INCOME TAXES

The income tax provision (benefit) related to income from all operations in the consolidated statements of income consists of:

(IN THOUSANDS)	YEARS ENDED OCTOBER 31,
	2 0 0 0		1 9 9 9		1 9 9 8
From continuing operations	$	12,727	$	10,711	$	(34,723)
From cumulative effect of a change in accounting principle	(218)		-		-
From discontinued operations	-		(6,425)		130
	$	12,509	$	4,286	$	(34,593)

The income tax provision (benefit) related to income from continuing operations in the consolidated statements of income consists of:

(IN THOUSANDS)	YEARS ENDED OCTOBER 31,
	2 0 0 0		1 9 9 9		1 9 9 8
Current
Federal	$	1,508	$	445	$	462
State	(2,474)		(641)		471
Foreign	2,799		2,222		131
	1,833		2,026		1,064
Deferred
Federal	9,532		8,730		(35,955)
State	1,362		(45)		-
Foreign	-		-		168
	10,894		8,685		(35,787)
	$	12,727	$	10,711	$	(34,723)

We reconcile the provision for (benefit of) income taxes attributable to income from continuing operations and the amount computed by applying the statutory federal income tax rate of 35% to income from continuing operations before income taxes as follows:

(IN THOUSANDS)	YEARS ENDED OCTOBER 31,
	2 0 0 0		1 9 9 9		1 9 9 8
Computed expected provision for taxes from continuing operations	$	14,744	$	11,449	$	8,080
Increase (decrease) in taxes resulting from:
Income (loss) outside the United    States subject to different tax rates	(534)		(325)		431
Amortization of intangibles	426		392		477
State taxes, net of federal income    tax benefit	1,271		312		306
Reversal of prior years’ estimated    state tax liabilities no longer required	(2,330)		(1,121)		-
Utilization of net operating loss    carryforwards	-		-		(10,359)
Change in valuation allowance	(655)		331		(35,787)
Other, net	(195)		(327)		2,129
Actual provision (benefit) of income taxes	$	12,727	$	10,711	$	(34,723)

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities are:

(IN THOUSANDS)	OCTOBER 31,
	2 0 0 0	1 9 9 9
Deferred tax assets:
Accounts receivable, principally due to allowances for    doubtful accounts	$       852	$     559
Inventories, principally due to obsolescence reserves	2,310	1,329
Litigation settlements	6,000	7,200
Accrued liabilities, reserves and compensation accruals	3,593	1,696
Net operating loss carryforwards	48,671	56,957
Capital loss carryforwards	2,991	2,991
Tax credit carryforwards	3,712	4,138
Other	-	1,933
Total gross deferred tax assets	68,129	76,803
Less valuation allowance	(6,488)	(7,996)
Deferred tax assets	61,641	68,807
Deferred tax liabilities:
Plant and equipment	(862)	(650)
Net deferred tax assets	$ 60,779	$ 68,157

The net (increase)/decrease in the total valuation allowance for the years ended October 31, 2000, 1999 and 1998 was $1.5 million, ($923,000) and $45.4 million, respectively. In 1998, we recognized an income tax benefit of $35.8 million ($23.3 million in the fourth quarter of fiscal 1998) from reducing the valuation allowance based primarily on the continued improvement in Cooper’s operating results and future prospects. The recognition of the net deferred tax assets is based upon expected future earnings that we believe are more likely than not to be realized.

   At October 31, 2000 Cooper had net operating loss and tax credit carryforwards for federal tax purposes that expire as follows:

Year of Expiration	Net Operating Losses		Tax Credits
(In thousands)
2000	$	—	$	1,132
2001	—		202
2002	790		29
2003	1,378		330
2004	22,241		-
2005	11,006		-
2006	22,265		-
2007	22,058		-
2008	49,535		-
2009	6,553		-
2010	1,318		-
2018	823		-
2019	1,092		-
Indefinite life	-		2,019
	$	139,059	$	3,712