<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                       OR

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                For the Transition Period from ______ to ________

                           COMMISSION FILE NO. 0-27421

                              OCULAR SCIENCES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  DELAWARE                               94-2985696
         (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER
         INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)

                                475 ECCLES AVENUE
                      SOUTH SAN FRANCISCO, CALIFORNIA 94080
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (650) 583-1400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X]  NO [ ].



As of July 31, 1998, there were 22,410,211 outstanding shares of the
Registrant's Common Stock, par value $0.001 per share.


<PAGE>   2
                              OCULAR SCIENCES, INC.

                                      INDEX


<TABLE>
<CAPTION>
PART  I - FINANCIAL INFORMATION                                                Page
----  -------------------------                                                ----
<S>                                                                            <C>
ITEM 1.    FINANCIAL STATEMENTS

                  Consolidated Balance Sheets -
                  June 30, 1998 and December 31, 1997                            3

                  Consolidated Statements of Income -
                  Three and Six Months Ended June 30, 1998 and 1997              4

                  Consolidated Statements of Comprehensive Income -
                  Three and Six Months Ended June 30, 1998 and 1997              5

                  Consolidated Statements of Cash Flows -
                  Six Months Ended June 30, 1998 and 1997                        6

                  Notes to Consolidated Financial Statements                     7

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        10

PART II - OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                              24

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       25

           SIGNATURES                                                           26
</TABLE>


                                       2


<PAGE>   3
PART I - FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                              OCULAR SCIENCES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                                                    June 30,          December 31,
                                                                                     1998                1997
                                                                                  (unaudited)          (audited)
                                                                                 -------------       -------------
<S>                                                                              <C>                 <C>          
ASSETS

Current Assets:
     Cash and cash equivalents                                                   $      27,559       $      27,895
     Restricted cash                                                                       471                 464
     Short-term investments                                                             18,093              10,000
     Accounts receivable, less allowance for sales returns and doubtful
         accounts of $1,724 and $1,655 for 1998 and 1997, respectively                  20,085              18,785
     Inventories                                                                        12,504              12,941
     Loans to officers and employees                                                       929                 927
     Other current assets                                                                6,307               5,173
                                                                                 -------------       -------------
              Total Current Assets                                                      85,948              76,185


Property and equipment, net                                                             45,165              36,248
Intangible assets, net                                                                   7,679               8,137
Long-term investments                                                                   11,480               9,070
Other assets                                                                               155                  95
                                                                                 -------------       -------------
              Total Assets                                                       $     150,427       $     129,735
                                                                                 =============       =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable                                                            $       5,265       $       3,723
     Accrued liabilities                                                                 9,624               9,354
     Accrued cooperative merchandise allowances                                          5,275               4,238
     Current portion of long-term debt                                                     467                 445
     Current deferred taxes                                                              2,168               2,159
     Income and other taxes payable                                                      3,747                 278
                                                                                 -------------       -------------
                  Total Current Liabilities                                             26,546              20,197
     Long-term debt, less current portion                                                3,194               3,434
                                                                                 -------------       -------------
              Total Liabilities                                                         29,740              23,631



Stockholders' Equity:
     Common stock, $0.001 par value; 80,000,000
        shares authorized; 22,361,501 and 21,738,166 shares
        issued and outstanding for 1998 and 1997, respectively                              22                  22
     Additional paid-in capital                                                         71,780              70,438
     Retained earnings                                                                  49,399              36,164
     Accumulated other comprehensive income                                               (514)               (520)
                                                                                 -------------       -------------
              Total Stockholders' Equity                                               120,687             106,104
                                                                                 -------------       -------------
              Total Liabilities and Stockholders' Equity                         $     150,427       $     129,735
                                                                                 =============       =============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       3


<PAGE>   4
                              OCULAR SCIENCES, INC.
                 CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
                 (In thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                         Three months ended                            Six months ended
                                                              June 30,                                      June 30,
                                                ------------------------------------          ------------------------------------
                                                    1998                   1997                   1998                    1997
                                                -------------          -------------          -------------          -------------
<S>                                             <C>                    <C>                    <C>                    <C>          
Net sales                                       $      38,019          $      29,090          $      70,190          $      52,969
Cost of sales                                          11,685                 10,958                 21,826                 20,420
                                                -------------          -------------          -------------          -------------
         Gross profit                                  26,334                 18,132                 48,364                 32,549

Selling and marketing expenses                         10,515                  6,198                 19,246                 11,972
General and administrative expenses                     5,740                  4,676                 11,006                 10,075
                                                -------------          -------------          -------------          -------------
         Income from operations                        10,079                  7,258                 18,112                 10,502

Interest expense                                          (82)                  (462)                  (164)                  (949)
Interest income                                           684                     30                  1,265                     67
Other (expense) income                                   (124)                   228                   (307)                    37
                                                -------------          -------------          -------------          -------------
         Income before taxes                           10,557                  7,054                 18,906                  9,657

Income taxes                                           (3,167)                (2,116)                (5,672)                (2,897)
                                                -------------          -------------          -------------          -------------
         Net income                                     7,390                  4,938                 13,234                  6,760

Preferred stock dividends                                  --                    (21)                    --                    (41)
                                                -------------          -------------          -------------          -------------
         Net income applicable to
           common stockholders                  $       7,390          $       4,917          $      13,234          $       6,719
                                                =============          =============          =============          =============

Net income per share data:

      Net income per share (basic)              $        0.33          $        0.30          $        0.60          $        0.41
                                                =============          =============          =============          =============

      Net income per share (diluted)            $        0.32          $        0.25          $        0.57          $        0.35
                                                =============          =============          =============          =============

      Weighted average common
         shares outstanding                        22,302,477             16,583,323             22,112,282             16,572,547

      Weighted average dilutive
         potential common shares                    1,135,606              2,999,921              1,195,675              3,005,120
                                                -------------          -------------          -------------          -------------

      Total weighted average common
         and dilutive potential common
         shares outstanding                        23,438,083             19,583,244             23,307,957             19,577,667
                                                =============          =============          =============          =============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4


<PAGE>   5
                              OCULAR SCIENCES, INC.
          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (UNAUDITED)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                        Three months ended                   Six months ended
                                                              June 30,                           June 30,
                                                  -------------------------------     ------------------------------
                                                      1998               1997              1998             1997
                                                  -------------     -------------     -------------    -------------
<S>                                               <C>               <C>               <C>              <C>          
Net income                                        $       7,390     $       4,938     $      13,234    $       6,760

 Other comprehensive income, net of tax:

       Foreign currency translation
         adjustment                                         (29)             (180)                2             (218)

         Unrealized holding gain on
         securities arising during
             the period                                     (21)               --                 4               --
                                                  -------------     -------------     -------------    -------------

Other comprehensive net income                              (50)             (180)                6             (218)
                                                  -------------     -------------     -------------    -------------

Comprehensive income                              $       7,340     $       4,758     $      13,240    $       6,542
                                                  =============     =============     =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       5


<PAGE>   6
                              OCULAR SCIENCES, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                    Six months ended June 30,
                                                                                --------------------------------
                                                                                     1998               1997
                                                                                -------------      -------------
<S>                                                                             <C>                <C>          
Cash flows from operating activities:
     Net income                                                                 $      13,234      $       6,760
     Adjustments to reconcile net income to net cash provided
       by operating activities:
         Depreciation and amortization                                                  2,907              3,525
         Allowances for sales returns and doubtful accounts                               358                496
         Provision for excess and obsolete inventory                                      359                562
         Provision for damaged and scrap products                                         385                397
         Provision for property and equipment                                             586                 --
         Exchange loss (gain)                                                             225                (59)
         Deferred income taxes                                                           (156)                --
      Changes in operating assets and liabilities:
         Accounts receivable                                                           (1,678)             1,141
         Inventories                                                                     (324)            (1,704)
         Other current and non-current assets                                          (1,047)            (1,737)
         Accounts payable                                                               1,524               (481)
         Accrued liabilities                                                            1,290              1,459
         Income and other taxes payable                                                 3,469                300
                                                                                -------------      -------------

                  Net cash provided by operating activities                            21,132             10,659
                                                                                -------------      -------------

Cash flows from investing activities:
       Purchase of property and equipment                                             (11,939)            (6,022)
       Purchase of available-for-sale short-term and long-term
            investments                                                               (14,495)                --
       Sales and maturities of available-for-sale short-term and long-
            term investments                                                            3,996                 --
       Purchase of marketing rights and license agreement                                  --             (3,333)
       Payments from (deposits to) restricted cash                                         (5)             1,228
                                                                                -------------      -------------

                  Net cash used in investing activities                               (22,443)            (8,127)
                                                                                -------------      -------------

Cash flows from financing activities:
       Proceeds from issuance of long-term debt                                            --              5,731
       Repayment of long-term debt                                                       (193)            (8,197)
       Proceeds from secondary public offering of common stock, net                       143                 --
       Preferred stock dividends                                                           --                (41)
       Proceeds from issuance of common stock                                           1,199                 97
                                                                                -------------      -------------

                  Net cash provided by (used in) financing activities                   1,149             (2,410)

Effect of exchange rate changes on cash and cash equivalents                             (174)               101
                                                                                -------------      -------------

                 Net (decrease) increase in cash and cash
                               equivalents                                               (336)               223

Cash and cash equivalents at beginning of period                                       27,895              3,795
                                                                                -------------      -------------

Cash and cash equivalents at end of period                                      $      27,559      $       4,018
                                                                                =============      =============

Supplemental cash flow disclosures:

      Cash paid during the year for:

         Interest                                                               $         165      $         886
                                                                                =============      =============

         Income taxes                                                           $       2,777      $       2,605
                                                                                =============      =============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       6


<PAGE>   7
                              OCULAR SCIENCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - BASIS OF PREPARATION

        The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
consolidated financial statements have been prepared on the same basis as the
audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for the fair
statement of the Company's financial condition as of June 30, 1998 and the
results of its operations, and its cash flows for the three and six month
periods ended June 30, 1998 and 1997. These financial statements should be read
in conjunction with the Company's audited financial statements as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997, including notes thereto, included in the Company's Annual
Report on Form 10-K. Operating results for the three and six month periods ended
June 30, 1998 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998.


NOTE 2 - NEW ACCOUNTING POLICIES

        The Company has adopted Statement of Financial Accounting Standards
("SFAS") Nos. 130 and 131, "Reporting Comprehensive Income" ("SFAS No. 130") and
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS No.
131"), respectively (collectively, the "Statements") effective in the year
ending December 31, 1998. SFAS No. 130 establishes standards for the reporting
of comprehensive income and its components in annual financial statements. The
Company has included a statement of comprehensive income that begins with net
income and reconciles to comprehensive income. SFAS No. 131 establishes
standards for reporting financial and descriptive information about an
enterprise's operating segments in its annual financial statements and selected
segment information in interim financial reports. The Company operates in a
single industry segment and will disclose the enterprise-wide disclosures in its
annual financial statements as of and for the year ended December 31, 1998.
Application of the Statements' disclosure requirements did not have an impact on
the Company's consolidated financial position, results of operations or net
income per share data as currently reported.

        In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133") which will be effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS No. 133
establishes accounting and reporting standards for derivatives instruments and
for hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. Earlier application of all provisions of this
Statement is encouraged but it is permitted only as of the beginning of any
fiscal quarter that begins after issuance of this Statement. The Company
anticipates that adoption of this Statement will not have a material effect on
the consolidated financial statements.


                                       7


<PAGE>   8
NOTE 3 - SIGNIFICANT EVENTS

The Secondary Public Offering

        In March 1998, the Company completed a secondary offering in which
5,343,381 shares of its Common Stock were sold to the public at a price of
$27.50 per share (including shares sold pursuant to the underwriters'
over-allotment option). The shares sold consisted of 30,000 shares sold by the
Company and 5,313,381 shares sold by selling stockholders. The Company incurred
aggregate expenses of $640,000 in connection with the secondary offering
(excluding underwriting discounts and commissions paid by the Company and the
selling stockholders).

Financing

        Ocular Sciences Puerto Rico has entered into a letter of intent and is
negotiating the final terms of an agreement with the Puerto Rico Industrial
Development Company ("PRIDCO") to manage on PRIDCO's behalf the construction of
a new building in Puerto Rico that will be leased by Ocular Sciences Puerto Rico
as its manufacturing facility, upon completion of construction. Ocular Sciences
Puerto Rico plans to initially finance the building construction as well as the
leasehold improvements with existing cash and then borrow against the remaining
balance available under its term loan with Comerica Bank - California upon
completion of construction. Under the anticipated agreement, PRIDCO would
reimburse Ocular Sciences Puerto Rico for up to a maximum of $3,470,000 for
certain structural construction costs of the facility at the end of the
construction project, as specified in the agreement. Annual rental payments of
approximately $489,000 per year would be due to PRIDCO to commence four months
after completion of the project, for a period of ten years. No assurance can be
given as to the terms of the final agreement between PRIDCO and Ocular Sciences
Puerto Rico. This transaction will be accounted for in accordance with Emerging
Issues Task Force 97-10 and SFAS Nos. 13 and 98.


NOTE 4 - INVENTORIES

         Inventories consisted of the following (in thousands):


<TABLE>
<CAPTION>
                            June 30,       December 31,
                             1998               1997
                         -------------    -------------
<S>                      <C>              <C>          
Raw materials            $       1,447    $       2,767
Work in process                    645              812
Finished goods                  10,412            9,362
                         -------------    -------------

                         $      12,504    $      12,941
                         =============    =============
</TABLE>


NOTE 5 -  PROPERTY AND EQUIPMENT, NET

        In the second quarter of 1998, the Company recorded a charge of $586,000
related to a custom-built packaging machine that failed the factory acceptance
test and Company specifications.


                                       8


<PAGE>   9
NOTE 6 -  NET INCOME PER SHARE

        The following table reconciles net income per share (basic) to net
income per share (diluted) (in thousands, except per share amounts):


<TABLE>
<CAPTION>
                                                     Three months ended                  Six months ended
                                                          June 30,                           June 30,
                                               ------------------------------    ------------------------------
                                                   1998              1997             1998             1997
                                               -------------    -------------    -------------    -------------
<S>                                            <C>              <C>              <C>              <C>          
Net income used  in the net income
     per share (basic) calculation             $       7,390    $       4,917    $      13,234    $       6,719
Preferred stock dividends                                 --               21               --               41
                                               -------------    -------------    -------------    -------------

Net income used in the net income per
     share (diluted) calculation               $       7,390    $       4,938    $      13,234    $       6,760
                                               =============    =============    =============    =============

Weighted average common shares
     outstanding                                      22,302           16,583           22,112           16,573
Weighted average dilutive potential
     common shares                                     1,136            3,000            1,196            3,005
                                               -------------    -------------    -------------    -------------

Weighted average common and
     dilutive potential common shares
     outstanding                                      23,438           19,583           23,308           19,578
                                               =============    =============    =============    =============

Net income per share (basic)                   $        0.33    $        0.30    $        0.60    $        0.41
                                               =============    =============    =============    =============
Net income per share (diluted)                 $        0.32    $        0.25    $        0.57    $        0.35
                                               =============    =============    =============    =============
</TABLE>


NOTE 7 -  ACCUMULATED OTHER COMPREHENSIVE INCOME BALANCES

         Accumulated other comprehensive income consists of the following (in
thousands):


<TABLE>
<CAPTION>
                                          FOREIGN                  ACCUMULATED
                                         CURRENCY     UNREALIZED       OTHER
                                        TRANSLATION    GAINS ON    COMPREHENSIVE
                                        ADJUSTMENT    SECURITIES       INCOME
                                      -------------  ------------- -------------
<S>                                   <C>            <C>           <C>  
Balances at December 31, 1997                  (531)            11          (520)
Current-period change                             2              4             6
                                      -------------  ------------- -------------
Balances at June 30, 1998                      (529)            15          (514)
                                      =============  ============= =============
</TABLE>


                                       9
<PAGE>   10


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

        The following discussion should be read in conjunction with the
unaudited Consolidated Financial Statements and notes thereto included in Part I
- Item 1 of this Quarterly Report and the audited Consolidated Financial
Statements and notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.

        Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. These statements involve risks and
uncertainties that could cause actual results to differ materially from those
anticipated. Such risks and uncertainties include, but are not limited to, the
impact of intense competition, uncertainties in demand for and market acceptance
of the Company's products; changes in trade practices and the risk of trade
practice litigation; and the risks of developing new automated production
technology and manufacturing facilities. These and other risks are described in
the section labeled "Factors That May Affect Future Results," and in the
Company's SEC reports and filings, including its annual report on Form 10-K for
the fiscal year ended December 31, 1997 and its quarterly report on Form 10-Q
for the quarterly period ended March 31, 1998. The Company has identified with a
preceding asterisk ("*"), various sentences within this Form 10-Q which contain
such forward-looking statements, and words such as "believes", "anticipates",
"expects", "future", "intends", "would", "may" and similar expressions are also
intended to identify forward-looking statements. However, the asterisk and these
words are not the exclusive means of identifying such statements. In addition,
the section labeled "Factors That May Affect Future Results", which has no
asterisks for improved readability, consists primarily of forward-looking
statements. The Company undertakes no obligation to revise any of these
forward-looking statements to reflect events or circumstances after the date
hereof.



RESULTS OF OPERATIONS


Net Sales


<TABLE>
<CAPTION>
                                           Three Months Ended June 30,
                                      -----------------------------------
                                          1998                   1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
U.S.                                  $  30,320,000         $  23,046,000                  31.6%
As a percentage of net sales                   79.7%                 79.2%
International                         $   7,699,000         $   6,044,000                  27.4%
As a percentage of net sales                   20.3%                 20.8%
                                      -------------         -------------
Net sales                             $  38,019,000         $  29,090,000                  30.7%
</TABLE>


<TABLE>
<CAPTION>
                                            Six Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                 % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
U.S.                                  $  55,672,000         $  41,950,000                  32.7%
As a percentage of net sales                   79.3%                 79.2%
International                         $  14,518,000         $  11,019,000                  31.8%
As a percentage of net sales                   20.7%                 20.8%
                                      -------------         -------------
Net sales                             $  70,190,000         $  52,969,000                  32.5%
</TABLE>


                                       10


<PAGE>   11
        Net sales represents gross sales less volume discounts, trial set
discounts, prompt payment discounts and allowances for sales returns. The
Company recognizes sales upon shipment of products to its customers. Discounts
and allowances for sales returns are accrued at the time sales are recognized.
Substantially all of the growth in net sales from the quarter and six months
ended June 30, 1997 to the quarter and six months ended June 30, 1998 resulted
from increased sales of the Company's lenses marketed for weekly disposable
replacement regimens. Unit sales of the Company's lenses marketed for weekly
disposable replacement regimens increased 62.0% from the second quarter of 1997
to the second quarter of 1998 and 63.6% from the six months ended June 30, 1997
to the six months ended June 30, 1998. During the quarter and six months ended
June 30, 1998, 89.4% and 88.7%, respectively, of all lenses sold were for use in
the weekly disposable replacement regimen, compared to 82.9% and 83.2% during
the quarter and six months ended June 30, 1997, respectively. Unit sales of the
Company's lenses marketed for monthly replacement regimens increased 17.5% and
lenses for annual replacement regimens declined 15.2% from the second quarter of
1997 to the second quarter of 1998. The growth in the Company's international
sales grew at a slower rate than recent quarters due to the sale of the Canadian
custom toric business during the fourth quarter of 1997, currency fluctuations
and reductions in the Company's selling prices into the Asian market in response
to the economic conditions there. The Company's overall average selling price
declined approximately 12.7% and 13.6% from the quarter and six months ended
June 30, 1997 to the quarter and six months ended June 30, 1998, respectively,
as a result of a continued shift in product mix towards sales of lower priced
products for weekly disposable replacement regimens. During the second quarter
of 1998, the Company's largest competitor restructured its U.S. prices to offer
discounts for volume and growth. The Company will be matching that pricing plan
in most respects starting in the third quarter of 1998. *The Company also plans
to introduce a lens for the daily disposable replacement regimen in Japan during
the fourth quarter of 1998 and in Europe and the U.S. during the first half of
1999 at a price substantially less than the current price for lenses marketed
for the weekly disposable replacement regimen. *The Company expects that the
overall average selling price that it realizes across its products will continue
to decline over time, and may decline at a greater rate than in the past,
because of (i) shifts in the Company's product mix from lenses marketed for
annual replacement regimens to lenses marketed for weekly disposable replacement
regimens and, in the future, to lenses marketed for daily disposable replacement
regimes, (ii) decreases in the average per unit selling prices of lenses
marketed for disposable replacement regimens, including decreases resulting from
the Company's new pricing plan and (iii) increases in products sold
internationally to distributors at prices lower than direct sales prices in the
United States. *The Company does not expect there to be significant growth, if
any, in its sales of lenses for annual replacement as a result of the continuing
shift in consumer demand towards more frequent replacement regimens. *The
Company does not believe that its net sales growth rate from the quarter and six
months ended June 30, 1997 to the quarter and six months ended June 30, 1998,
respectively, is indicative of the Company's long-term sales growth rate.


Gross Profit


<TABLE>
<CAPTION>
                                         Three Months Ended June 30,
                                      -----------------------------------
                                           1998                  1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Gross profit                          $  26,334,000         $  18,132,000                  45.2%
As a percentage of net sales                   69.3%                 62.3%
</TABLE>


<TABLE>
<CAPTION>
                                          Six Months Ended June 30,
                                      -----------------------------------
                                           1998                  1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Gross profit                          $  48,364,000         $  32,549,000                  48.6%
As a percentage of net sales                   68.9%                 61.4%
</TABLE>


                                       11


<PAGE>   12
        Cost of sales is comprised primarily of the labor, overhead and material
costs of production and packaging, freight and duty, inventory reserves,
royalties to third parties and amortization of certain intangible assets. A
substantial portion of the Company's cost of sales is fixed and therefore
declines as a percentage of net sales as volume increases. The increase in gross
profit from the quarter and six months ended June 30, 1997 to the quarter and
six months ended June 30, 1998 was due primarily to increased net sales, and to
decreases in per unit production costs resulting from the implementation of
certain process improvements and increases in manufacturing volume. *The Company
expects cost reductions resulting from improvements in the Company's current
production process to be less significant in the immediate future. *The Company
intends to add new, automated production technology at its United Kingdom and
Puerto Rico facilities, and is currently validating the first of these automated
production lines, and anticipates commencing production on these new lines
during the fourth quarter of 1998. *The new manufacturing technology is designed
to further reduce the Company's per unit cost of production over time, although
such cost reductions may not be seen until future periods and are dependant in
part on increases in production volume to offset the higher depreciation costs
(which are a component of cost of goods sold) associated with the new production
lines. *In addition, as described above in "Net Sales", the Company expects that
its overall average selling price on its current products will continue to
decline over time, and that accordingly the Company will need to continue to
reduce its per unit production costs through increased automation, increased
volume and reduced packaging costs in order to improve, or even maintain, its
gross margins on such products. See "Factors That May Affect Future Results
Manufacturing Capacity Constraints; Risks Associated With Expansion and
Automation of Manufacturing Operations." *The Company expects that the
introduction of a lower priced lens marketed for the daily disposable
replacement regimen in the fourth quarter of 1998 will result in a decline in
the average selling price of the Company's products, while reductions in costs
of sales will likely not reach comparable levels until subsequent periods, if at
all. *Accordingly, the Company expects its gross margins to decrease, at least
in the first several quarters following the introduction of lenses marketed for
daily replacement regimens and also expects that gross margins may fluctuate
more significantly than in the past. See "Factors That May Affect Future Results
- Fluctuations in Operating Results; Seasonality; Decreasing Average Sales
Prices."


Selling and Marketing Expenses


<TABLE>
<CAPTION>
                                          Three Months Ended June 30,
                                      -----------------------------------
                                           1998                 1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Selling and marketing expenses        $  10,515,000         $   6,198,000                  69.7%
As a percentage of net sales                   27.7%                 21.3%
</TABLE>


<TABLE>
<CAPTION>
                                          Six Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                 % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Selling and marketing expenses        $  19,246,000         $  11,972,000                  60.8%
As a percentage of net sales                   27.4%                 22.6%
</TABLE>



         Selling and marketing expenses are comprised primarily of cooperative
merchandising allowances, sample diagnostic products provided to eyecare
practitioners without charge, salaries, commissions and benefits for selling and
marketing personnel and postage and freight charges not billed to customers.
Cooperative merchandising allowances are reimbursements made principally to
chain stores and mass merchants to encourage the fitting and wearing of the
Company's lenses marketed 


                                       12


<PAGE>   13
for disposable replacement regimens. Such activities may include but are not
limited to advertising, in-house promotion, displays and mailings. These
allowances are limited to a percentage of purchases of lenses marketed for
disposable replacement regimens from the Company. The increase, both in dollars
and as a percentage of net sales, from the quarter and six months ended June 30,
1997 to the quarter and six months ended June 30, 1998 resulted primarily from
increases in cooperative merchandising allowances and, to a lesser extent, from
increased shipments of diagnostic lenses, increases in the size of the U.S.
sales force and increases in royalties which are due on certain U.K. sales. The
increase in cooperative merchandising allowances was primarily attributable to
the 62.0% unit growth in lenses marketed for weekly disposable replacement
regimens as well as the growth in sales to the optical retail channel which
tends to carry a higher level of these allowances. *The Company anticipates that
its new pricing plan will lead to a reduction in the rate of growth of
cooperative merchandising allowances starting in the fourth quarter of 1998.
*However, the Company believes selling and marketing expenses, particularly
cooperative merchandising allowances, are likely to continue to grow at a faster
rate than the overall increase in sales as the Company seeks to increase its
market share and respond to pricing and promotional pressures from competitors.


General and Administrative Expenses


<TABLE>
<CAPTION>
                                          Three Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                 % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
General and administrative expenses   $   5,740,000         $   4,676,000                  22.8%
As a percentage of net sales                   15.1%                 16.1%
</TABLE>


<TABLE>
<CAPTION>
                                          Six Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C> 
General and administrative expenses   $  11,006,000         $  10,075,000                   9.2%
As a percentage of net sales                   15.7%                 19.0%
</TABLE>


        General and administrative expenses are comprised primarily of salaries
and benefits for general and administrative, distribution, research and
development personnel, non-manufacturing facilities costs, professional
services, and consultants' fees. General and administrative expenses increased
in dollars but decreased as a percentage of sales from both the quarter and six
months ended June 30, 1997 to the quarter and six months ended June 30, 1998.
Included in the expense for the second quarter of 1998 is a charge of $586,000
related to a custom-built packaging machine which failed factory acceptance
tests and Company specifications. Without this one-time expense, general and
administrative expenses would have increased 10.2% and 3.4% from the quarter and
six months ended June 30, 1997 to the quarter and six months ended June 30,
1998, due primarily to the additional infrastructure related to the requirements
of being a publicly held company. The increase in general and administrative
expenses was substantially less than the increases in net sales of 30.7% and
32.5% for the same periods due primarily to the automation of the Company's
distribution centers and the leverage from utilizing the infrastructures of the
Company's international partners rather than establishing direct operations
overseas. *The Company believes that if net sales grow, its general and
administrative expenses will increase in absolute dollars, but decrease as a
percentage of net sales.


                                       13


<PAGE>   14
Income from operations


<TABLE>
<CAPTION>
                                           Three Months Ended June 30,
                                      -----------------------------------
                                           1998                  1997               % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Income from operations                $  10,079,000         $   7,258,000                  38.9%
As a percentage of net sales                   26.5%                 25.0%
</TABLE>


<TABLE>
<CAPTION>
                                          Six Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Income from operations                $  18,112,000         $  10,502,000                  72.5%
As a percentage of net sales                   25.8%                 19.8%
</TABLE>


         The increase in income from operations, both in dollars and as a
percentage of net sales, is due primarily to increased sales and improved gross
margins.


Interest and Other Income (Expense), Net


<TABLE>
<CAPTION>
                                         Three Months Ended June 30,
                                      -----------------------------------
                                          1998                   1997               % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>
Interest and other
     income (expense), net            $     478,000         $    (204,000)                   NA
As a percentage of net sales                    1.3%                 (0.7%)
</TABLE>


<TABLE>
<CAPTION>
                                          Six Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                 % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>
Interest and other
     income (expense), net            $     794,000         $    (845,000)                   NA
As a percentage of net sales                    1.1%                 (1.6%)
</TABLE>


        The increase in interest and other income (expense), net from the
quarter and six months ended June 30, 1997 to the quarter and six months ended
June 30, 1998 resulted primarily from a reduction in interest expense as the
aggregate amount of the Company's borrowings was reduced following its initial
public offering in August 1997 and an increase in interest earned as a result of
the investment of a portion of the net proceeds from the Company's initial
public offering.


Income Taxes


<TABLE>
<CAPTION>
                                          Three Months Ended June 30,
                                      -----------------------------------
                                          1998                  1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Income taxes                          $   3,167,000         $   2,116,000                  49.7%
Effective tax rate                             30.0%                 30.0%
</TABLE>


<TABLE>
<CAPTION>
                                           Six Months Ended June 30,
                                      -----------------------------------
                                           1998                 1997                % Change
                                      -------------         -------------         -------------
<S>                                   <C>                   <C>                   <C>  
Income taxes                          $   5,672,000         $   2,897,000                  95.8%
Effective tax rate                             30.0%                 30.0%
</TABLE>


                                       14


<PAGE>   15
        The Company's effective tax rate remained constant at 30% from the
quarter and six months ended June 30, 1997 to the quarter and six months ended
June 30, 1998. Earnings attributable to the Company's Puerto Rican operations
are partially exempt from U.S. taxation. *The Company anticipates that it will
continue to benefit from the favorable effect of this partial exemption through
2001, with limited exemption during the transition period from 2002 through
2006, when the benefit will expire under the current provisions of the Internal
Revenue Code. *The Company continues to evaluate various tax planning strategies
to maintain or reduce its effective tax rate. *In addition, the Company's
planned installation of the automated production technology in Puerto Rico could
cause an increase in the Company's tax rate if the automation results in a
reduction in the Company's labor costs in Puerto Rico relative to its Puerto
Rican earnings.



LIQUIDITY AND CAPITAL RESOURCES

        At June 30, 1998, the Company had a cash and cash equivalents balance of
$27.6 million, compared to a cash and cash equivalents balance of $27.9 million
at December 31, 1997. Cash from operations essentially offset net purchases of
short-term and long-term investments and purchases of property and equipment.
Working capital increased slightly from $56.0 million at December 31, 1997 to
$59.4 million at June 30, 1998. The increase in working capital was due
primarily to the increase in short-term investments. The Company had $29.6
million in short-term and long-term investments as of June 30, 1998, compared to
$19.1 million as of December 31, 1997. The Company's short-term and long-term
investments may be easily liquidated at minimal cost

        In the first six months of 1998, net cash provided by operating
activities of $21.1 million, was derived principally from net income of $13.2
million, adjusted primarily for depreciation and amortization of $2.9 million
and a $3.5 million increase in income and other taxes payable due to differences
between the timing of estimated tax payments and the accrual of the related tax
expense. Net cash provided by operating activities in the six months ended June
30, 1998 increased $10.5 million compared to the six months ended June 30, 1997,
due primarily to the increase in net income and changes in operating assets and
liabilities.

        Net cash used in investing activities in the first six months of 1998
was $22.4 million. During this period, the Company used $11.9 million to
purchase property and equipment, and $10.5 million for net purchases of
short-term and long-term investments. Net cash used in investing activities in
the six months ended June 30, 1998 increased $14.3 million compared to the six
months ended June 30, 1997, due primarily to increased purchases of property and
equipment and short-term and long-term investments, offset in part by the effect
of the purchase of intangible assets in the first quarter of 1997 as part of the
settlement of certain United Kingdom litigation. *The Company anticipates that
capital expenditures will be approximately $31 million for the remainder of 1998
as the Company invests in the development and implementation of automated
production technology at its manufacturing facilities and the development and
construction of a new Puerto Rican manufacturing facility. *However, the amount
of capital expenditures may increase or decrease, as the Company may accelerate
or delay the implementation of the automated production lines based on market
conditions and demand for its products. *The Company expects to finance the
acquisition of property, plant and equipment using cash from operations for the
foreseeable future without the need for debt or equity financing. See "Factors
That May Affect Future Results - Manufacturing Capacity Constraints; Risks
Associated With Expansion and Automation of Manufacturing Operations."

        Net cash provided by financing activities in the first six months of
1998 was $1.1 million. The increase of $3.6 million from the first six months of
1997 to the first six months of 1998 was due primarily to the decrease in net
repayment of debt of $2.3 million. The Company repaid all debt outstanding under
its previous credit facility with Comerica Bank-


                                       15


<PAGE>   16
California with proceeds from the initial public offering and therefore, the
average debt outstanding was significantly lower in the first six months of 1998
than in the first six months of 1997. Additionally the Company received $1.2
million in proceeds from stock option exercises in the first six months of 1998.
The Company also received net proceeds of $143,000 from the secondary offering
of common stock. The Company used the proceeds primarily to pay the expenses
incurred in the offering.

        In addition to cash, cash equivalents, short-term investments and
long-term investments, the Company has a credit facility with Comerica Bank -
California. Under the Comerica Credit Agreement, the Company and its subsidiary
Ocular Sciences Puerto Rico, Inc. ("Ocular Sciences Puerto Rico") can borrow up
to an aggregate of $30.0 million. The Comerica Credit Agreement provides for up
to $20.0 million of revolving credit loans to the Company and up to $10.0
million of term loans to Ocular Sciences Puerto Rico. Revolving credit
borrowings under the Comerica Credit Agreement bear interest at the bank's base
rate or at 1.00% to 1.50% above the eurodollar rate, and term loans bear
interest at the bank's base or at 1.25% to 1.75% above the eurodollar rate, in
each case with the applicable margin over the eurodollar rate depending on the
Company's ratio of debt to tangible net worth. As of June 30, 1998, there were
no revolving credit loans outstanding under the Comerica Credit Agreement. $2.4
million of term loans were borrowed on November 7, 1997 and used to repay
outstanding loans from the Banco Bilbao de Vizcaya, and the remaining $7.6
million of term loans will be available to finance the construction and
development of the Company's planned new Puerto Rican manufacturing facility.
The revolving credit loans will be available through June 30, 2000 and the term
loan facility provides for advances through April 30, 1999, at which time the
principal amount outstanding will become payable over twenty-two quarterly
principal installments, with a final maturity date of October 31, 2004. The
Company is required to maintain minimum ratios of debt to tangible net worth and
of current assets to current liabilities, and a minimum tangible net worth.
Borrowings under the Comerica Credit Agreement are secured by a pledge of 100%
of the outstanding common stock of Ocular Sciences Puerto Rico and 65% of the
outstanding capital stock of the Company's United Kingdom and Canadian
subsidiaries. In addition, the Company and Ocular Sciences Puerto Rico have each
guaranteed the other's borrowings under the Comerica Credit Agreement.

        *The Company believes that its current cash and cash equivalents,
further borrowings available under its credit facilities and its anticipated net
cash flow from operations, will be sufficient to meet its anticipated cash needs
for working capital, contractual commitments and capital expenditures for at
least the next 12 months. *If cash generated from operations proves insufficient
to satisfy the Company's liquidity requirements, the Company may seek to sell
additional equity or debt securities or obtain further credit facilities. *The
sale of additional equity or convertible debt securities could result in
additional dilution to the Company's stockholders *The sale of additional debt
or further bank borrowings could subject the Company to additional restrictive
financial covenants and restrictions on the payment of dividends. There can be
no assurance that financing will be available to the Company in amounts or on
terms acceptable to the Company, if at all.



YEAR 2000

        The Company is in the process of replacing its information systems with
new systems that function properly with respect to dates in the Year 2000 and
thereafter. *The Company has implemented several of these applications and
anticipates implementing the other planned applications by the middle of 1999.
*The Company expects that, with the new information system, the Year 2000 issue
will not pose significant operational problems for the Company's computer
system, however, there can be no assurance there will not be a delay in, or
increased costs associated with, the implementation of the new information
system and the Company's inability to install such a system could have an
adverse effect on future results of operations.


                                       16


<PAGE>   17
        The Company has not fully determined the extent to which it may be
impacted by third parties' systems, which may not be Year 2000-compliant. The
Year 2000 computer issue creates risk for the Company from third parties with
whom the Company works on business transactions worldwide. *While the Company
has begun efforts to seek reassurance from its suppliers and service providers,
there can be no assurance that the systems of other companies that the Company
works with or on which the Company's systems rely will be timely converted, or
that any such failure to convert by another company could not have an adverse
effect on the Company. See "Factors That May Affect Future Results - Uncertain
Ability to Manage Growth: Risks Associated with Implementation of New Management
Information Systems.



FACTORS THAT MAY AFFECT FUTURE RESULTS

        The Company's future operating results may differ materially from the
results discussed in, or implied by, forward-looking statements made by the
Company. Factors that may cause such differences include, but are not limited
to, those discussed below and elsewhere in this Report.

        As referenced in the first paragraph of Part 1 - Item 2, this section
consists primarily of forward-looking statements and associated risks but, for
improved readability, does not include asterisks.

        Intense Competition. The market for soft contact lenses is intensely
competitive and is characterized by decreasing prices for many products. The
Company's products compete with products offered by a number of larger companies
including the Vistakon division of Johnson & Johnson ("Johnson & Johnson"),
Ciba-Geigy Corporation ("Ciba-Geigy"), Bausch & Lomb, Inc. ("Bausch & Lomb"),
Wesley Jessen VisionCare, Inc. ("Wesley Jessen") and The Cooper Companies, Inc.
("Cooper"), which recently acquired Aspect Vision Care Ltd. Many of the
Company's competitors have substantially greater financial, manufacturing,
marketing and technical resources, greater market penetration and larger
manufacturing volumes than the Company. Among other things, these advantages may
afford the Company's competitors greater ability to manufacture large volumes of
lenses, reduce product prices and influence customer buying decisions. The
Company believes that certain of its competitors are expanding, or are planning
to expand their manufacturing capacity, and are implementing new, more automated
manufacturing processes, in order to support anticipated increases in volume. As
many of the costs involved in producing contact lenses are relatively fixed, if
a manufacturer can increase its volume, it can generally reduce its per unit
costs and thereby increase its flexibility to reduce prices. In addition, the
Company's largest competitor restructured its U.S. prices, during the second
quarter of 1998, to offer discounts for volume and growth. The Company has
decided to match that pricing plan in most respects. The Company's competitors
may continue to reduce prices to achieve the sales volumes necessary to utilize
their increased capacity, or for other reasons. Future price reductions by
competitors could make the Company's products less competitive, and there can be
no assurance that the Company would be able to either match the competitor's
pricing plan or reduce its prices in response. The Company's ability to respond
to competitive pressures by decreasing its prices without adversely affecting
its gross margins and operating results will depend on its ability to decrease
its costs per lens. Any significant decrease in the Company's costs per lens
will depend, in part, on the Company's ability to increase its sales volume and
production capacity. There can be no assurance that the Company will be able to
continue to increase its sales volume or reduce its per unit production costs.
In response to competition, the Company may also increase cooperative
merchandising allowances or otherwise increase spending, which may adversely
affect its business, financial condition and results of operations. The failure
of the Company to respond to competitive pressures, and particularly price
competition, in a timely manner would have a material adverse effect on the
Company's business, financial condition and 


                                       17


<PAGE>   18
results of operations. See " -- Manufacturing Capacity Constraints; Risks
Associated with Expansion and Automation of Manufacturing Operations."

        The market for contact lenses is shifting from lenses marketed for
annual replacement regimens, where the Company has significant experience and a
leading market position, to lenses marketed for weekly and daily disposable
replacement regimens, where the Company is less experienced and has a
significantly smaller market share. The weekly disposable replacement market is
particularly competitive and price-sensitive and is currently dominated by the
Acuvue product produced by Johnson & Johnson. The Company believes that the per
unit production costs of Johnson & Johnson and certain of the Company's other
competitors are currently lower than those of the Company. Further price
reductions by Johnson & Johnson or certain of the Company's other competitors
could limit or reduce the Company's market share in the weekly disposable
replacement segment and, as a result, could materially adversely affect the
Company's business, financial condition and results of operations. The Company
is introducing a lens marketed for the daily disposal regimen in the fourth
quarter of 1998 in Japan and in the first half of 1999 in Europe and the U.S.
The Company's ability to enter and to compete effectively in the daily market
will depend in large part upon the Company's ability to expand its production
capacity and reduce its per unit production costs.

        The Company believes that its manufacturing process technology, lens
designs and marketing strategies differentiate it from its leading competitors.
However, there can be no assurance that competitors will not adopt technologies,
lens designs or marketing strategies that are similar to those used by the
Company. Any such action by competitors could have a material adverse effect on
the Company's business, results of operations and financial condition. In this
regard, Cooper's acquisition of Aspect Vision Care Ltd. in December 1997, has
given them the ability to market in the U.S. a new line of contact lenses for
weekly and monthly replacement regimens that utilize a manufacturing process
technology that is based in significant part on technology also licensed to and
used by the Company.

        The Company also encounters competition from manufacturers of eyeglasses
and from alternative technologies, such as surgical refractive procedures
(including new refractive laser procedures such as PRK, or photorefractive
keratectomy, and LASIK, or laser in situ keratomileusis). If surgical refractive
procedures become increasingly accepted as an effective and safe technique for
permanent vision correction, they could substantially reduce the demand for
contact lenses by enabling patients to avoid the ongoing cost and inconvenience
of contact lenses. Accordingly, there can be no assurance that these procedures,
or other alternative technologies that may be developed in the future, will not
cause a substantial decline in the number of contact lens wearers and thus have
a material adverse effect on the Company's business, financial condition and
results of operations.

        Manufacturing Capacity Constraints; Risks Associated with Expansion and
Automation of Manufacturing Operations. The Company's success will depend upon
its ability to increase its production volume on a timely basis while
maintaining product quality and lowering per unit production costs.
Manufacturers often encounter difficulties in increasing production volumes,
including problems involving delays, quality control and shortages of qualified
personnel. Any significant increase in production volume will require that the
Company increase its manufacturing capacity.

        The Company intends to add new, highly automated production technology
at its facilities in the United Kingdom and Puerto Rico to increase its
manufacturing capacity and reduce its per unit manufacturing costs. However,
there can be no assurance that the Company will be able to implement this
automated technology on a timely basis or that the automated technology will
operate as efficiently as expected. The Company has encountered a delay in
implementing the first line of this automated technology, has had to write off
the cost of a custom made piece of equipment, and there can be no assurance that
it will not encounter significant delays and difficulties in the future. For
example, suppliers could miss their equipment delivery schedules, the efficiency
of the new production lines and facility could improve less rapidly than
expected, if at all, or the equipment or processes could 


                                       18


<PAGE>   19
require longer design time than anticipated, or redesigning after installation.
In addition, the new production technology will involve processes and equipment
with which the Company and its personnel are not experienced. Difficulties
experienced by the Company in automating its manufacturing process could impair
the Company's ability to reduce its per unit production costs and to compete in
the weekly and daily disposable replacement market and, accordingly, could have
a material adverse effect on the Company's business, financial condition and
results of operations. In addition, the installation of this automated
production technology in Puerto Rico could increase the Company's tax rate if it
results in a significant reduction in the Company's labor costs in Puerto Rico
in relation to its Puerto Rican earnings.

        The Company currently expects that from 1998 through the end of 2000, it
will invest approximately $75.0 million in capital expenditures on automated
production lines in the United Kingdom and Puerto Rico and expects to continue
to invest in additional automated production lines after this period. The
Company intends to finance these capital expenditures with net cash provided by
operating activities, existing cash balances and borrowings under its credit
facilities. No assurances can be given as to the availability of such net cash
from operations or borrowings, and if such funds are not available, the Company
could be required to curtail the installation of the automated lines.

        The Company is currently experiencing space constraints at its Puerto
Rican facility. As a result, the Company intends to relocate its Puerto Rican
manufacturing operations to a substantially larger new facility being
constructed to the Company's specifications and leased to the Company by the
Puerto Rico Industrial Development Company. The development and construction of
a new manufacturing facility is subject to significant risks and uncertainties,
including cost estimation errors and overruns, construction delays, weather
problems, equipment delays or shortages, production start-up problems and other
factors. As many of such factors are beyond the Company's control, the Company
cannot predict the length of any such delays, which could be substantial.
Construction of the new facility began during the fourth quarter of 1997 and is
expected to be completed during the first quarter of 1999. There can be no
assurances as to when the Company will complete construction and begin
production. Before this new facility begins production, it must be inspected by
the U.S. Food and Drug Administration (the "FDA") for compliance with current
good manufacturing practices ("GMP"), and the inspection and approval process
could significantly delay the Company's ability to begin production in this new
facility.

        The Company's development of a new facility and implementation of the
new automated production technology will result in new fixed and operating
expenses, including substantial increases in depreciation expense that will
increase the Company's cost of sales. If revenue levels do not increase
sufficiently to offset these new expenses, the Company's operating results could
be materially adversely affected. There can be no assurance that the Company
will not encounter unforeseen difficulties, costs or delays in automating its
production process, in constructing and equipping the new manufacturing facility
in Puerto Rico or in commencing production on the new lines and at the new
facility. Any such difficulties or delays would limit the Company's ability to
increase production volume and lower per unit costs (and consequently prices),
would limit the Company's ability to compete in the weekly and daily disposable
replacement regimen markets and, accordingly, could have a material adverse
effect on the Company's business, financial condition and results of operations.

        Risk of Trade Practice Litigation; Changes in Trade Practices. The
contact lens industry has been the subject of a number of class action and
government lawsuits and government investigations in recent years. In December
1996, over twenty states sued three of the Company's largest competitors, as
well as certain eyecare practitioners and trade organizations. The lawsuit
alleges, among other things, a conspiracy among such persons to violate
antitrust laws by refusing to sell contact lenses to mail order and other
non-practitioner contact lens providers, so as to reduce competition in the
contact lens industry. A similar lawsuit was filed by the State of Florida in
1994 and several similar class action 


                                       19


<PAGE>   20
lawsuits were also filed in 1994. One of the defendants has agreed to settle the
lawsuits as to itself by agreeing to sell contact lenses to mail-order and other
alternative distribution channels, and to make substantial cash and product
rebates available to consumers.

        In an unrelated matter, one of the Company's largest competitors was
sued in a national class action lawsuit brought in the Federal District Court in
the Northern District of Alabama in 1994 (the "Alabama Lawsuit"). This suit
alleged that the defendant engaged in fraudulent and deceptive practices in the
marketing and sale of contact lenses by selling identical contact lenses, under
different brand names and for different replacement regimens, at different
prices. The defendant subsequently modified certain of its marketing practices
and ultimately settled the lawsuit in August 1996 by making substantial cash and
product payments available to consumers. In August 1997, such competitor also
settled an investigation by 17 states into similar matters by agreeing to
certain restrictions on its future contact lens marketing practices and making
certain payments to each of the states. In October 1996, a class action lawsuit
was brought against another of the Company's largest competitors in the Superior
Court of New Jersey-Camden (the "New Jersey Lawsuit"). This suit alleges that
the defendant engaged in fraudulent and deceptive practices in the marketing and
sale of contact lenses by selling interchangeable contact lenses, under
different brand names and for different replacement regimens, at different
prices. The suit was certified as a national class action in December 1997.

        Although the Company has not been named in any of the foregoing
lawsuits, the Company from time to time receives claims or threats similar to
those brought against its competitors, and in one circumstance a suit was filed
against the Company making allegations similar to those made in the Alabama and
New Jersey Lawsuits, which suit was dismissed without prejudice for
non-substantive reasons. There can be no assurance that the Company will not
face similar actions relating to its marketing and pricing practices or other
claims or lawsuits in the future. The defense of any such action, lawsuit or
claim could result in substantial expense to the Company and significant
diversion of attention and effort by the Company's management personnel. There
can be no assurance that any such lawsuit would be settled or decided in a
manner favorable to the Company, and a settlement or adverse decision in any
such action, lawsuit or claim could have a material adverse effect on the
Company's business, financial condition and results of operations.

        In addition to the foregoing lawsuits, there is substantial federal and
state governmental regulation related to the prescribing of contact lenses.
These regulations relate to who is permitted to prescribe and fit contact
lenses, the prescriber's obligation to provide prescriptions to its patients,
the length of time a prescription is valid, the ability or obligation of
prescribers to prescribe lenses by brand rather than by generic equivalent or
specification, and other matters. Although these regulations primarily affect
contact lens prescribers, and not manufacturers or distributors of lenses such
as the Company, changes in these regulations, or their interpretation or
enforcement, could adversely affect the effectiveness of the Company's marketing
strategy to eyecare practitioners, most notably the effectiveness of the
Company's channel-specific and private label branding strategies. Additionally,
given the Company's strategic emphasis on focusing its marketing efforts on
eyecare practitioners, the Company may be more vulnerable than its competitors
to changes in current trade practices. Finally, although cost controls or other
requirements imposed by third party health-care payors such as insurers and
health maintenance organizations have not historically had a significant effect
on contact lens prices or distribution practices, this could change in the
future, and could adversely affect the Company's business, financial condition
and results of operations. Adverse regulatory or other decisions affecting
eyecare practitioners, or material changes in the selling and prescribing
practices for contact lenses, could have a material adverse effect on the
Company's business, financial condition and results of operations.

        Fluctuations in Operating Results; Seasonality; Decreasing Average Sales
Prices. The Company's quarterly operating results have varied significantly in
the past and are likely to vary significantly in the future based upon a number
of factors. The Company's quarterly 


                                       20


<PAGE>   21
results can be affected significantly by pricing changes by the Company or its
competitors, the Company's ability to increase manufacturing capacity
efficiently and to reduce per unit manufacturing costs, the time and costs
involved in expanding existing distribution channels and establishing new
distribution channels, discretionary marketing and promotional expenditures such
as cooperative merchandising allowances paid to the Company's customers, timing
of the introduction of new products by the Company or its competitors, inventory
shortages, timing of regulatory approvals and other factors. The Company's
customers generally do not have long-term commitments to purchase products and
products are generally shipped as orders are received. Consequently, quarterly
sales and operating results depend primarily on the volume and timing of orders
received during the quarter, which are difficult to forecast. A significant
portion of the Company's operating expenses is relatively fixed, and planned
expenditures are based on sales forecasts. If sales levels fall below
expectations, operating results are likely to be materially adversely affected.
In particular, net income may be disproportionately affected because only a
small portion of the Company's expenses varies with net sales in the short term.
In response to competition, the Company may reduce prices, increase cooperative
merchandising allowances or otherwise increase marketing expenditures, and such
responses may adversely affect the Company's business, financial condition and
results of operations. Due to the foregoing factors, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Further, it is likely that in some future quarter the Company's net sales or
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock would likely
be materially adversely affected.

        The Company expects that the overall average selling price that it
realizes across its products will decline over time because of (i) shifts in the
Company's product mix from lenses marketed for annual replacement regimens to
lenses marketed for weekly disposable replacement regimens and, in the future,
to lenses marketed for daily disposability, (ii) decreases in the prices of
lenses marketed for disposable replacement regimens, including decreases
resulting from the Company's new pricing plan and (iii) increases in products
sold internationally through distributors at prices lower than direct sales
prices in the United States. The Company does not expect there to be significant
growth in its sales of lenses marketed for annual or monthly replacement.
Accordingly, the Company will need to continue to reduce its per unit production
costs through increased automation, increased volume and reduced packaging costs
in order to improve, or even to maintain, its gross margins. The Company does
not believe that its recent net sales and operating income growth rates are
indicative of the Company's long-term growth rates.

        Need to Increase Sales of Lenses Marketed for Weekly and Daily
Disposable Replacement Regimens. The market for contact lenses is shifting from
lenses marketed for annual replacement regimens, where the Company has
significant experience and a leading market position, to lenses marketed for
weekly and daily disposable replacement regimens, where the Company is less
experienced and has a significantly smaller market share. The Company's success
depends on both continued growth of the weekly disposable replacement market and
increased penetration of this market by the Company's products. There can be no
assurance that the Company's contact lenses marketed for weekly disposable
replacement regimens will achieve widespread consumer acceptance, or that net
sales or net income from the sale of such lenses will be sufficient to offset
the decline in the Company's net sales or net income from its contact lenses
marketed for annual replacement regimens, which have higher prices and gross
margins. The Company anticipates that prices for its products targeted for
weekly disposable replacement regimens will decline in the future. In addition,
the lenses currently offered in the United States by the Company in the
disposable segment are marketed for weekly and monthly replacement regimens.
Certain of the Company's competitors have introduced lenses for daily
replacement at lower prices than their current weekly and monthly disposable
lenses. The Company plans to introduce a lens marketed for daily disposability
in Japan in the fourth quarter of 1998 and in Europe and the U.S. in the first
half of 1999. The Company's ability to enter and to compete effectively in the
market for lenses marketed for daily disposal will depend in large part upon the
Company's ability to 


                                       21


<PAGE>   22
expand its production capacity and reduce its per unit production costs. The
Company's ability to increase volume and reduce costs is also dependent upon the
success of the market for daily disposability, which is currently relatively
small.

        Risks Relating to International Operations; Need to Increase Sales in
International Markets. In 1996, 1997 and the first six months of 1998, the
Company's international sales represented 18.2%, 21.0% and 20.7%, respectively,
of the Company's net sales. In addition, a substantial portion of the Company's
products is manufactured in the United Kingdom. As a result, the Company's
business is subject to the risks generally associated with doing business
abroad, such as foreign consumer preferences, disruptions or delays in
shipments, changes in currency exchange rates, longer accounts receivable
payment cycles and greater difficulties in collecting accounts receivable,
foreign tax laws or tariffs, political unrest and changing economic conditions
in countries in which the Company's products are sold or manufacturing
facilities are located. These factors, among others, could adversely affect the
Company's ability to sell its products in international markets, as well as its
ability to manufacture its products. If any such factors were to render the
conduct of business in a particular country undesirable or impractical, there
could be a material adverse effect on the Company's business, financial
condition and results of operations. The Company and its representatives, agents
and distributors are also subject to the laws and regulations of foreign
jurisdictions in which they operate or in which the Company's products are sold,
and there can be no assurance that new laws or regulations will not have a
material adverse effect on the Company's business, financial condition and
results of operations.

        A substantial portion of the Company's sales and expenditures are
collected or paid in currencies other than the U.S. dollar. Therefore, the
Company's operating results are affected by fluctuations in foreign currency
exchange rates. In the three and six months ended June 30, 1998, the Company had
an exchange loss of $75,000 and $225,000, respectively, primarily relating to
changes in exchange rate between the U.S. dollar and the U.K. pound sterling.
There can be no assurance that in the future exchange rate movements will not
have a material adverse effect on the Company's sales, gross profit, operating
expenses or foreign currency exchange gains and losses.

        The Company's continued growth is dependent on the expansion of
international sales of its products. This expansion will involve operations in
markets with which the Company is not experienced and there can be no assurance
that the Company will be successful in capturing a significant portion of these
markets for contact lenses. In addition, the Company will not be able to market
and sell its products in certain international markets, such as Japan, until it
obtains regulatory approval. The failure of the Company to increase its
international sales substantially could have a material adverse effect on the
Company's business, financial condition and results of operations.

        Uncertain Ability to Manage Growth; Risks Associated with Implementation
of New Management Information Systems. The Company has experienced rapid growth
in recent years. Continued rapid growth may place a significant strain on
management, operational infrastructure, working capital and financial and
management control systems. Growth in the Company's business has required, and
is expected to continue to require, significant personnel management and other
infrastructure resources. The Company's ability to manage any future growth
effectively will require it to attract, train, motivate and manage new employees
successfully, to integrate new employees into its overall operations and to
continue to improve its operational, financial and management information
systems.

        The Company is in the process of replacing its information systems with
new systems that are expected to include a number of integrated applications,
including order entry, billing and labeling. The new systems will significantly
affect many aspects of the Company's business, including its manufacturing,
sales and marketing and accounting functions, and the successful implementation
and integration of these applications will be important to facilitate future
growth. The Company has implemented several of these applications, and
anticipates implementing the other planned applications by the middle of 1999.
However, the Company 


                                       22


<PAGE>   23
could experience unanticipated delays in the implementation of the new systems
and implementation of the new information systems could cause significant
disruption in operations. If the Company is not successful in implementing its
new systems or if the Company experiences difficulties in such implementation,
the Company could experience problems with the delivery of its products or an
adverse impact on its ability to access timely and accurate financial and
operating information. In addition, delays in implementing the new systems could
require additional expenditures by the Company to modify or replace portions of
its existing information systems so that they will function properly with
respect to dates in the Year 2000 and thereafter and there can be no assurance
that the Company will be able to correct any problems with respect to such dates
in a timely manner.

        Additionally, the Year 2000 computer issue creates risk for the Company
from third parties with whom the Company works on business transactions
worldwide. While the Company has begun efforts to seek reassurance from its
suppliers and service providers, there can be no assurance that the systems of
other companies that the Company works with or on which the Company's systems
rely will be timely converted, or that any such failure to convert by another
company will not have an adverse effect on the Company.


                                       23


<PAGE>   24
PART II - OTHER INFORMATION

ITEM 2:  CHANGES IN SECURITIES AND USE OF PROCEEDS

Initial Public Offering

        The Company's registration statement (the "Registration Statement") on
Form S-1, registering the offer and sale of an aggregate of 8,280,000 shares of
the Company's common stock in connection with the Company's initial public
offering (Securities and Exchange Commission File No. 333-27421) was declared
effective by the Securities and Exchange Commission on August 4, 1997, the
offering date for the initial public offering. The managing underwriters for the
offering were Morgan Stanley Dean Witter Incorporated, Bear, Stearns & Co. Inc.
and Cowen and Company.

        In August 1997, the Company completed its initial public offering in
which 8,280,000 shares of its Common Stock were sold to the public at a price of
$16.50 per share (including shares sold pursuant to the underwriters'
over-allotment option). The shares sold consisted of 3,600,000 shares sold by
the Company at an aggregate public offering price of $59.4 million and 4,680,000
shares sold by selling stockholders at an aggregate public offering price of
$77.2 million. Effective immediately prior to the closing of the initial public
offering, all outstanding shares of the Company's then outstanding preferred
stock were automatically converted into shares of common stock.

        The aggregate net offering proceeds to the Company from the initial
public offering after deducting the total expenses described above was $53.7
million. From the effective date of the Registration Statement through June 30,
1998, such proceeds were used for the following purposes:


<TABLE>
<S>                                                                  <C>        
Construction of plant, building and facilities ...........           $ 2,614,000
Purchase and installation of machinery and equipment .....            16,742,000
Repayment of indebtedness ................................            14,728,000
Working capital ..........................................            12,928,000
Cash equivalents .........................................                     0
Final payment pursuant to UK settlement agreement ........             6,685,000
</TABLE>


        None of such payments were direct or indirect payments to directors or
officers of the Company or any of their associates, to persons holding ten
percent or more of any class of equity securities of the Company or to
affiliates of the Company, except that $2,895,000 of the net proceeds were used
to repay indebtedness owed to John Fruth, the Company's Chief Executive Officer
and a Director and holder of in excess of ten percent of the Company's common
stock.


                                       24


<PAGE>   25
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

The following exhibits are filed herewith:


<TABLE>
<CAPTION>
Exhibit
Number                                                 Exhibit Title
------                                                 -------------
<S>           <C>
 11.01   -    Statement regarding computation of net income per share (basic and diluted)
 27.01   -    Financial Data Schedule
</TABLE>


        (b) Reports on Form 8-K

The Company did not file a report on Form 8-K during the period ended June 30,
1998.


                                       25


<PAGE>   26
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                OCULAR SCIENCES, INC.
                                (Registrant)




Date: August 12, 1998           /s/ Gregory E. Lichtwardt
                                --------------------------------------
                                Gregory E. Lichtwardt
                                Vice President, Finance,
                                Chief Financial Officer, and Treasurer
                                (Duly Authorized Officer and Chief 
                                Accounting Officer)


                                       26


<PAGE>   27

<TABLE>
<CAPTION>
Exhibit
Number                                                 Description                          Page
------                                                 -----------                          ----
<S>           <C>
 11.01   -    Statement regarding computation of net income per share (basic and diluted)    29

 27.01   -    Financial Data Schedule                                                        31
</TABLE>