##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2002

OR

(BOX)   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. 0-22623

OCULAR SCIENCES, INC.
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 94-2985696
(I.R.S. Employer
Identification No.)

1855 Gateway Boulevard, Suite 700
Concord, California 94520
(Address of principal executive offices, including zip code)

(925) 969-7000
(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 BOX)      NO (BOX).

As of July 29, 2002, there were outstanding 23,676,756 shares of the
registrants Common Stock, par value $0.001 per share.





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TABLE OF CONTENTS



|                               |                                                                                               |                                                               |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1. Financial Statements                                                                 
|                               |                                                                                               | Condensed Consolidated Balance Sheets  (unaudited)          
|                               |                                                                                               | Condensed Consolidated Statements of Income  (unaudited)    
|                               |                                                                                               | Condensed Consolidated Statements of Cash Flows  (unaudited)
|                               |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS         
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | Item 3. Quantitative And Qualitative Disclosures About Market Risk                           
|Part II  OTHER INFORMATION   
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|SIGNATURES                    



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##### Table of Contents



OCULAR SCIENCES, INC.

INDEX

|                               |  |                                                                                                 |  |     
|------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                 |  | Page
|                               |  |                                                                                                 |  |     
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|PART I  FINANCIAL INFORMATION |  |                                                                                                
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|Item 1.                        |  | Financial Statements (Unaudited)                                                                |  |     
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Balance Sheets 
June 30, 2002 and December 31, 2001                     |  | 3   
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Statements of Income 
Three and Six Months Ended June 30, 2002 and 2001 |  | 4   
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Statements of Cash Flows 
Six Months Ended June 30, 2002 and 2001       |  | 5   
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Notes to Condensed Consolidated Financial Statements                                            |  | 6   
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|Item 2.                        |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations           |  | 14  
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                      |  | 23  
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|PART II  OTHER INFORMATION    |  |                                                                                                
|                              
|                              
|                              
|                              
|                              
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                             |  | 24  
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  |                                                                                                 |  |     
|                              
|                              
|                              
|                              
|                               |  | Signatures                                                                                      |  | 25  





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##### Table of Contents






PART I  FINANCIAL INFORMATION




ITEM 1. Financial Statements




OCULAR SCIENCES, INC.
Condensed Consolidated Balance Sheets  (unaudited)
(In thousands, except share and per share data)

|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |         | 
|----------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | -------- | ------- | ------------ | ------- | ------- | ------- | 
|                                          |                                                                                                                                                       |                                            |         | June 30, |         | December 31,
|                                          |                                                                                                                                                       |                                            |         | 2002     |         | 2001*       
|                                          |                                                                                                                                                       |                                            |         |          |         |             
|ASSETS                                    |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|Current Assets:                           |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|                                          | Cash and cash equivalents                                                                                                                             |                                            | $       | 18,769   |         |              | $       | 7,789   |        
|                                         
|                                         
|                                         
|                                         
|                                          | Accounts receivable, less allowance for sales returns and doubtful
accounts of $2,530 and $2,389 for 2002 and 2001, respectively                      |                                            |         | 49,061   |         |              |         | 46,696  |        
|                                         
|                                         
|                                         
|                                         
|                                          | Inventories                                                                                                                                           |                                            |         | 61,796   |         |              |         | 46,772  |        
|                                         
|                                         
|                                         
|                                         
|                                          | Prepaid expenses and other current assets                                                                                                             |                                            |         | 22,009   |         |              |         | 24,721  |        
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |        
|                                          |                                                                                                                                                       | Total Current Assets                       |         |          | 151,635 |              |         |         | 125,978 | 
|                                         
|                                         
|                                         
|                                         
|Property and equipment, net               |                                                                                                                                                       |                                            | 139,321 |          |         |              | 128,157 |        
|                                         
|                                         
|                                         
|                                         
|Goodwill and other intangible assets, net |                                                                                                                                                       |                                            | 60,313  |          |         |              | 45,765  |        
|                                         
|                                         
|                                         
|                                         
|Loans to officers and employees           |                                                                                                                                                       |                                            | 1,140   |          |         |              | 1,505   |        
|                                         
|                                         
|                                         
|                                         
|Long-term investments                     |                                                                                                                                                       |                                            | 357     |          |         |              | 280     |        
|                                         
|                                         
|                                         
|                                         
|Other assets                              |                                                                                                                                                       |                                            | 2,485   |          |         |              | 2,652   |        
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |        
|                                          |                                                                                                                                                       | Total Assets                               |         | $        | 355,251 |              |         | $       | 304,337 | 
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY      |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|Current Liabilities:                      |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|                                          | Accounts payable                                                                                                                                      |                                            | $       | 12,207   |         |              | $       | 14,474  |        
|                                         
|                                         
|                                         
|                                         
|                                          | Accrued liabilities                                                                                                                                   |                                            |         | 52,457   |         |              |         | 34,155  |        
|                                         
|                                         
|                                         
|                                         
|                                          | Current portion of long-term debt                                                                                                                     |                                            |         | 399      |         |              |         | 12,660  |        
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                          |                                                                                                                                                       | Total Current Liabilities                  |         |          | 65,063  |              |         |         | 61,289  | 
|                                         
|                                         
|                                         
|                                         
|                                          | Deferred income taxes                                                                                                                                 |                                            |         | 5,008    |         |              |         | 4,394   |        
|                                         
|                                         
|                                         
|                                         
|                                          | Other liabilities                                                                                                                                     |                                            |         | 4,726    |         |              |         | 5,375   |        
|                                         
|                                         
|                                         
|                                         
|                                          | Long-term debt, less current portion                                                                                                                  |                                            |         | 28,188   |         |              |         | 3,388   |        
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |        
|                                          |                                                                                                                                                       | Total Liabilities                          |         |          | 102,985 |              |         |         | 74,446  | 
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |        
|Commitments and contingencies             |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|Stockholders Equity:                     |                                                                                                                                                       |                                            |         |          |         |              |         |        
|                                         
|                                         
|                                         
|                                         
|                                          | Preferred stock, $0.001 par value; 4,000,000 shares authorized;
none issued                                                                           |                                            |         |         |         |              |         |        |        
|                                         
|                                         
|                                         
|                                         
|                                          | Common stock, $0.001 par value; 80,000,000 shares authorized;
23,676,256 and 23,457,185 shares issued and outstanding
for 2002 and 2001, respectively |                                            |         | 24       |         |              |         | 24      |        
|                                         
|                                         
|                                         
|                                         
|                                          | Additional paid-in capital                                                                                                                            |                                            |         | 88,919   |         |              |         | 85,025  |        
|                                         
|                                         
|                                         
|                                         
|                                          | Retained earnings                                                                                                                                     |                                            |         | 167,793  |         |              |         | 148,624 |        
|                                         
|                                         
|                                         
|                                         
|                                          | Accumulated other comprehensive loss                                                                                                                  |                                            |         | (4,470   | )       |              |         | (3,782  | )      
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |        
|                                          |                                                                                                                                                       | Total Stockholders Equity                 |         |          | 252,266 |              |         |         | 229,891 | 
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |         |        
|                                          |                                                                                                                                                       | Total Liabilities and Stockholders Equity |         | $        | 355,251 |              |         | $       | 304,337 | 
|                                          |                                                                                                                                                       |                                            |         |          |         |              |         |        

|  |                                                                                                                                                                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|* | The consolidated balance sheet at
December 31, 2001 has been derived from the Companys
audited consolidated financial statements at that date, but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.

See accompanying notes to condensed consolidated financial statements.





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##### Table of Contents






OCULAR SCIENCES, INC.
Condensed Consolidated Statements of Income  (unaudited)
(In thousands, except share and per share data)

|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |            |        | 
|-------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ---------- | ------ | ---- | ------- | ---------- | ------ | - | ------- | ---------- | ------ | 
|                                             |                                                                                |                                          |        | Three months ended |        | Six months ended
|                                             |                                                                                |                                          |        | June 30,           |        | June 30,        
|                                             |                                                                                |                                          |        |                    |        |                 
|                                             |                                                                                |                                          |        | 2002               |        | 2001             |        | 2002       |        | 2001
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |     
|Net sales                                    |                                                                                | $                                        | 65,677 |                    |        | $                | 55,142 |            |        | $    | 126,488 |            |        | $ | 105,193 |           
|                                            
|                                            
|                                            
|                                            
|Cost of sales                                |                                                                                |                                          | 29,137 |                    |        |                  | 23,006 |            |        |      | 56,467  |            |        |   | 44,659  |           
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             |                                                                                | Gross profit                             |        |                    | 36,540 |                  |        |            | 32,136 |      |         |            | 70,021 |   |         |            | 60,534 | 
|                                            
|                                            
|                                            
|                                            
|Selling and marketing expenses               |                                                                                |                                          | 14,676 |                    |        |                  | 11,451 |            |        |      | 24,813  |            |        |   | 20,094  |           
|                                            
|                                            
|                                            
|                                            
|General and administrative expenses          |                                                                                |                                          | 10,199 |                    |        |                  | 9,467  |            |        |      | 20,231  |            |        |   | 17,464  |           
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |                                                                                |                                          | 1,346  |                    |        |                  | 1,699  |            |        |      | 2,364   |            |        |   | 3,240   |           
|                                            
|                                            
|                                            
|                                            
|Acquired in-process
research and development |                                                                                |                                          |       |                    |        |                  |       |            |        |      |        |            |        |   | 4,150   |           
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             |                                                                                | Income from operations                   |        |                    | 10,319 |                  |        |            | 9,519  |      |         |            | 22,613 |   |         |            | 15,586 | 
|                                            
|                                            
|                                            
|                                            
|Interest expense                             |                                                                                |                                          | (272   | )                  |        |                  | (89    | )          |        |      | (613    | )          |        |   | (206    | )         
|                                            
|                                            
|                                            
|                                            
|Interest income                              |                                                                                |                                          | 258    |                    |        |                  | 105    |            |        |      | 284     |            |        |   | 702     |           
|                                            
|                                            
|                                            
|                                            
|Other income (expense)                       |                                                                                |                                          | 763    |                    |        |                  | 9      |            |        |      | 1,093   |            |        |   | (41     | )         
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             |                                                                                | Income
before provision for income taxes |        |                    | 11,068 |                  |        |            | 9,544  |      |         |            | 23,377 |   |         |            | 16,041 | 
|                                            
|                                            
|                                            
|                                            
|Provision
for income taxes                   |                                                                                |                                          | (1,992 | )                  |        |                  | (2,491 | )          |        |      | (4,208  | )          |        |   | (4,171  | )         
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             |                                                                                | Net income                               |        | $                  | 9,076  |                  |        | $          | 7,053  |      |         | $          | 19,169 |   |         | $          | 11,870 | 
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|Net income per share:                        |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                            
|                                            
|                                            
|                                            
|                                             | Basic                                                                          |                                          | $      | 0.38               |        |                  | $      | 0.30       |        |      | $       | 0.81       |        |   | $       | 0.51       |       
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             | Diluted                                                                        |                                          | $      | 0.37               |        |                  | $      | 0.29       |        |      | $       | 0.78       |        |   | $       | 0.50       |       
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             | Weighted average common
shares outstanding                                     |                                          |        | 23,602,259         |        |                  |        | 23,349,945 |        |      |         | 23,550,901 |        |   |         | 23,330,614 |       
|                                            
|                                            
|                                            
|                                            
|                                             | Weighted average shares of stock
options under the treasury
stock method       |                                          |        | 1,017,594          |        |                  |        | 704,545    |        |      |         | 984,013    |        |   |         | 488,854    |       
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           
|                                             | Total weighted average common
and dilutive potential
common
shares outstanding |                                          |        | 24,619,853         |        |                  |        | 24,054,490 |        |      |         | 24,534,914 |        |   |         | 23,819,468 |       
|                                             |                                                                                |                                          |        |                    |        |                  |        |            |        |      |         |            |        |   |         |           

See accompanying notes to condensed consolidated financial statements.





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##### Table of Contents






OCULAR SCIENCES, INC.
Condensed Consolidated Statements of Cash Flows  (unaudited)
(In thousands)

|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |      |   |         |         |  
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------ | - | ------------------------- | ------- | ---- | - | ------- | ------- | -
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   | Six months ended June 30,
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                          
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   | 2002                      |         | 2001
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|Cash flows from operating activities:                                    |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Net income                                                                        |                                                        | $ | 19,169                    |         |      | $ | 11,870  |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Adjustments to reconcile net income to net cash provided
by operating activities: |                                                        |   |                           |         |      |   |         |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Depreciation and amortization                          |   |                           | 10,349  |      |   |         | 8,699   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Income tax benefits from stock options exercised       |   |                           | 658     |      |   |         | 23      |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Provision for sales returns and doubtful accounts      |   |                           | (106    | )    |   |         | 42      |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Provision for excess and obsolete inventory            |   |                           | 732     |      |   |         | 843     |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | (Gain)
loss on sale of property and equipment          |   |                           |        |      |   |         | 38      |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Exchange (gain) loss                                   |   |                           | (1,189  | )    |   |         | 98      |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Acquired in-process research and development           |   |                           |        |      |   |         | 4,150   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Deferred income taxes                                  |   |                           | 901     |      |   |         | (1,301  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       | Changes in operating assets and liabilities,
net of effects of acquisitions: |                                                                                   |                                                        |   |                           |         |      |   |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Accounts receivable                                    |   |                           | (9,564  | )    |   |         | (5,335  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Inventories                                            |   |                           | (9,466  | )    |   |         | (11,506 | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Prepaid expenses, other current and non-current assets |   |                           | 2,759   |      |   |         | (2,577  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Accounts payable                                       |   |                           | (2,267  | )    |   |         | 5,691   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Accrued liabilities                                    |   |                           | 4,753   |      |   |         | 2,113   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Income taxes refundable                                |   |                           | (153    | )    |   |         | (1,260  | )
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |      |   |         |        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Net cash provided by operating activities              |   |                           | 16,576  |      |   |         | 11,588  |  
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|Cash flows from investing activities:                                    |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Purchase of property and equipment                                                |                                                        |   | (20,640                   | )       |      |   | (15,066 | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Purchase of short and long-term investments                                       |                                                        |   | (79                       | )       |      |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Sales and maturities of short and long-term investments                           |                                                        |   |                          |         |      |   | 10,614  |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Loans to officers and employees                                                   |                                                        |   |                          |         |      |   | (500    | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Payment for acquisition, net of cash acquired                                     |                                                        |   |                          |         |      |   | (48,272 | )      
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |      |   |         |        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Net cash used in investing activities                  |   |                           | (20,719 | )    |   |         | (53,224 | )
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |      |   |         |        
|Cash flows from financing activities:                                    |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Repayment of long-term debt                                                       |                                                        |   | (26,222                   | )       |      |   | (819    | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Proceeds from issuance of long-term debt                                          |                                                        |   | 39,000                    |         |      |   |        |        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Repayment of capital lease obligations                                            |                                                        |   | (239                      | )       |      |   | (234    | )      
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              | Proceeds from issuance of common stock                                            |                                                        |   | 3,236                     |         |      |   | 722     |        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Net cash provided by (used in) financing activities    |   |                           | 15,775  |      |   |         | (331    | )
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|Effect of exchange rate changes on cash and cash equivalents             |                                                                                                                       |                                                                              | (652                                                                              | )                                                      |   |                           | (964    | )   
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Net increase (decrease) in cash and cash equivalents   |   |                           | 10,980  |      |   |         | (42,931 | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cash and cash equivalents at beginning of period                         |                                                                                                                       |                                                                              | 7,789                                                                             |                                                        |   |                           | 55,109  |     
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|Cash and cash equivalents at end of period                               |                                                                                                                       | $                                                                            | 18,769                                                                            |                                                        |   | $                         | 12,178  |     
|                                                                         |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|Supplementary cash flow information:                                     |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Cash paid during the period for:                                                                                      |                                                                              |                                                                                   |                                                        |   |                           |         |      |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Interest                                               |   | $                         | 496     |      |   | $       | 200     |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         |                                                                                                                       |                                                                              |                                                                                   | Taxes                                                  |   | $                         | 4,890   |      |   | $       | 5,431   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Supplementary disclosure of non-cash investing and financing activities: |                                                                                                                       |                                                                              |                                                                                   |                                                        |   |                           |         |     
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Reduction
to liabilities assumed and goodwill in connection with the Essilor
acquisition                              |                                                                              | $                                                                                 | 974                                                    |   |                           | $       |     |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Acquisition
of assets of Seiko Contactlens, Inc. (see Note 8 of notes to
condensed consolidated financial statements) |                                                                              | $                                                                                 | 21,686                                                 |   |                           | $       |     |  



See accompanying notes to condensed consolidated financial statements.





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##### Table of Contents






OCULAR SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1  Basis of Preparation

The accompanying unaudited condensed 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 accounting principles generally accepted
in the United States of America for complete financial statements. The
accompanying unaudited condensed consolidated financial statements have been
prepared on the same basis as the audited consolidated financial statements at
and for the year ended December 31, 2001 and, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of our financial condition as of June 30,
2002 and the results of our operations and comprehensive income for the three
and six-month periods ended June 30, 2002 and 2001, respectively, and our cash
flows for the six-month periods ended June 30, 2002 and 2001. These unaudited
condensed consolidated financial statements should be read in conjunction with
our audited consolidated financial statements as of December 31, 2001 and 2000
and for each of the years in the three year period ended December 31, 2001,
including notes thereto, included in our Annual Report on Form 10-K for the
year ended December 31, 2001. Operating results for the six month period ended
June 30, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002.

All
amounts, unless otherwise indicated are in U.S. dollars.

Note 2  New Accounting Standards

The Financial Accounting Standards Boards Emerging Issues Task Force
(EITF) issued EITF 00-14, Accounting for Certain Sales Incentives, effective
January 1, 2002. EITF 00-14 requires that costs related to consumer coupons be
classified as a reduction of sales. We reclassified as deductions in net
sales approximately $401,000 and $574,000 of expenses which were previously
classified as selling and marketing expenses in the three and six months ended
June 30, 2001, respectively.

The EITF also issued EITF 00-25, Vendor Income Statement Characterization
of Consideration to a Purchaser of the Vendors Products or Services,
effective January 1, 2002. EITF 00-25 requires that certain of our customer
promotional incentive payments, primarily cooperative merchandising allowances,
be classified as a reduction of sales. We reclassified as deductions in net
sales approximately $6.1 million and $12.6 million of customer promotional
incentives that were previously classified as selling and marketing expenses in
the three and six months ended June 30, 2001, respectively.

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This Statement applies to legal obligations associated with retirement
of long-lived assets that result from the acquisition, construction,
development or normal use of the asset. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. We are currently evaluating the
impact of SFAS No. 143 on our financial statements and related disclosures.

On
January 1, 2002, we adopted SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.





---



##### Table of Contents



SFAS No. 144 addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. The implementation of
SFAS No. 144 did not have a material impact on our consolidated financial
statements.

The
FASB issued SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities in June,
2002. SFAS No. 146 addresses
accounting and reporting for costs associated with exit and disposal activities
and supercedes EITF No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred,
as defined by the Statement. Under EITF 94-3, an exit cost was recognized at
the date an entity committed to an exit plan. Additionally, SFAS No. 146
provides that exit and disposal costs should be measured at fair value and that
the associated liability will be adjusted for changes in estimated cash flows.
The provisions of SFAS No. 146 are effective for exit and disposal activities
initiated after December 31, 2002.

Note 3  Balance Sheet Items

Inventories consisted of the following
(in thousands):

|                |  |          |        |              |  |   |        | 
|--------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                |  | June 30, |        | December 31,
|                |  | 2002     |        | 2001        
|                |  |          |        |             
|Raw materials   |  | $        | 6,261  |              |  | $ | 6,313  | 
|               
|               
|               
|               
|Work in process |  |          | 3,787  |              |  |   | 3,866  | 
|               
|               
|               
|               
|Finished goods  |  |          | 51,748 |              |  |   | 36,593 | 
|                |  |          |        |              |  |   |        | 
|                |  | $        | 61,796 |              |  | $ | 46,772 | 
|                |  |          |        |              |  |   |        | 

Prepaid expenses and other current assets consisted of the
following (in thousands):

|                             |  |          |        |              |  |   |        | 
|---------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                             |  | June 30, |        | December 31,
|                             |  | 2002     |        | 2001        
|                             |  |          |        |             
|Refundable taxes             |  | $        |       |              |  | $ | 7,426  | 
|                            
|                            
|                            
|                            
|Deferred income taxes        |  |          | 7,982  |              |  |   | 8,269  | 
|                            
|                            
|                            
|                            
|Value added taxes receivable |  |          | 2,830  |              |  |   | 2,803  | 
|                            
|                            
|                            
|                            
|Prepaid insurance            |  |          | 1,352  |              |  |   | 2,472  | 
|                            
|                            
|                            
|                            
|Prepaid expenses             |  |          | 3,862  |              |  |   | 1,329  | 
|                            
|                            
|                            
|                            
|Other current assets         |  |          | 5,983  |              |  |   | 2,422  | 
|                             |  |          |        |              |  |   |        | 
|                             |  | $        | 22,009 |              |  | $ | 24,721 | 
|                             |  |          |        |              |  |   |        | 

Accrued liabilities consisted of the
following (in
thousands):

|                                             |  |          |        |              |  |   |        | 
|-------------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                                             |  | June 30, |        | December 31,
|                                             |  | 2002     |        | 2001        
|                                             |  |          |        |             
|Accrued expenses                             |  | $        | 29,559 |              |  | $ | 20,466 | 
|                                            
|                                            
|                                            
|                                            
|Accrued restructuring expense                |  |          | 6,767  |              |  |   | 7,871  | 
|                                            
|                                            
|                                            
|                                            
|Accrued cooperative merchandising allowances |  |          | 9,114  |              |  |   | 5,318  | 
|                                            
|                                            
|                                            
|                                            
|Accrued
value added taxes payable            |  |          | 6,670  |              |  |   |       | 
|                                            
|                                            
|                                            
|                                            
|Income taxes payable                         |  |          | 347    |              |  |   | 500    | 
|                                             |  |          |        |              |  |   |        | 
|                                             |  | $        | 52,457 |              |  | $ | 34,155 | 
|                                             |  |          |        |              |  |   |        | 





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##### Table of Contents



Note 4   Goodwill and Other Intangible Assets

In July 2001, the FASB issued
 SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS No. 142 provides guidance on how
to account for goodwill and certain intangible assets after an acquisition is
completed. The most substantive change is that goodwill and other indefinite
life intangible assets can no longer be amortized but instead should be
periodically tested for impairment. Therefore, we no longer amortize goodwill
and certain other intangible assets, principally assembled workforce.

We have completed the first step of SFAS No. 142 transitional goodwill
impairment test and have determined that as of January 1, 2002 our goodwill had
not been impaired. In the future, we will perform the annual impairment test required by SFAS
No. 142 in the fourth quarter of each fiscal year.

Goodwill and other intangible assets (gross) consisted of the following
(in thousands):

|                                              |  |          |        |              |  |   |        | 
|--------------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                                              |  | June 30, |        | December 31,
|                                              |  | 2002     |        | 2001        
|                                              |  |          |        |             
|Goodwill                                      |  | $        | 43,020 |              |  | $ | 31,965 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets subject to
amortization     |  |          | 22,083 |              |  |   | 17,916 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets not subject to
amortization |  |          | 3,630  |              |  |   | 3,630  | 
|                                              |  |          |        |              |  |   |        | 
|                                              |  | $        | 68,733 |              |  | $ | 53,511 | 
|                                              |  |          |        |              |  |   |        | 

Accumulated amortization consisted of the following (in
thousands):

|                                              |  |          |       |              |  |   |       | 
|--------------------------------------------- |  | -------- | ----- | ------------ |  | - | ----- | 
|                                              |  | June 30, |       | December 31,
|                                              |  | 2002     |       | 2001        
|                                              |  |          |       |             
|Goodwill                                      |  | $        | 2,067 |              |  | $ | 2,067 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets subject to amortization     |  |          | 5,878 |              |  |   | 5,204 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets not subject to amortization |  |          | 475   |              |  |   | 475   | 
|                                              |  |          |       |              |  |   |       | 
|                                              |  | $        | 8,420 |              |  | $ | 7,746 | 
|                                              |  |          |       |              |  |   |       | 

Goodwill and other intangible assets, net of accumulated depreciation,
consisted of the following (in thousands):

|                                              |  |          |        |              |  |   |        | 
|--------------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                                              |  | June 30, |        | December 31,
|                                              |  | 2002     |        | 2001        
|                                              |  |          |        |             
|Goodwill                                      |  | $        | 40,953 |              |  | $ | 29,898 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets subject to
amortization     |  |          | 16,205 |              |  |   | 12,712 | 
|                                             
|                                             
|                                             
|                                             
|Intangible assets not subject to
amortization |  |          | 3,155  |              |  |   | 3,155  | 
|                                              |  |          |        |              |  |   |        | 
|                                              |  | $        | 60,313 |              |  | $ | 45,765 | 
|                                              |  |          |        |              |  |   |        | 

Intangible assets subject to amortization consist primarily of marketing
rights, patents, customer lists, core technology and trade names. Amortization
expense for intangible assets subject to amortization amounted to approximately
$331,000 and $516,000 for the three and six months ended June 30, 2002, respectively and
approximately $250,000 and $334,000 for the three and six months ended June 30,
2001, respectively.





---



##### Table of Contents



Amortization expense for the five succeeding fiscal years will amount to
approximately (in thousands):

|                         |  |              |       | 
|------------------------ |  | ------------ | ----- | 
|                         |  | Amortization
|Year ending December 31, |  | expense     
|                         |  |             
|2003                     |  | $            | 2,000 | 
|                        
|                        
|                        
|                        
|2004                     |  |              | 2,000 | 
|                        
|                        
|                        
|                        
|2005                     |  |              | 2,000 | 
|                        
|                        
|                        
|                        
|2006                     |  |              | 1,900 | 
|                        
|                        
|                        
|                        
|2007                     |  |              | 1,900 | 
|                         |  |              |       | 
|Total                    |  | $            | 9,800 | 
|                         |  |              |       | 

As required under SFAS No. 142, we have ceased to amortize goodwill and assembled workforce beginning January 1, 2002.
As of June 30, 2002, unamortized goodwill and assembled
workforce was approximately $44 million. This reduction in amortization effective January 1, 2002 may affect the
comparability of current period results of operations with prior periods. The
following table discloses what reported net income, including income tax
effects, and basic and diluted net income per share would have been in all
periods presented exclusive of amortization expense (in thousands,
except for per share amounts):

|                     |                                            |      |                    |      |                  |      |       |      |  |   |        |   |  |   |        |     | 
|-------------------- | ------------------------------------------ | ---- | ------------------ | ---- | ---------------- | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | --- | 
|                     |                                            |      | Three months ended |      | Six months ended
|                     |                                            |      | June 30,           |      | June 30,        
|                     |                                            |      |                    |      |                 
|Net income:          |                                            | 2002 |                    | 2001 |                  | 2002 |       | 2001
|                     |                                            |      |                    |      |                  |      |       |      | 
|Reported net income: |                                            | $    | 9,076              |      |                  | $    | 7,053 |      |  | $ | 19,169 |   |  | $ | 11,870 |    
|                    
|                    
|                    
|                    
|                     | Add back: Goodwill amortization            |      |                    |     |                  |      |       | 369  |  |   |        |  |  |   |        | 614 | 
|                    
|                    
|                    
|                    
|                     | Add back: Assembled workforce amortization |      |                    |     |                  |      |       | 96   |  |   |        |  |  |   |        | 161 | 
|                     |                                            |      |                    |      |                  |      |       |      |  |   |        |   |  |   |        |    
|Adjusted net income: |                                            | $    | 9,076              |      |                  | $    | 7,518 |      |  | $ | 19,169 |   |  | $ | 12,645 |    
|                     |                                            |      |                    |      |                  |      |       |      |  |   |        |   |  |   |        |    

|                            |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |     | 
|--------------------------- | -------------------------------- | ---- | ------------------ | ---- | ---------------- | ---- | ---- | ---- |  | - | ---- | - |  | - | ---- | --- | 
|                            |                                  |      | Three months ended |      | Six months ended
|                            |                                  |      | June 30,           |      | June 30,        
|                            |                                  |      |                    |      |                 
|Basic net income per share: |                                  | 2002 |                    | 2001 |                  | 2002 |      | 2001
|                            |                                  |      |                    |      |                  |      |      |      | 
|Reported net income:        |                                  | $    | 0.38               |      |                  | $    | 0.30 |      |  | $ | 0.81 |   |  | $ | 0.51 |    
|                           
|                           
|                           
|                           
|                            | Goodwill amortization            |      |                    |     |                  |      |      | .02  |  |   |      |  |  |   |      | .03 | 
|                           
|                           
|                           
|                           
|                            | Assembled workforce amortization |      |                    |     |                  |      |      |     |  |   |      |  |  |   |      |    | 
|                            |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |    
|Adjusted net income:        |                                  | $    | 0.38               |      |                  | $    | 0.32 |      |  | $ | 0.81 |   |  | $ | 0.54 |    
|                            |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |    

|                              |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |     | 
|----------------------------- | -------------------------------- | ---- | ------------------ | ---- | ---------------- | ---- | ---- | ---- |  | - | ---- | - |  | - | ---- | --- | 
|                              |                                  |      | Three months ended |      | Six months ended
|                              |                                  |      | June 30,           |      | June 30,        
|                              |                                  |      |                    |      |                 
|Diluted net income per share: |                                  | 2002 |                    | 2001 |                  | 2002 |      | 2001
|                              |                                  |      |                    |      |                  |      |      |      | 
|Reported net income:          |                                  | $    | 0.37               |      |                  | $    | 0.29 |      |  | $ | 0.78 |   |  | $ | 0.50 |    
|                             
|                             
|                             
|                             
|                              | Goodwill amortization            |      |                    |     |                  |      |      | .02  |  |   |      |  |  |   |      | .03 | 
|                             
|                             
|                             
|                             
|                              | Assembled workforce amortization |      |                    |     |                  |      |      |     |  |   |      |  |  |   |      |    | 
|                              |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |    
|Adjusted net income:          |                                  | $    | 0.37               |      |                  | $    | 0.31 |      |  | $ | 0.78 |   |  | $ | 0.53 |    
|                              |                                  |      |                    |      |                  |      |      |      |  |   |      |   |  |   |      |    





---



##### Table of Contents



Note 5   Comprehensive Income

Comprehensive income consisted of (in thousands):

|                                        |  |   |                    |  |                  |   |       |   |      |   |        |   |  |   |        |   | 
|--------------------------------------- |  | - | ------------------ |  | ---------------- | - | ----- | - | ---- | - | ------ | - |  | - | ------ | - | 
|                                        |  |   | Three months ended |  | Six months ended
|                                        |  |   | June 30,           |  | June 30,        
|                                        |  |   |                    |  |                 
|                                        |  |   | 2002               |  | 2001             |   | 2002  |   | 2001
|                                        |  |   |                    |  |                  |   |       |   |     
|Net income                              |  | $ | 9,076              |  |                  | $ | 7,053 |   |      | $ | 19,169 |   |  | $ | 11,870 |  
|                                        |  |   |                    |  |                  |   |       |   |      |   |        |   |  |   |        |  
|Foreign currency translation adjustment |  |   | 905                |  |                  |   | (61   | ) |      |   | (686   | ) |  |   | (898   | )
|                                       
|                                       
|                                       
|                                       
|Net unrealized losses on investments    |  |   |                   |  |                  |   | (39   | ) |      |   | (2     | ) |  |   | (17    | )
|                                        |  |   |                    |  |                  |   |       |   |      |   |        |   |  |   |        |  
|Other comprehensive gain (loss)         |  |   | 905                |  |                  |   | (100  | ) |      |   | (688   | ) |  |   | (915   | )
|                                        |  |   |                    |  |                  |   |       |   |      |   |        |   |  |   |        |  
|Comprehensive income                    |  | $ | 9,981              |  |                  | $ | 6,953 |   |      | $ | 18,481 |   |  | $ | 10,955 |  
|                                        |  |   |                    |  |                  |   |       |   |      |   |        |   |  |   |        |  

Note 6   Net Income Per Share

In accordance with SFAS No. 128, Earnings Per Share, basic earnings per
share is calculated using the weighted average number of common shares
outstanding during the period. Diluted earnings per share is calculated using
the weighted average number of common shares and dilutive potential common
shares outstanding during the period. Dilutive potential common shares
represent shares issuable upon the exercise of outstanding options and are
calculated using the treasury stock method.

Options to purchase 126,300 and 212,700 shares of our common stock for the
three and six months ended June 30, 2002, respectively, were not included in the computation
of diluted earnings per share because their exercise prices were greater than
the average market price of our common stock of $27.55 and $26.85 per share,
respectively. Options to purchase 925,180 and 1,373,290 shares of our common
stock for the three and six months ended June 30, 2001,
respectively, were not included in the
computation of diluted earnings per share because their exercise prices were
greater than the average market price of our common stock of $20.87 and $18.21
per share, respectively.

Note 7   Acquisition of the Contact Lens Business from Essilor International S. A.

On February 12, 2001, we acquired the contact lens business of Essilor
International (Compagnie Generale dOptique) S. A. (Essilor). We acquired
Essilors sales and distribution assets of the contact lens business in Europe
and the United States and manufacturing facilities in France, the United
Kingdom and the United States.

We have accounted for the acquisition using the purchase method.
Accordingly, the operating results of Essilor are
included in our operating results from February 1, 2001.

The $48,590,000 purchase price for the assets acquired and liabilities
assumed was comprised of $44,476,000 in cash and $4,114,000 in acquisition
costs. There were no contingent payments, pre-acquisition contingencies or
other commitments specified in the acquisition agreement.





---



##### Table of Contents



The purchase price has been allocated as follows (in
thousands):

|                                    |  |   |         |  
|----------------------------------- |  | - | ------- | -
|Goodwill                            |  | $ | 29,647  |  
|                                   
|                                   
|                                   
|                                   
|Inventory                           |  |   | 6,532   |  
|                                   
|                                   
|                                   
|                                   
|Accounts receivable                 |  |   | 6,127   |  
|                                   
|                                   
|                                   
|                                   
|Property and equipment              |  |   | 5,627   |  
|                                   
|                                   
|                                   
|                                   
|In-process research and development |  |   | 4,150   |  
|                                   
|                                   
|                                   
|                                   
|Assembled workforce                 |  |   | 3,630   |  
|                                   
|                                   
|                                   
|                                   
|Core technology                     |  |   | 3,490   |  
|                                   
|                                   
|                                   
|                                   
|Customer list                       |  |   | 2,700   |  
|                                   
|                                   
|                                   
|                                   
|Trade names                         |  |   | 1,650   |  
|                                   
|                                   
|                                   
|                                   
|Other assets                        |  |   | 649     |  
|                                   
|                                   
|                                   
|                                   
|Liabilities assumed                 |  |   | (15,612 | )
|                                    |  |   |         |  
|                                    |  | $ | 48,590  |  
|                                    |  |   |         |  

Included in the liabilities assumed are accruals for costs associated with
exiting certain activities and facilities of the acquired Essilor operations
that were considered duplicative. This includes accruals for severance costs
related to workforce reductions across all functions and exit costs associated
with exiting certain facilities, dismantling equipment and other miscellaneous
exit costs. Details of the exit costs and severance costs paid and charged
against the accrual are presented in the following table (in
thousands):

|                                |  |                   |       |          |  |             |        |                   |  |          |    |             |  |               |       |             |  |    |        |   |  |            |     |  |  |   |       | 
|------------------------------- |  | ----------------- | ----- | -------- |  | ----------- | ------ | ----------------- |  | -------- | -- | ----------- |  | ------------- | ----- | ----------- |  | -- | ------ | - |  | ---------- | --- |  |  | - | ----- | 
|                                |  | Accrual as        |       |          |  |             |        |                   |  |          |    | Accrual as  |  |               |       |             |  |    |        |   |  | Accrual as
|                                |  | of                |       |          |  |             |        | Translation       |  | of       |    |             |  |               |       | Translation |  | of
|                                |  | February 12, 2001 |       | Payments |  | Adjustments |        | December 31, 2001 |  | Payments |    | Adjustments |  | June 30, 2002
|                                |  |                   |       |          |  |             |        |                   |  |          |    |             |  |              
|Severance costs                 |  | $                 | 7,145 |          |  | $           | (501   | )                 |  | $        | 59 |             |  | $             | 6,703 |             |  | $  | (1,337 | ) |  | $          | 231 |  |  | $ | 5,597 | 
|                               
|                               
|                               
|                               
|Facility
costs                  |  |                   | 1,566 |          |  |             | (755   | )                 |  |          |   |             |  |               | 811   |             |  |    | (44    | ) |  |            | 36  |  |  |   | 803   | 
|                               
|                               
|                               
|                               
|Equipment and
dismantling costs |  |                   | 250   |          |  |             |       |                   |  |          |   |             |  |               | 250   |             |  |    | (4     | ) |  |            | 15  |  |  |   | 261   | 
|                               
|                               
|                               
|                               
|Miscellaneous costs             |  |                   | 107   |          |  |             |       |                   |  |          |   |             |  |               | 107   |             |  |    | (3     | ) |  |            | 2   |  |  |   | 106   | 
|                                |  |                   |       |          |  |             |        |                   |  |          |    |             |  |               |       |             |  |    |        |   |  |            |     |  |  |   |       | 
|Total                           |  | $                 | 9,068 |          |  | $           | (1,256 | )                 |  | $        | 59 |             |  | $             | 7871  |             |  | $  | (1,388 | ) |  | $          | 284 |  |  | $ | 6,767 | 
|                                |  |                   |       |          |  |             |        |                   |  |          |    |             |  |               |       |             |  |    |        |   |  |            |     |  |  |   |       | 

Management began formulating the plans to exit certain activities and
facilities of the acquired Essilor operations at the time of the acquisition
and expects to complete all actions under such plans by June 30, 2003.

The purchase price was more than the fair value of the net assets acquired
of approximately $18,943,000, resulting in goodwill of approximately
$29,647,000. Subsequent to December 31, 2001, goodwill and assembled workforce
have not been subject to amortization due to their infinite lives. Customer
lists, existing technology and trade names are included as components of
intangible assets and are being amortized on a straight-line basis over their
useful lives as listed in the table below:

|                  |  |          |  | 
|----------------- |  | -------- |  | 
|                  |  | Useful  
|Intangible Assets |  | Life    
|                  |  |         
|Core technology   |  | 10 years
|                 
|                 
|                 
|                 
|Trade names       |  | 12 years
|                 
|                 
|                 
|                 
|Customer lists    |  | 15 years

The total weighted average amortization period of
intangible assets subject to amortization is approximately 12 years.

As a result of the acquisition, we recorded acquired in-process research
and development totaling $4,150,000. This charge relates to Essilors Fully
Molded Toric Lenses and Photochromic Lenses, all of which were under
development on the date of the acquisition.





---



##### Table of Contents



These projects under development were valued on the premise of fair market value in continued
use employing a version of the income approach referred to as the discounted
cash flow approach. This methodology is based on discounting to present value,
at an appropriate risk-adjusted discount rate, both the expenditures to be made
to complete the development efforts and the operating cash flows which the
applications are projected to generate, less a return on the assets necessary
to generate the operating cash flows.

From these projected revenues, we deducted costs of sales, operating
costs, royalties and taxes to determine net cash flows. We estimated the
percentage of completion of the development efforts for each product by
comparing the estimated costs incurred and portions of the development
accomplished prior to the acquisition date, to the total estimated costs and
total development efforts required to fully develop these products. This
percentage was calculated for each product and was then applied to the net cash
flows that each product was projected to generate. These net cash flows were
then discounted to present values using appropriate risk-adjusted discount
rates in order to arrive at discounted fair values for each product.

The following table reflects unaudited pro forma combined results of
operations of the Company and Essilor on the basis that the acquisition had
taken place on January 1, 2001 (in thousands, except per share
data):

|                      |         |   |                  |      | 
|--------------------- | ------- | - | ---------------- | ---- | 
|                      |         |   | Six months ended
|                      |         |   | June 30, 2001   
|                      |         |   |                 
|Net sales             |         | $ | 109,392          |     
|                     
|                     
|                     
|                     
|Net income            |         | $ | 12,304           |     
|                     
|                     
|                     
|                     
|Net income per share: |         |   |                  |     
|                     
|                     
|                     
|                     
|                      | Basic   |   | $                | 0.53 | 
|                     
|                     
|                     
|                     
|                      | Diluted |   | $                | 0.52 | 

Note 8   Acquisition of Assets of Seiko Contactlens, Inc.

On March 11, 2002, we entered into an agreement to acquire certain assets
of Seiko Contactlens, Inc. (Seiko). The purchase was completed
on April 1, 2002. As part of the acquisition, we hired 74 Seiko sales and administrative personnel. Seiko had been our distributor
in Japan.

We have accounted for the acquisition under the purchase method of
accounting and accordingly the operating results of Seiko have been
included in our operating results from April 1, 2002.

The purchase price consisted of (in thousands):

|                                |  |   |        | 
|------------------------------- |  | - | ------ | 
|Exchange
of accounts receivable |  | $ | 11,215 | 
|                               
|                               
|                               
|                               
|Cash                            |  |   | 8,823  | 
|                               
|                               
|                               
|                               
|Acquisition costs               |  |   | 1,648  | 
|                                |  |   |        | 
|                                |  | $ | 21,686 | 
|                                |  |   |        | 

As
of June 30, 2002, the cash component of the purchase price was
classified as accrued liability as the cash was not transferred to
Seiko until August 1, 2002. The accounts receivable represents
amounts owed from Seiko and exchanged as part of the acquisition.





---



##### Table of Contents



We have preliminarily evaluated the assets and liabilities acquired and
have allocated the $21.7 million purchase price based on this evaluation, which
is subject to change. The preliminary purchase price allocation consisted of
(in thousands):

|                    |  |   |        |  
|------------------- |  | - | ------ | -
|Goodwill            |  | $ | 11,172 |  
|                   
|                   
|                   
|                   
|Customer lists      |  |   | 3,540  |  
|                   
|                   
|                   
|                   
|Favorable contracts |  |   | 330    |  
|                   
|                   
|                   
|                   
|Inventory           |  |   | 6,290  |  
|                   
|                   
|                   
|                   
|Accounts receivable |  |   | 3,910  |  
|                   
|                   
|                   
|                   
|Liabilities
assumed |  |   | (3,556 | )
|                    |  |   |        |  
|                    |  | $ | 21,686 |  
|                    |  |   |        |  

Goodwill has not been subject to amortization due to its infinite life.
Customer lists and favorable contracts are included as components of intangible
assets and are being amortized on a straight-line basis over their useful lives
as listed in the table below:

|                    |  |          |  | 
|------------------- |  | -------- |  | 
|                    |  | Useful  
|Intangible Assets   |  | Life    
|                    |  |         
|Customer lists      |  | 10 years
|                   
|                   
|                   
|                   
|Favorable contracts |  | 3 years 

The total weighted average amortization period of intangible assets
subject to amortization is approximately 8 years.

Note 9  New Credit Facility

On April 16, 2002, we completed a new $50 million credit facility, $40
million of which is provided by Comerica Bank and $10 million of which is
provided by The Northern Trust Company. Revolving loans under this
facility mature on April 16, 2005, and bear interest at 0.50% below Comericas prime rate or 1.00% to
1.50% above the eurodollar rate depending on our ratio of total funded
debt to earnings before interest and taxes plus non-cash charges. The loan
provides an option to convert any outstanding revolving loans not to exceed $40
million at the maturity date to a four-year term loan. The term loan, once
repaid, may not be reborrowed. This credit agreement contains covenants,
which, among other things, require us to maintain certain financial ratios. As
of June 30, 2002, there were $25 million of revolving loans outstanding under
this credit agreement and the interest rate was 2.95% and 4.25% on loan
balances of $19.5 million and $5.5 million, respectively.
This revolving loan is included in long-term liabilities in the
accompanying balance sheet as of June 30, 2002 based on our
ability and intent to defer payment beyond June 30, 2003. Borrowings under
this agreement are secured by a pledge of 100% of the outstanding common stock
of Ocular Sciences Puerto Rico and Sunsoft, Inc. and 65% of the outstanding
common stock of our Barbados and Canadian subsidiaries.

Note 10  1997 Directors Stock
Option Plan

In April 2002, our stockholders approved
an amendment to increase the number of shares of common stock
authorized and reserved for issuance under the 1997 Directors Stock
Option Plan by 300,000 (from 400,000 to 700,000 shares).





---



##### Table of Contents






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
condensed 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 our Annual Report on
Form 10-K for the year ended December 31, 2001.

This Quarterly Report on Form 10-Q contains 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. Such
statements relate to our future performance and plans, results of operations,
capital expenditures, acquisitions and operating improvements and costs. You
can identify forward-looking statements by the use of forward-looking
terminology such as believes, expects, may, will, should, seeks,
approximately, intends, plans, pro forma, estimates or anticipates
or the negative of these words and phrases or similar words or phrases. You can
also identify forward-looking statements by discussions of strategy, plans or
intentions. Forward-looking statements involve numerous risks and uncertainties
and you should not rely upon them as predictions of future events. There is no
assurance that the events or circumstances reflected in forward-looking
statements will be achieved or will occur. Forward-looking statements are
necessarily dependent on assumptions, data, or methods that may be incorrect or
imprecise and we may not be able to realize them. Factors that could cause
actual results and future events to differ materially from those set forth or
contemplated in the forward-looking statements include risks associated with
the overall economic environment, the integration of the Essilor and Seiko
Contactlens businesses, the impact of competitive products and pricing, product
demand both domestically and overseas, market receptiveness to various product
launches, higher than expected employee turnover, extended manufacturing
difficulties, customer bad debts, currency fluctuations, other risks of doing
business internationally and the other risks detailed in the sections entitled
Item 1, Business  Risk Factors, and Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations and elsewhere in our
Annual Report on Form 10-K for the year ended December 31, 2001, and from time
to time our other reports filed with the Securities and Exchange Commission. We
caution you not to place undue reliance on forward-looking statements, which
reflect our analysis only and speak as of the date of this report or as of the
dates indicated in the statements. Unless the context otherwise requires, the
terms we, us, and our refer to Ocular Sciences, Inc. and its
subsidiaries.

ACQUISITIONS

On February 12, 2001, we acquired the contact lens business of Paris-based
Essilor International (Compagnie Generale dOptique) S.A. (Essilor). We
acquired, among other things, the sales and distribution assets of the contact
lens business in Europe and the United States and a number of manufacturing
facilities in France, the United Kingdom and the United States. We accounted
for the acquisition using the purchase method. Accordingly, the operating
results of Essilor are included in our operating results from February 1, 2001.
The $48,590,000 purchase price for the acquired assets was comprised of
$44,476,000 in cash and $4,114,000 in acquisition costs. Acquired in-process
research and development costs of $4,150,000 were expensed in the year ended
December 31, 2001, as it was determined that the technology had no alternative
uses. There were no contingent payments, pre-acquisition contingencies or other
commitments specified in the acquisition agreement.





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##### Table of Contents



On March 11, 2002, we entered into an agreement to acquire certain assets
of Seiko Contactlens, Inc. (Seiko) for $21,686,000. The purchase
was completed on April 1, 2002. Seiko had been our distributor in
Japan. We have accounted for the acquisition under the purchase method of
accounting and accordingly the operating results of Seiko has been
included in our operating results from April 1, 2002. The $21,686,000
purchase price was comprised of an exchange of accounts receivable of $11,215,000, a
payable to Seiko of $8,823,000 (subsequently paid
on August 1, 2002) and acquisition costs of $1,648,000. There
were no contingent payments, pre-acquisition contingencies or other commitments
specified in the acquisition agreement.

Critical Accounting Policies

The Companys critical accounting policies are as follows:



| |  |  | revenue recognition;                                           
| | - |  | ---------------------------------------------------------------
|
| |  |  | estimating valuation allowances and accrued liabilities;       
|
| |  |  | accounting for income taxes;                                   
|
| |  |  | valuation of long-lived and intangible assets and goodwill; and
|
| |  |  | estimates inherent in purchase accounting.                     

Revenue Recognition

Revenue is recognized based on the terms of sale with the customer,
generally upon product shipment. We have established programs that, under
specified conditions, enable our customers to return product. We establish
liabilities for estimated returns and allowances at the time revenues are
recognized. In addition, accruals for customer discounts and rebates are
recorded when revenues are recognized. Amounts billed to customers in sale
transactions related to shipping and handling are classified as revenue. In
December 1999, the Securities and Exchange Commission (the SEC) issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements, which summarizes certain of the SECs views in applying generally
accepted accounting principles for revenue recognition in financial statements.
Our revenue recognition policies complied with the guidance contained in SAB
No. 101.

Estimating Valuation Allowances and Accrued Liabilities

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period.

Management specifically analyzes the aging of accounts receivable and also
analyzes historical bad debts, customer concentrations, customer
credit-worthiness, current economic trends and changes in customer payment
terms and sales returns when evaluating the adequacy of the allowance for
doubtful accounts and sales returns in any accounting period. Material
differences may result in the amount and timing of revenue and or expenses for
any period if management made different judgments or utilized different
estimates.





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##### Table of Contents



We assess the need for reserves on inventory based on monthly forward
projections of sales of products that are updated monthly. Inventories are
recorded at the lower of cost (first-in, first-out method) or market. Cost
includes material, labor and applicable factory overhead. Provision for
potentially obsolete or slow moving inventory is made based upon managements
analysis of inventory levels and forecasted sales. Once inventory is reserved,
the reserve can only be relieved by the subsequent sale or disposal of the
inventory.

Accounting for Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates recognized in income in the period that includes the enactment date.

In
preparing our condensed consolidated financial statements, we are required to
estimate our income taxes in each of the jurisdictions in which we operate.
This process involves estimating actual current tax liability together with
assessing temporary differences resulting from differing treatment of items,
such as deferred revenue, for tax and accounting purposes. These differences
result in deferred tax assets and liabilities, which are included within the
consolidated balance sheet. Significant management judgment is required in
determining the provision for income taxes, deferred tax assets and
liabilities. In the event that actual results differ from these estimates or we
adjust these estimates in future periods, our financial position and results of
operations could be materially impacted.

Valuation of Long-Lived and Intangible Assets and Goodwill

We periodically review long-lived assets and certain identifiable
intangible assets for impairment in accordance with SFAS No. 144, Accounting
for the Impairment or Disposal of Long-lived Assets. Goodwill
and certain intangible
assets, which are not subject to amortization, are periodically reviewed for impairment in
accordance with SFAS No. 142, Goodwill and Other
Intangible Assets .

For assets to be held and used, including acquired intangibles, we
initiate our review whenever events or changes in circumstances indicate that
the carrying amount of goodwill and intangible assets may not be recoverable.
Recoverability of an asset is measured by comparison of its carrying amount to
the expected future undiscounted cash flows (without interest charges) that the
asset is expected to generate. Any impairment to be recognized is measured by
the amount by which the carrying amount of the asset exceeds its fair market
value. Significant management judgment is required in the forecasting of future
operating results which are used in the preparation of projected discounted
cash flows and should different conditions prevail, material write downs of net
intangible assets and/or goodwill could occur. It is reasonably possible that
the estimates of anticipated future gross revenue, the remaining estimated
economic life of the products and technologies, or both, could differ from
those used to assess the recoverability of these costs and result in a
write-down of the carrying amount or a shortened life of acquired intangibles
in the future.

In January 2002, Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets became effective and as a result,
we have ceased to amortize goodwill and
assembled workforce beginning January 1, 2002. As of
June 30, 2002, unamortized goodwill and assembled workforce was
approximately $44 million. In lieu of amortization, we are
required to perform an initial impairment review of goodwill in 2002 and an
annual impairment review thereafter. We have completed the first step of SFAS
No. 142 transitional goodwill impairment test and have determined that as of
January 1, 2002 our goodwill had not been impaired. In the future, we will perform the annual
impairment test required by SFAS No. 142 in the fourth
quarter of each fiscal year.





---



##### Table of Contents



There can be no assurance that a material impairment charge will not be
recorded in the future.

Estimates Inherent in Purchase Accounting

Purchase accounting requires extensive use of accounting estimates and
judgments to allocate the purchase price to the fair market value of the assets
purchased and liabilities assumed. In our recording of the acquisition of the
assets of Essilor and Seiko Contactlens, values were assigned to identifiable intangible assets based on managements forecasts and projections that include
assumptions related to future revenues and cash flows generated from the
acquired assets.

The allocation of Essilors purchase price to in-process
research and development of $4.2 million
represented the estimated fair value based on risk-adjusted cash flows related
to the incomplete research and development projects. At February 12, 2001, the
development of these projects had not reached technological feasibility and the
research and development in progress had no alternative uses. Accordingly,
these costs were expensed in the statement of operations for the year ended
December 31, 2001.

New Accounting Pronouncements Adopted

See Note 2 and Note 4 to Notes to Condensed Consolidated Financial
Statements which are incorporated herein by reference.





---



##### Table of Contents



Results of Operations

Net Sales

|                             |  |                             |             |      |  |          |             |   |  |  |      |  
|---------------------------- |  | --------------------------- | ----------- | ---- |  | -------- | ----------- | - |  |  | ---- | -
|                             |  | Three Months Ended June 30, |             |      |  |         
|                             |  |                             |             |      |  |         
|                             |  | 2002                        |             | 2001 |  | % Change
|                             |  |                             |             |      |  |         
|U.S.                         |  | $                           | 32,279,000  |      |  | $        | 31,542,000  |   |  |  | 2.3  | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                             | 49.1        | %    |  |          | 57.2        | % |  |  |      |  
|                            
|                            
|                            
|                            
|International                |  | $                           | 33,398,000  |      |  | $        | 23,600,000  |   |  |  | 41.5 | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                             | 50.9        | %    |  |          | 42.8        | % |  |  |      |  
|                             |  |                             |             |      |  |          |             |   |  |  |      |  
|Net sales                    |  | $                           | 65,677,000  |      |  | $        | 55,142,000  |   |  |  | 19.1 | %
|                             |  |                             |             |      |  |          |             |   |  |  |      |  
|                            
|                             |  | Six Months Ended June 30,   |             |      |  |         
|                             |  |                             |             |      |  |         
|                             |  | 2002                        |             | 2001 |  | % Change
|                             |  |                             |             |      |  |         
|U.S.                         |  | $                           | 65,489,000  |      |  | $        | 61,339,000  |   |  |  | 6.8  | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                             | 51.8        | %    |  |          | 58.3        | % |  |  |      |  
|                            
|                            
|                            
|                            
|International                |  | $                           | 60,999,000  |      |  | $        | 43,854,000  |   |  |  | 39.1 | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                             | 48.2        | %    |  |          | 41.7        | % |  |  |      |  
|                             |  |                             |             |      |  |          |             |   |  |  |      |  
|Net sales                    |  | $                           | 126,488,000 |      |  | $        | 105,193,000 |   |  |  | 20.2 | %
|                             |  |                             |             |      |  |          |             |   |  |  |      |  

Net sales were $65.7 million and $126.5 million for the three and six
months ended June 30, 2002 compared to $55.1 million and $105.2 million for the
three and six months ended June 30, 2001, representing increases of 19.1% and
20.2%, respectively. The increase in net sales for the three months ended June
30, 2002 compared to the three months ended June 30, 2001 was due primarily to
the added revenues generated by the Seiko Contactlens acquisition, growing
sales of our new toric and color disposable lenses and growth in international
sales of disposable lenses marketed for daily, weekly and monthly replacement
regimens. The increase in net sales for the six months ended June 30, 2002
compared to the six months ended June 30, 2001 was due primarily to the same
reasons mentioned above as well as the additional month of revenues in 2002
from products acquired as part of the Essilor acquisition.

U.S. sales were $32.3 million and $65.5 million for the three and six
months ended June 30, 2002, compared to $31.5 million and $61.3 million for the
three and six months ended June 30, 2001, representing increases of 2.3% and
6.8%, respectively. The increase in U.S. net sales for the three and six
months ended June 30, 2002 compared to the three and six months ended June 30,
2001 was due primarily to the increase in sales of newly introduced toric and
colored lenses.

International sales were $33.4 million and $61.0 million for the three and
six months ended June 30, 2002, compared to $23.6 million and $43.9 million for
the three and six months ended June 30, 2001, representing increases of 41.5%
and 39.1%, respectively. The increase in international net sales was due
primarily to the strengthening of our position in the international
marketplace, the increased breadth of our product offerings, better inventory
availability, additional distribution channels in Europe and our increased
distribution network in the Japanese marketplace as a result of the Seiko
acquisition. In addition, the effect of exchange rates positively
impacted our revenues by approximately $600,000 in the quarter ended June 30,
2002 as compared to the quarter ended June 30, 2001. The net effect of
exchange rates did not materially impact our revenues for the six months ended
June 30, 2002 as compared to the six months ended June 30, 2001.





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##### Table of Contents



Gross Profit

|                             |  |                             |            |      |  |          |            |   |  |  |      |  
|---------------------------- |  | --------------------------- | ---------- | ---- |  | -------- | ---------- | - |  |  | ---- | -
|                             |  | Three Months Ended June 30, |            |      |  |         
|                             |  |                             |            |      |  |         
|                             |  | 2002                        |            | 2001 |  | % Change
|                             |  |                             |            |      |  |         
|Gross profit                 |  | $                           | 36,540,000 |      |  | $        | 32,136,000 |   |  |  | 13.7 | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                             | 55.6       | %    |  |          | 58.3       | % |  |  |      |  

|                             |  |                           |            |      |  |          |            |   |  |  |      |  
|---------------------------- |  | ------------------------- | ---------- | ---- |  | -------- | ---------- | - |  |  | ---- | -
|                             |  | Six Months Ended June 30, |            |      |  |         
|                             |  |                           |            |      |  |         
|                             |  | 2002                      |            | 2001 |  | % Change
|                             |  |                           |            |      |  |         
|Gross profit                 |  | $                         | 70,021,000 |      |  | $        | 60,534,000 |   |  |  | 15.7 | %
|                            
|                            
|                            
|                            
|As a percentage of net sales |  |                           | 55.4       | %    |  |          | 57.5       | % |  |  |      |  

Gross profit was $36.5 million and $70.0 million for the three and six
months ended June 30, 2002, compared to $32.1 million and $60.5 million for the
three and six months ended June 30, 2001, representing increases of 13.7% and
15.7%, respectively. As a percentage of sales, gross profit was 55.6% and
55.4% in the three and six months ended June 30, 2002 compared to 58.3% and
57.5% in the three and six months ended June 30, 2001. The increase in dollar
terms was primarily due to our growth in sales as discussed above. The decline
as a percentage of net sales was primarily due to unfavorable product and
geographic mix. This is mostly a result of an increase in sales of daily
disposable products at gross margins lower than other products.

We expect cost reductions resulting from improvements in our current
production processes to continue in the future. Specifically, we are in the
process of adding new automated production lines at our United Kingdom and
Puerto Rico facilities, which are designed to further reduce our per unit cost
of production over time, although such cost reductions may not be realized
until future periods.

Selling and Marketing Expenses

|                               |  |                             |            |      |  |          |            |   |  |  |      |  
|------------------------------ |  | --------------------------- | ---------- | ---- |  | -------- | ---------- | - |  |  | ---- | -
|                               |  | Three Months Ended June 30, |            |      |  |         
|                               |  |                             |            |      |  |         
|                               |  | 2002                        |            | 2001 |  | % Change
|                               |  |                             |            |      |  |         
|Selling and marketing expenses |  | $                           | 14,676,000 |      |  | $        | 11,451,000 |   |  |  | 28.2 | %
|                              
|                              
|                              
|                              
|As a percentage of net sales   |  |                             | 22.3       | %    |  |          | 20.8       | % |  |  |      |  

|                               |  |                           |            |      |  |          |            |   |  |  |      |  
|------------------------------ |  | ------------------------- | ---------- | ---- |  | -------- | ---------- | - |  |  | ---- | -
|                               |  | Six Months Ended June 30, |            |      |  |         
|                               |  |                           |            |      |  |         
|                               |  | 2002                      |            | 2001 |  | % Change
|                               |  |                           |            |      |  |         
|Selling and marketing expenses |  | $                         | 24,813,000 |      |  | $        | 20,094,000 |   |  |  | 23.5 | %
|                              
|                              
|                              
|                              
|As a percentage of net sales   |  |                           | 19.6       | %    |  |          | 19.1       | % |  |  |      |  

Sales and marketing expenses were $14.7 million and $24.8 million for the
three and six months ended June 30, 2002 as compared to $11.5 million and $20.1
million for the three and six months ended June 30, 2001, representing
increases of 28.2% and 23.5%, respectively. As a percentage of net sales,
selling and marketing expenses were 22.3% and 19.6% in the three and six months
ended June 30, 2002 compared to 20.8% and 19.1% in the three and six months
ended June 30, 2001. The increase in sales and marketing expenses were due
primarily to the additional sales expenses in Japan, increases in expenditures
related to new product launches in the United States and Canada and promotional
programs.





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##### Table of Contents



General and Administrative Expenses

|                                    |  |                             |            |      |  |          |           |   |  |  |     |  
|----------------------------------- |  | --------------------------- | ---------- | ---- |  | -------- | --------- | - |  |  | --- | -
|                                    |  | Three Months Ended June 30, |            |      |  |         
|                                    |  |                             |            |      |  |         
|                                    |  | 2002                        |            | 2001 |  | % Change
|                                    |  |                             |            |      |  |         
|General and administrative expenses |  | $                           | 10,199,000 |      |  | $        | 9,467,000 |   |  |  | 7.7 | %
|                                   
|                                   
|                                   
|                                   
|As a percentage of net sales        |  |                             | 15.5       | %    |  |          | 17.2      | % |  |  |     |  

|                                    |  |                           |            |      |  |          |            |   |  |  |      |  
|----------------------------------- |  | ------------------------- | ---------- | ---- |  | -------- | ---------- | - |  |  | ---- | -
|                                    |  | Six Months Ended June 30, |            |      |  |         
|                                    |  |                           |            |      |  |         
|                                    |  | 2002                      |            | 2001 |  | % Change
|                                    |  |                           |            |      |  |         
|General and administrative expenses |  | $                         | 20,231,000 |      |  | $        | 17,464,000 |   |  |  | 15.8 | %
|                                   
|                                   
|                                   
|                                   
|As a percentage of net sales        |  |                           | 16.0       | %    |  |          | 16.6       | % |  |  |      |  

General and administrative expenses were $10.2 million and $20.2 million
for the three and six months ended June 30, 2002 as compared to $9.5 million
and $17.5 million for the three and six months ended June 30, 2001,
representing increases of 7.7% and 15.8%, respectively. As a percentage of net
sales, general and administrative expenses were 15.5% and 16.0% in the three
and six months ended June 30, 2002 compared to 17.2% and 16.6% in the three and
six months ended June 30, 2001. The decrease in general and administrative
expenses in 2002 as a percent of sales was primarily due to the better leverage associated with the increased costs arising from the new entities
acquired in the Essilor acquisition. We believe that when net sales increase,
our general and administrative expenses will continue to increase in absolute
dollars, but will continue to decrease as a percentage of net sales.

Research and Development Expenses

|                                  |  |                             |           |      |  |          |           |   |  |  |       |   
|--------------------------------- |  | --------------------------- | --------- | ---- |  | -------- | --------- | - |  |  | ----- | --
|                                  |  | Three Months Ended June 30, |           |      |  |         
|                                  |  |                             |           |      |  |         
|                                  |  | 2002                        |           | 2001 |  | % Change
|                                  |  |                             |           |      |  |         
|Research and development expenses |  | $                           | 1,346,000 |      |  | $        | 1,699,000 |   |  |  | (20.8 | %)
|                                 
|                                 
|                                 
|                                 
|As a percentage of net sales      |  |                             | 2.0       | %    |  |          | 3.1       | % |  |  |       |   

|                                  |  |                           |           |      |  |          |           |   |  |  |       |   
|--------------------------------- |  | ------------------------- | --------- | ---- |  | -------- | --------- | - |  |  | ----- | --
|                                  |  | Six Months Ended June 30, |           |      |  |         
|                                  |  |                           |           |      |  |         
|                                  |  | 2002                      |           | 2001 |  | % Change
|                                  |  |                           |           |      |  |         
|Research and development expenses |  | $                         | 2,364,000 |      |  | $        | 3,240,000 |   |  |  | (27.0 | %)
|                                 
|                                 
|                                 
|                                 
|As a percentage of net sales      |  |                           | 1.9       | %    |  |          | 3.1       | % |  |  |       |   

Research and development expenses were $1.3 million and $2.4 million for
the three and six months ended June 30, 2002 as compared to $1.7 million and
$3.2 million for the three and six months ended June 30, 2001, representing
decreases of 20.8% and 27.0%, respectively. As a percentage of net sales,
research and development expenses were 2.0% and 1.9% in the three and six
months ended June 30, 2002 compared to 3.1% in the three and six months ended
June 30, 2001. Research and development expenses decreased in dollars and as a
percentage of net sales due primarily to the timing of new product development
projects.





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##### Table of Contents



Interest and Other Income, Net

|                               |  |                             |         |      |  |          |        |   |  |  |        |  
|------------------------------ |  | --------------------------- | ------- | ---- |  | -------- | ------ | - |  |  | ------ | -
|                               |  | Three Months Ended June 30, |         |      |  |         
|                               |  |                             |         |      |  |         
|                               |  | 2002                        |         | 2001 |  | % Change
|                               |  |                             |         |      |  |         
|Interest and other income, net |  | $                           | 749,000 |      |  | $        | 25,000 |   |  |  | 2896.0 | %
|                              
|                              
|                              
|                              
|As a percentage of net sales   |  |                             | 1.1     | %    |  |          | 0.0    | % |  |  |        |  

|                               |  |                           |         |      |  |          |         |   |  |  |      |  
|------------------------------ |  | ------------------------- | ------- | ---- |  | -------- | ------- | - |  |  | ---- | -
|                               |  | Six Months Ended June 30, |         |      |  |         
|                               |  |                           |         |      |  |         
|                               |  | 2002                      |         | 2001 |  | % Change
|                               |  |                           |         |      |  |         
|Interest and other income, net |  | $                         | 764,000 |      |  | $        | 455,000 |   |  |  | 67.9 | %
|                              
|                              
|                              
|                              
|As a percentage of net sales   |  |                           | 0.6     | %    |  |          | 0.8     | % |  |  |      |  

Interest and other income was $749,000 and $764,000 for the three and six
months ended June 30, 2002 as compared to $25,000 and $455,000 for the three
and six months ended June 30, 2001, representing an increase of 2,896.0% and
67.9%, respectively.

The increase in interest and other income resulted primarily from the
increase in net foreign exchange gains realized on foreign-denominated
receivables and interest received on an income tax refund in the second quarter of
2002, offset partially by an increase in interest expense as a result of larger
amounts of outstanding debt and a decrease in available cash balances arising
from the acquisition of the Essilor contact lens business.

Provision for Income Taxes

|                           |  |                             |           |      |  |          |           |   |  |  |       |   
|-------------------------- |  | --------------------------- | --------- | ---- |  | -------- | --------- | - |  |  | ----- | --
|                           |  | Three Months Ended June 30, |           |      |  |         
|                           |  |                             |           |      |  |         
|                           |  | 2002                        |           | 2001 |  | % Change
|                           |  |                             |           |      |  |         
|Provision
for income taxes |  | $                           | 1,992,000 |      |  | $        | 2,491,000 |   |  |  | (20.0 | %)
|                          
|                          
|                          
|                          
|Effective tax rate         |  |                             | 18.0      | %    |  |          | 26.1      | % |  |  |       |   

|                           |  |                           |           |      |  |          |           |   |  |  |     |  
|-------------------------- |  | ------------------------- | --------- | ---- |  | -------- | --------- | - |  |  | --- | -
|                           |  | Six Months Ended June 30, |           |      |  |         
|                           |  |                           |           |      |  |         
|                           |  | 2002                      |           | 2001 |  | % Change
|                           |  |                           |           |      |  |         
|Provision
for income taxes |  | $                         | 4,208,000 |      |  | $        | 4,171,000 |   |  |  | 0.9 | %
|                          
|                          
|                          
|                          
|Effective tax rate         |  |                           | 18.0      | %    |  |          | 26.0      | % |  |  |     |  

Income taxes were $2.0 million and $4.2 million for the three and six
months ended June 30, 2002 as compared to $2.5 million and $4.2 million for the
three and six months ended June 30, 2001, representing a decrease of 20.0% and
increase of 0.9%, respectively.

Our
effective tax rate decreased from 26.1% and 26.0% in the three and
six months ended June 30, 2001, respectively, to 18.0%
in the comparable 2002 periods primarily due to increases in sales and income
in our offshore subsidiary, which has a lower effective tax rate. We
continue to receive an industrial tax exemption from United States taxation
with respect to the earnings of our Puerto Rican operations. We anticipate we
will continue to benefit from the favorable effect of the Puerto Rican
industrial tax exemption through 2002, with limited exemption during the
transition period from 2002 through 2005, when the benefit will expire under
the current provisions of the United States Internal Revenue Code.





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##### Table of Contents



Liquidity and Capital Resources

At June 30, 2002, we had working capital of $86.6 million, including cash
and cash equivalents of $18.8 million compared to working capital of $64.7
million at December 31, 2001, including cash and cash equivalents of $7.8
million.

Cash
provided by operating activities was $16.6 million for the six months
ended June 30, 2002 compared to $11.6 million in the six months ended June 30,
2001. Cash provided by operating activities in the six months ended June 30,
2002 represented net income for the period ($19.2 million) adjusted for the
non-cash impact of depreciation and amortization ($10.3 million), offset by the
use of cash for operating assets and liabilities ($13.9 million), primarily
inventories and accounts receivable. Cash provided by operating activities in
the six months ended June 30, 2001 represented net income for the period ($11.9
million) adjusted for the non-cash impact of depreciation and amortization
($8.7 million) and acquired in-process research and development ($4.2 million),
offset by the use of cash for operating assets and liabilities ($12.9 million).

Cash used in investing activities for the six months ended June 30, 2002
was $20.7 million, which primarily represented purchases of property and
equipment ($20.6 million). Cash used in investing activities for the six
months ended June 30, 2001 was $53.2 million, which represented the payment for
the Essilor acquisition ($48.3 million), purchases of property and equipment
($15.1 million) offset against sales and maturities of investments ($10.6
million).

In the six months ended June 30, 2002, cash provided by financing
activities was $15.8 million and in the six months ended June 30, 2001, cash
used in financing activities was $0.3 million. During the six months ended
June 30, 2002, financing activities were primarily net borrowings under credit
facilities of $12.8 million and proceeds from the exercise of employee stock
options of $3.2 million. During the six months ended June 30, 2001, financing
activities were primarily net payments under credit facilities and capital
lease obligations of $1.1 million offset against proceeds from exercises of
employee stock options of $0.7 million.

The
effect of foreign currency exchange rate changes on cash were losses of
$0.7 million in the six months ended June 30, 2002. The effect of foreign
currency exchange rate changes on cash were losses of $1.0 million in the six
months ended June 30, 2001.

These activities resulted in increases in cash and cash equivalents of
$11.0 million in the six months ended June 30, 2002 and decreases in cash and
cash equivalents of $42.9 million in the six months ended June 30, 2001.

In addition to cash, cash equivalents and short and long-term investments,
we had a credit facility with Comerica Bank  California. The Comerica credit
agreement provided for up to $20.0 million of revolving loans to us, which was
retired on April 16, 2002 and replaced with a new credit facility. The interest
on the loan was Comerica Banks base rate or a margin of 1.00% to 1.25% above
the banks eurodollar rate depending on our ratio of total liabilities to
tangible net worth. This credit facility was paid off in full in April 2002
with the completion of a new $50 million credit facility.

On April 16, 2002, we completed a new $50 million credit facility, $40
million of which is provided by Comerica Bank and $10 million of
which is provided by The
Northern Trust Company. Revolving loans under this facility mature on April 16, 2005, and
bear interest at 0.50% below Comericas prime rate or 1.00% to 1.50% above the
eurodollar rate depending on our ratio of total funded debt to earnings
before interest and taxes plus non-cash charges. The loan provides an option
to convert any outstanding revolving loans not to exceed $40 million at the
maturity date to a four-year term loan. The term loan, once





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##### Table of Contents



repaid, may not be reborrowed. This credit agreement contains covenants,
which, among other things, require us to maintain certain financial ratios. As
of June 30, 2002, there were $25 million of revolving loans outstanding under
this credit agreement and the interest rate was 2.95% and 4.25% on loan
balances of $19.5 million and $5.5 million, respectively.
This revolving loan is included in long-term liabilities on the
accompanying balance sheet as of June 30, 2002 based on our
ability and intent to defer payment beyond June 30, 2003. Borrowings under this
agreement are secured by a pledge of 100% of the outstanding common stock of
Ocular Sciences Puerto Rico and Sunsoft, Inc. and 65% of the outstanding common
stock of our Barbados and Canadian subsidiaries.

We believe that our current cash and cash equivalents, borrowings
available under our credit facilities and anticipated net cash flow from
operations will be sufficient to meet our anticipated cash needs for working
capital, contractual commitments and capital expenditures for the foreseeable
future.




Item 3. Quantitative And Qualitative Disclosures About Market Risk

We have debt outstanding, which is carried at cost, with an interest rate
referenced to market rates. Interest rate changes generally do not affect the
fair value of variable rate debt instruments, but do impact future earnings and
cash flows. As of June 30, 2002, we had $25 million in revolving loans
outstanding under the new Comerica Bank credit agreement. See terms of loan
agreement in Liquidity and Capital Resource section in Item 2. Holding debt
levels constant, a one-percentage point increase in interest rates would
decrease earnings and cash flows for variable rate debt by approximately
$250,000 in the year ended December 31, 2002.

We operate multiple foreign subsidiaries that manufacture and / or sell
our products worldwide. As a result, our earnings, cash flows and financial
position are exposed to foreign currency risk from foreign-currency-denominated
receivables and payables, forecasted sales transactions, and net investments in
certain foreign operations. We have not normally engaged in foreign currency
hedging activities, except for a forward contract covering Yen payments for the
acquisition of the Seiko Contactlens, Inc. business. We continue to evaluate
the potential use of such activities on a more regular basis.

Unless otherwise noted above, there has been no additional material change
in our assessment of our sensitivity to market risk from the information set
forth in Item 7A, Quantitative and Qualitative Disclosures About Market Risk
in its Annual Report on Form 10-K for the fiscal year ended December 31, 2001.





---



##### Table of Contents






Part II  OTHER INFORMATION




Item 4. Submission of Matters to a Vote of Security Holders

We held our Annual Meeting of Stockholders on April 25, 2002. Three
matters were voted upon. A description of each matter and a tabulation of
votes are as follows:



|1. |  | To elect seven (7) directors, each to serve until the next annual
meeting of stockholders and until his successor has been elected and
qualified or until his earlier resignation or removal.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The stockholders votes with respect to the election of directors were
as follows:                                                                                                           

|                       |  |       |            |          |  |           |           |           |  |        |   |  |  |  |   | 
|---------------------- |  | ----- | ---------- | -------- |  | --------- | --------- | --------- |  | ------ | - |  |  |  | - | 
|                       |  | Votes
|                       |  |      
|                       |  |       |            |          |  | Against   |           |           |  |        |   |  |  | 
|                       |  |       |            |          |  | or        |           | Votes     |  | Broker
|                       |  | For   |            | Withheld |  | Abstained |           | Non-Votes
|                       |  |       |            |          |  |           |           |          
|John D. Fruth          |  |       | 20,000,957 |          |  |           | 329,355   |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|Edgar J. Cummins       |  |       | 19,943,557 |          |  |           | 386,755   |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|Stephen J. Fanning     |  |       | 18,849,557 |          |  |           | 1,480,755 |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|Terence M. Fruth       |  |       | 20,000,957 |          |  |           | 329,355   |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|William R. Grant       |  |       | 20,011,037 |          |  |           | 319,275   |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|Terrance H. Gregg      |  |       | 20,011,137 |          |  |           | 319,175   |           |  |        |  |  |  |  |  | 
|                      
|                      
|                      
|                      
|Francis R. Tunney, Jr. |  |       | 20,011,037 |          |  |           | 319,275   |           |  |        |  |  |  |  |  | 



|2. |  | To amend our 1997 Directors Stock Option Plan to increase the number
of shares of common stock that may be issued upon the exercise of
options granted under the plan by 300,000 (from 400,000 shares to
700,000 shares).
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The stockholders votes with respect to the amendment of our 1997
Directors Stock Option Plan were as follows:                                                                                                           

|           |  |          |           |           |  |           |           |  |  |  |   | 
|---------- |  | -------- | --------- | --------- |  | --------- | --------- |  |  |  | - | 
|Votes     
|          
|           |  | Against  |           |           |  |           |           |  |  | 
|           |  | or       |           | Votes     |  | Broker   
|For        |  | Withheld |           | Abstained |  | Non-Votes
|           |  |          |           |           |  |          
|17,842,108 |  |          | 1,405,583 |           |  |           | 1,082,621 |  |  |  |  | 



|3. |  | To ratify the selection of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2002. 
|-- |  | --------------------------------------------------------------------------------------------------------------
|  
|   |  | The stockholders votes with respect to the selection of KPMG LLP as
our independent auditors were as follows:

|           |  |          |         |           |  |           |        |  |  |  |   | 
|---------- |  | -------- | ------- | --------- |  | --------- | ------ |  |  |  | - | 
|Votes     
|          
|           |  | Against  |         |           |  |           |        |  |  | 
|           |  | or       |         | Votes     |  | Broker   
|For        |  | Withheld |         | Abstained |  | Non-Votes
|           |  |          |         |           |  |          
|20,179,352 |  |          | 133,562 |           |  |           | 17,398 |  |  |  |  | 





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##### Table of Contents






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 14, 2002 |  | /s/ Sidney B. Landman
Sidney B. Landman
Vice-President Finance,
Chief Financial Officer,
Treasurer and Secretary
(Duly Authorized Officer and Principal
Financial and Accounting Officer)