FINANCIAL INSTRUMENTS

The fair values of our financial instruments, including cash and cash equivalents, trade receivables, lines of credit, accounts payable and accrued liabilities, approximated their carrying values as of October 31, 2000 and 1999 because of the short maturity of these instruments. We believe that there are no significant concentrations of credit risk in trade receivables.

  The fair value of our other long-term debt approximated the carrying value at October 31, 2000 and 1999 because we believe that we could obtain similar financing with similar terms.

DERIVATIVES

FOREIGN EXCHANGE INSTRUMENTS
Cooper enters into forward exchange contracts to hedge the currency exposure of liabilities and firm commitments denominated in foreign currencies. We recognize gains and losses on hedges in our results of operations in the same period as we realize the gain or loss from remeasuring the foreign currency denominated asset or liability. As of October 31, 2000, we had outstanding forward exchange contracts of $48 million to purchase £30.1 million, which are to be purchased from time to time through November 2002. We obtained the fair value of the forward exchange contracts through KeyBank’s foreign exchange department. The fair value indicated that termination of the forward exchange contracts at October 31, 2000 would have resulted in a loss of $3.7 million.

  We also enter into forward exchange contracts to minimize the net currency exposure of intercompany liabilities and commitments denominated in foreign currencies. We record gains and losses on these forward contracts in our results, and they offset the gains and losses from the remeasurement of our intercompany accounts. At October 31, 2000, we had outstanding forward exchange contracts against our intercompany accounts of $2.9 million to sell 4.4 million Canadian Dollars. We obtained the fair value of the forward exchange contracts through KeyBank’s Foreign Exchange department. The fair value indicated that termination of these forward exchange contracts at October 31, 2000 would have resulted in a loss of $17,000.

INTEREST RATE SWAPS
On a selective basis, we enter into interest rate swap agreements to reduce the potential negative impact of increases in interest rates on our outstanding variable-rate debt under the Midland Bank Loan and the IRB. We recognize in our results of operations over the life of the contract, as interest expense, the amortization of contract premiums incurred from buying interest rate swaps. We record net payments or receipts resulting from these agreements as adjustments to interest expense. The effect of interest rate instruments on our results of operations in fiscal years ended October 31, 2000, 1999 and 1998 was not significant. As of October 31, 2000, Cooper had interest rate swap agreements with notional amounts totaling $6.7 million. As of October 31, 2000, we had a $2.5 million interest rate swap that matures on January 1, 2012 and a $4.2 million interest rate swap that matures on April 1, 2003.

  We obtained the fair value of the swap agreements through KeyBank’s derivative department. The fair value indicated that termination of the swap agreements at October 31, 2000 would have resulted in an $82,000 loss.