of financial statements in foreign currencies into U.S. dollars in other comprehensive income. We record gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional currency in net income for each period. Net foreign exchange gain (loss) included in the determination of net income for the years ended October 31, 2000, 1999 and 1998 was ($256,000), ($325,000) and $591,000, respectively.

DERIVATIVES

We use derivatives to reduce market risk from changes in foreign exchange and interest rates. We do not use derivative financial instruments for trading or speculative purposes. We believe that the counter party with whom we enter into forward exchange contracts and interest rate swap agreements is financially sound and that the credit risk of these contracts is negligible.

ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, which requires us to make informed estimates and judgments about certain amounts appearing in them. The actual results could differ from the estimated figures included in our financial statements.

REVENUE RECOGNITION

We recognize revenue upon shipment of our products, when risk of ownership transfers to our customers. We record, based on historical statistics, appropriate provisions for shipments to customers who have the right of return.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include commercial paper and other short-term income producing securities with maturity dates of three months or less. These investments are readily convertible to cash and are carried at cost, which approximates market value.

INVENTORIES, AT THE LOWER OF AVERAGE COST OR MARKET

(In thousands except per share data)	October 31,
	2 0 0 0		1 9 9 9
Raw materials	$	9,740	$	8,151
Work-in-process	6,056		3,786
Finished goods	22,423		21,493
	$	38,219	$	33,430

PROPERTY, PLANT AND EQUIPMENT, AT COST

(In thousands except per share data)	October 31,
	2 0 0 0		1 9 9 9
Land and improvements	$	1,343	$	1,500
Buildings and improvements	11,371		11,036
Machinery and equipment	54,502		41,675
	$	67,216	$	54,211

We compute depreciation using the straight-line method in amounts sufficient to write off depreciable assets over their estimated useful lives. We amortize leasehold improvements over their estimated useful lives or the period of the related lease, whichever is shorter. We depreciate buildings over 35 to 40 years and machinery and equipment over 3 to 15 years. We expense costs for maintenance and repairs, and we capitalize major replacements, renewals and betterments. We eliminate the cost and accumulated depreciation of depreciable assets retired or otherwise disposed of from the asset and accumulated depreciation accounts and reflect any gains or losses in operations for the period.

AMORTIZATION OF INTANGIBLES

We amortize intangible assets (primarily goodwill of $96.9 million and $65.4 million at October 31, 2000 and 1999) on a straight-line basis over periods of up to 40 years. Accumulated amortization at October 31, 2000 and 1999 was $16.9 million and $12.7 million, respectively. We assess the recoverability of goodwill and other long-lived assets by determining whether the amortization of the related balance over its remaining life can be recovered through reasonably expected undiscounted future cash flows. We also evaluate amortization periods of intangibles to determine whether later events and circumstances warrant revised estimates of useful lives. To date, no such adjustments have been required.

EARNINGS PER SHARE ("EPS")

We determine basic EPS by using the weighted average number of shares outstanding and then add outstanding dilutive stock warrants and options to determine diluted EPS.

STOCK-BASED COMPENSATION

We account for stock-based compensation in accordance with Statement of Financial Accounting Standards ("SFAS") 123, Accounting for Stock-Based Compensation. This statement establishes financial accounting and reporting standards for stock-based compensation, including employee stock option plans. As allowed by SFAS 123, we continue to measure compensation expense under Accounting Principles Board (“APB”) Opinion No. 25, Accounting For Stock Issued to Employees, and related interpretations (see Note 9).

NEW ACCOUNTING PRONOUNCEMENTS

In April 1998, The American Institute of Certified Public Accountants issued Statement of Position (“SOP”) 98-5, “Reporting on the Cost of Start-up Activities.” The SOP broadly defines start-up activities and requires us to expense them as incurred, effective for fiscal years beginning after December 15, 1998. We adopted the SOP in the first quarter of this year and reported an after tax charge of $432,000 as the cumulative effect of a change in accounting principle. Our previous policy had been to defer the cost of start-up activities as appropriate and amortize them over future periods.

  In June 1998, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities” (as amended by SFAS Nos. 137 and 138). SFAS 133 is required to be adopted in the first quarter of fiscal years beginning after June 15, 2000. SFAS 133 requires us to recognize all derivatives at fair value on the balance sheet. Changes in fair value must be recognized currently in earnings unless we meet specific hedge accounting criteria. We will adopt SFAS 133 in the first quarter of fiscal 2001 and do not anticipate that it will have a material effect on our consolidated financial statements.

  In December 1999, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 101 “Revenue Recognition in Financial Statements.” SAB 101 is to be adopted for fiscal years beginning after December 15, 1999. We will adopt SAB 101 in the fourth quarter of fiscal 2001 and do not expect that it will have a material effect on our consolidated financial statements.

  In July 2000, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue 00-10, “Accounting for Shipping and Handling Fees and Costs.” This issue, which will become effective for us in the fourth quarter of fiscal 2001, addresses the income statement classification for shipping and handling fees and costs by companies. We are currently analyzing EITF 00-10 and do not expect its implementation to have a material impact on our consolidated financial statements, other than a potential income statement reclassification that may result in increased revenue and selling, general and administrative expenses with no effect on operating income.

  In May 2000, the EITF reached a consensus on Issue 00-14, “Accounting for Certain Sales Incentives.” This issue, which will become effective for us in the fourth quarter of fiscal 2001, addresses the recognition, measurement, and income statement classification for sales incentives offered voluntarily by a vendor without charge to customers that can be used in, or are exercisable by a customer as a result of, a single exchange transaction. We are currently analyzing EITF 00-14, and based on our current understanding and interpretation, we do not expect that our implementation of EITF 00-14 will have a material impact on our consolidated financial statements.