**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**Washington,D.C. 20549

**FORM 10-Q**

 (Mark One)

x  QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly periodended June 30, 2003

or

  TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition periodfrom ____ to _____

Commission File No. 0-7955

MENTOR CORPORATION (Exact Name of Registrant as Specified in its Charter)

                                                              Minnesota                                                                             41-0950791                                                 (State or other jurisdiction of                                                 (IRS Employer Identification No.)                                                    incorporation or organization)

201 Mentor Drive, SantaBarbara, California 93111(Address of Principal Executive Offices) (Zip Code)Registrant's telephone number including area code:  805/879-6000

               Indicate by check mark whether the Registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or such shorter period that the Registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes x    No  o

                Indicate by check mark whether theRegistrant is an accelerated filer (as defined in Rule 12b-2 of the ExchangeAct).  Yes x   No o

As of August 13, 2003 there were approximately 46,421,778Common Shares, par value $.10 outstanding.

----

**MENTOR CORPORATION**

# INDEX

| Part I. Financial Information  |
|-------------------------------------|
| Item  1.                            | Consolidated  Financial Statements (unaudited)  |
|                                     | Consolidated  Balance Sheets - June 30, 2003 and March 31, 2003  |
|                                     | Consolidated  Statements of Income - Three Months Ended June 30, 2003 and 2002 |
|                                     | Condensed  Consolidated Statements of Cash Flows -   Three Months Ended June 30, 2003 and 2002 |
|                                     | Notes  to Condensed Consolidated Financial Statements - June 30, 2003 |
| Item  2.                            | Management's  Discussion and Analysis of Results of Operations and Financial Condition |
| Item  3.                            | Quantitative  and Qualitative Disclosures About Market Risk |
| Item  4.                            | Controls  and Procedures |
| Part II. Other Information     |
| Item  1.                            | Legal  Proceedings  |
| Item  2.                            | Changes  in Securities  |
| Item  3.                            | Defaults  upon Senior Securities  |
| Item  4.                            | Submission  of Matters to a Vote of Security Holders  |
| Item  5.                            | Other  Information  |
| Item  6.                            | **Exhibits and  Reports on Form 8-K**

**(a)    Exhibits  (b)    Reports on Form 8-K**  |

----

# PART I - FINANCIAL INFORMATION

**Item 1.  Consolidated FinancialStatements**
| Mentor CorporationConsolidated Balance Sheets(Unaudited)   |
|------------------------------------------------------------|
| (in thousands)                                             | **June 30, 2003** | March 31, 2003 |
| **Assets**                                                 | ** ** | ** ** |
| Current assets:                                            | ** ** | ** ** |
|   Cash and cash equivalents                      | **$        111,315** | $        105,840 |
|   Marketable securities                          | **   229** |    184 |
|   Accounts receivable, net                       | **85,690** | 79,784 |
|   Inventories                                    | **63,469** | 61,269 |
|   Deferred income taxes                          | **16,024** | 15,253 |
|   Prepaid expenses and other                     | **12,153** | 10,858 |
| Total current assets                                       | **288,880** | 273,188 |
|                                                       | ** ** |   |
| Property and equipment, net                                | **71,766** | 68,671 |
| Intangible assets, net                                     | **36,048** | 35,570 |
| Goodwill, net                                              | **17,124** | 16,520 |
| Long-term marketable securities and  investments           | **13,867** | 3,862 |
| Other assets                                               | **490** | 277 |
|                                                       | **$        428,175** | $        398,088 |
| See notes to condensed  consolidated financial statements. | ** ** |   |

----

| Mentor Corporation  Consolidated Balance Sheets  (Unaudited)                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------|
| (in thousands)                                                                                                                         | **June  30,   2003** | March 31, 2003 |
| **Liabilities and shareholders' equity**                                                                                               | ** ** |   |
| Current liabilities:                                                                                                                   | ** ** |   |
|   Accounts payable                                                                                                           | **$      28,756 ** | $    26,759  |
|   Warranty and related reserves                                                                                              | **20,995 ** |   19,989  |
|   Accrued compensation                                                                                                       | **14,788 ** | 18,753  |
|   Short-term bank borrowings                                                                                                 | **10,595 ** | 8,176  |
|   Sales returns                                                                                                              | **8,871 ** | 10,455  |
|   Income taxes payable                                                                                                       | **2,578 ** | 453  |
|   Current portion of purchase  price related to acquired         technologies and acquisitions | **5,689 ** | 5,698  |
|   Dividends payable                                                                                                          | **933 ** | 925  |
|   Accrued royalties                                                                                                          | **539 ** | 770  |
|   Other                                                                                                                      | **15,125 ** | 13,214  |
| Total current liabilities                                                                                                              | **108,869 ** | 105,192  |
| Deferred income taxes                                                                                                                  | **2,316 ** | 2,216  |
| Long-term accrued liabilities                                                                                                          | **        14,400 ** | 13,970  |
|                                                                                                                                        | ** ** |   |
| Commitments and contingencies                                                                                                          | ** ** |   |
|                                                                                                                                   | ** ** |   |
| Shareholders' equity:                                                                                                                  | ** ** |   |
|   Common Stock, $.10 par value:                                                                                              | ** ** |   |
|     Authorized -  150,000,000 shares; Issued and outstanding--                                                     | ** ** |   |
|     46,664,737 shares  at June 30, 2003;                                                                           | ** ** |   |
|     46,237,324 shares  at March 31, 2003;                                                                          | **4,666 ** | 4,624  |
|   Capital in excess of par value                                                                                             | **5,586 ** | **-   ** |
|   Foreign currency translation  adjustments                                                                                  | **11,542 ** | 6,510  |
|   Net unrealized gains (losses)  on securities                                                                               | **9 ** | (112) |
|   Retained earnings                                                                                                          | **280,787 ** | 265,688  |
|                                                                                                                                   | **302,590 ** | 276,710  |
|                                                                                                                                   | **$     428,175 ** | $    398,088  |
| See notes to condensed  consolidated financial statements.                                                                             |   |   |

----

| Mentor  Corporation  Consolidated Statements of Income  Three Months Ended June 30, 2003 and 2002  (Unaudited) |
|----------------------------------------------------------------------------------------------------------------|
|                                                                                                           | Three Months Ended  June 30, |
| (in thousands, except per share data)                                                                          | **2003** | 2002 |
| Net sales                                                                                                      | **$      105,106 ** | $       97,677  |
|                                                                                                                | ** ** |   |
| Costs and expenses:                                                                                            | ** ** |   |
|    Cost of sales                                                                                          | **39,373 ** | 38,245  |
|    Selling, general, and administrative                                                                   | **35,679 ** | 31,885  |
|    Research and development                                                                               | **7,543 ** | 5,374  |
|                                                                                                           | **82,595 ** | 75,504  |
|                                                                                                           | ** ** |   |
| Operating income                                                                                               | **22,511 ** | 22,173  |
|    Interest expense                                                                                       | **(161)** | (301) |
|    Interest income                                                                                        | **396 ** | 560  |
|    Other income, net                                                                                      | **676 ** | 1,047  |
| Income before income taxes                                                                                     | **23,422 ** | 23,479  |
| Income taxes                                                                                                   | **7,389 ** | 6,730  |
| Net income                                                                                                     | **$        16,033 ** | $       16,749  |
|                                                                                                                | ** ** |   |
| Basic earnings per share                                                                                       | **$            0.35 ** | $           0.36  |
| Diluted earnings per share                                                                                     | **$            0.33 ** | $           0.34  |
| Dividends per share                                                                                            | **$            0.02 ** | $         0.015  |
|                                                                                                                | ** ** |   |
| See notes to condensed  consolidated financial statements.                                                     |   |   |

----

| Mentor  Corporation  Consolidated Statements of Cash Flows  Three Months Ended June 30, 2003 and 2002  (Unaudited) |
|--------------------------------------------------------------------------------------------------------------------|
| (in thousands)                                                                                                     | **2003** | 2002 |
| **Cash From Operating Activities:**                                                                                | ** ** |   |
| Net income                                                                                                         | **$    16,033 ** | $    16,749  |
| Adjustments to derive cash flows from  operating activities:                                                       | ** ** |   |
|   Depreciation                                                                                           | **3,046 ** | 2,719  |
|   Amortization                                                                                           | **761 ** | 996  |
|   Deferred income taxes                                                                                  | **(1,096)** | (173) |
|   Tax benefit from exercise of  stock options                                                            | **1,756 ** | 980  |
|   Loss (gain) on sale of assets                                                                          | **80 ** | (465) |
|   Imputed interest on long-term  liabilities                                                             | **78 ** | 164  |
|   Foreign currency transaction  (gain) loss                                                              | **(617)** | (173) |
| Changes in operating assets and  liabilities:                                                                      | ** ** |   |
|     Accounts  receivable                                                                       | **(4,288)** | (2,154) |
|     Inventories and  other current assets                                                      | **(714)** | 3,493  |
|     Accounts payable  and accrued liabilities                                                  | **(401)** | 3,604  |
|     Income taxes  payable                                                                      | **1,977 ** | 1,433  |
| Net cash provided by operating activities                                                                          | **16,615 ** | 27,173  |
| **Cash From Investing Activities:**                                                                                | ** ** |   |
| Purchases of property and equipment                                                                                | **(3,950)** | (3,105) |
| Purchases of intangibles                                                                                           | **(1,256)** | (342) |
| Purchases of marketable securities                                                                                 | **(16,018)** | (422) |
| Sales of marketable securities                                                                                     | **5,007 ** | 1,647  |
| Acquisitions, net of cash acquired                                                                                 | **- ** | (10,603) |
| Proceeds from sale of property, equipment  and intangibles                                                         | **- ** | 500  |
| Net cash used for investing activities                                                                             | **(16,217)** | (12,325) |
| **Cash From Financing Activities:**                                                                                | ** ** |   |
| Proceeds from exercise of stock options                                                                            | **3,873 ** | 2,736  |
| Dividends paid                                                                                                     | **(925)** | (704) |
| Borrowings (repayments) under line of  credit agreements, net                                                      | **1,903 ** | (685) |
| Net cash used for financing activities                                                                             | **4,851 ** | 1,347  |
| Effect of currency exchange rates on cash  and cash     equivalents                                      | **226 ** | 710  |
| Increase (decrease) in cash and cash  equivalents                                                                  | **5,475 ** | 16,905  |
| Cash and cash equivalents at beginning of  year                                                                    | **105,840 ** | 60,398  |
| Cash and cash equivalents at end of period                                                                         | **$   111,315 ** | $     77,303  |

----

**MENTORCORPORATIONNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSJune 30, 2003**

**NoteA - Business Activity**

Mentor Corporation, (the "Company") was incorporatedin April 1969.  The Company develops,manufactures and markets a broad range of products for the medical specialties,in three reportable segments: aesthetic and general surgery (plastic andreconstructive surgery), surgical urology and clinical and consumerhealthcare.  The Company's products aresold to hospitals, physicians and through various healthcare dealers,wholesalers, distributors, and retail outlets by multiple sales forces. Theaesthetic and general surgery products segment consists primarily of breastimplants, tissue expanders and the Company's body contouring (liposuction)equipment, and disposables.  The surgicalurology segment includes penile implants, surgical incontinence products, andbrachytherapy seeds for the treatment of prostate cancer and associated suppliesand delivery systems.  The clinical and consumer healthcare segmentincludes catheters and other products for the management of urinaryincontinence and retention.  

**NoteB - Summary of Significant Accounting Policies**

**Principlesof Consolidation**

Theconsolidated financial statements include the accounts of the Company and allof its subsidiaries in which a controlling interest is maintained.  For those subsidiaries where the Company ownsless than 100%, the outside shareholders' interests are treated as minorityinterests.  All intercompany accounts andtransactions have been eliminated. Certain prior year amounts in previously issued financial statements havebeen reclassified to conform to the current year presentation.  Financial information presented in the Notesto Consolidated Financial Statements excludes discontinued operations, exceptwhere noted.  

##### Basis of Presentation 

The financial information forthe three months ended June 30, 2003 and 2002 is unauditedbut includes all adjustments (consisting only of normal recurring accruals,unless otherwise indicated) which the Company considers necessary for a fairpresentation of the results of operations for these periods. Interim resultsare not necessarily indicative of results for the full fiscal year. ** **

**Use of Estimates**

Financial statements prepared inaccordance with accounting principles generally accepted in the United Statesrequire management to make estimates and judgments that affect amounts anddisclosures reported in the financial statements.  Actual results could differ from thoseestimates.

**Stock Split, Changes in Authorized Shares andMove toNYSE**

On December13, 2002 the Board of Directors authorized a two-for-one stock split in theform of a 100% stock dividend distributed on or about January 17, 2003 toshareholders of record as of December 31, 2002. All references in the financial statements to number of shares, pershare amounts and market prices of the Company's common stock have beenretroactively restated to reflect the increased number of common sharesoutstanding.

At the annualmeeting of shareholders held on September 12, 2002, the shareholders approved aproposal to amend the Company's Restated Articles of Incorporation to increaseauthorized shares from 50,000,000 to 150,000,000.

EffectiveAugust 5, 2003 the Company's shares began trading on the New York StockExchange under the symbol MNT. ** **

**Effectsof Recent Accounting Pronouncements**

In 2002, the Financial Accounting Standards Board ("FASB")issued Statement of Financial Accounting Standards ("SFAS") 148, Accounting forStock-Based Compensation - Transition and Disclosure.  SFAS 148 amendsSFAS 123, Accounting for Stock-Based Compensation, to provide alternativemethods of transition for a voluntary change to the fair value method ofaccounting for stock-based employee compensation.  In addition, SFAS 148amends the disclosure requirement of SFAS 123 to require more prominentdisclosures, in both annual and interim financial statements, about the methodof accounting for stock-based employee compensation and the effect of themethod used on reported results.  The additional disclosure requirementsof SFAS 148 are effective for fiscal years ending after December 15,2002.  The Company has elected to continue to follow the intrinsic valuemethod of accounting as prescribed by Accounting Principles Board Opinion No.25 (or APB 25), Accounting for Stock Issued to Employees, to account foremployee stock options.  

In May 2003, the FASB issued SFAS No. 149, "Amendment ofStatement 133 on Derivative Instruments and Hedging Activities" ("SFAS No.149"), effective for contracts entered into or modified after June 30, 2003 andfor hedging relationships designated after June 30, 2003. This rule amends SFASNo. 133, "Accounting for Derivative Instruments and Hedging Activities," asamended, to provide more consistent reporting of contracts as eitherderivatives or hybrid instruments. The impact upon adoption of SFAS No. 149 isnot expected to have a material impact on the results of operations or thefinancial position of the Company. 

In May 2003, the FASB issued SFAS No. 150, "Accounting forCertain Financial Instruments with Characteristics of both Liabilities andEquity" ("SFAS No. 150"), effective for financial instruments entered into ormodified after May 31, 2003, and otherwise is effective at the beginning of thefirst interim period beginning after June 15, 2003. The impact upon adoption ofSFAS No. 150 is not expected to have a material impact on the results ofoperations or the financial position of the Company. 

In January 2003, the FASB issued FIN 46, Consolidation ofVariable Interest Entities ("VIE").  FIN46 defines a variable interest entity as a corporation, partnership,trust, or any other legal structure that does not have equity investors with acontrolling financial interest or has equity investorsthat do not provide sufficient financial resources for the entity to supportits activities.  FIN 46 requires consolidation of a VIE by the primarybeneficiary of the assets, liabilities, and results of activities effective in2003. FIN 46 also requires certain disclosures by all holders of a significantvariable interest in a VIE that are not the primary beneficiaries.  Theadoption of this interpretation will have no impact on its consolidatedfinancial position or results of operations.

**NoteC - Interim Reporting**

The Company'sthree quarterly interim reporting periods are each thirteen-week periods endingon the Friday nearest the end of the third calendar month of each calendarquarter.  The fiscal year end remainsMarch 31st.  To facilitateease of presentation, each interim period is shown as if it ended on the lastday of the appropriate calendar month. The actual dates for each of the three interim quarter-ends are shownbelow:
|                 | Fiscal 2004         | Fiscal 2003         |
|-----------------|---------------------|---------------------|
| First  Quarter  | June 27,  2003      | June 28,  2002      |
| Second  Quarter | September  26, 2003 | September  27, 2002 |
| Third Quarter   | January 2,  2004    | December 27,  2002  |

The accompanying unaudited condensed consolidatedfinancial statements for the three-month period ended June 30, 2003 and 2002have been prepared in accordance with accounting principles generally acceptedin the United States for interim financial information and with instructions toForm 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States forcomplete financial statements.  In theopinion of management, all adjustments (consisting only of normal recurringaccruals, unless otherwise indicated) considered necessary for a fairpresentation of the results of operations for the indicated periods have beenincluded.  Certain amounts recorded inprevious periods have been reclassified to conform to the current periodpresentation.  Operating results for thethree months ended June 30, 2003 are not necessarily indicative of the resultsfor the full fiscal year.

The balance sheet at March 31, 2003 has been derivedfrom the audited financial statements at that date but does not include all ofthe information and footnotes required by accounting principles generallyaccepted in the United States for complete financial statements.

The condensed consolidated financial statements shouldbe read in conjunction with the Company's Annual Report on Form 10-K for theyear ended March 31, 2003.** **

**NoteD - Cash Equivalents, Marketable Securities, and Long-Term MarketableSecurities and Investments**

All highlyliquid investments with maturities of three months or less at the date ofpurchase are considered to be cash equivalents.

The Company considers itsmarketable securities available-for-sale as defined in SFAS No. 115,"Accounting for Certain Investments in Debt and EquitySecurities."  Realized gains andlosses and declines in value considered to be other than temporary are includedin income.  The cost of securities soldis based on the specific identification method. For short-term marketable securities, there were no material realized orunrealized gains or losses, nor any material differences between estimated fairvalues, based on quoted market prices, and the costs of securities in theinvestment portfolio as of June 30, 2003  and March 31, 2003.  Short-term investments, except auction ratesecurities, mature between three months and one year from the purchasedate.  The Company's short-termmarketable securities consist primarily of money market mutual funds, U.S.,state and municipal government obligations, auction rate securities, andinvestment grade corporate obligations including commercial paper.  Auction rate securities carry interest ordividend rates that reset every 28 days but have contractual maturities ofgreater than one year. 

The Company's long-term marketable securities andinvestments include investments in Federal Home Loan Bank and MortgageAssociation bonds (FHLA bonds) with maturities of two to four years.  The Company has an investment in ParadigmMedical Industries, Inc. Paradigm reported financial and operationaldifficulties and its quoted market prices decreased substantially during theyear ended March 31, 2003.  In thequarter ended March 31, 2003, the Company determined the decrease in marketprices were more than temporary and recorded a one-time impairment charge of$1,857,000 pre-tax in other income, net. The remaining investment in Paradigmis recorded at $228,000 at June 30, 2003.

Available-for-sale investments atJune 30, 2003 were as follows:
| ** **                                                                          | ** **                          | ** **                                                         | **Gross**                                                          | **Gross**                           | **Estimated** |
|-------------------------------------------------------------------------------------|-------------------------------------|--------------------------------------------------------------------|--------------------------------------------------------------------|-------------------------------------|---------------|
| ** **                                                                          | ** **                          | **Adjusted**                                                       | **Unrealized**                                                     | **Unrealized**                      | **Fair**      |
| **(in thousands)**                                                                  | **Cost**                            | **Gains**                                                          | **Losses**                                                         | **Value**                           |
| **Cash balances**                                                                   | **$    18,682** | **$          -** | **$          -** | **$    18,682** |
| **Bank time deposits**                                                              | **-**                               | **-**                                                              | **-**                                                              | **-**                               |
| **Money market mutual funds**                                                       | **92,633**                          | **-**                                                              | **-**                                                              | **92,633**                          |
| **Marketable equity securities**                                                    | **536**                             | **114**                                                            | **(67)**                                                           | **583**                             |
| **U.S., State and Municipal agency      obligations**                | **13,229**                          | **6**                                                              | **-**                                                              | **13,235**                          |
| **Corporate debt securities**                                                       | **278**                             | **-**                                                              | **-**                                                              | **278**                             |
| **   Total available-for-sale investments**                          | **$  125,358**            | **$     120**                             | **$     (67)**                            | **$  125,411**            |
| ** **                                                                          | ** **                          | ** **                                                         | ** **                                                         | ** **                          |
| **Included in cash and cash equivalents**                                           | **$  111,315**            | **$          -** | **$          -** | **$  111,315**            |
| **Included in current marketable securities**                                       | **229**                             | **-**                                                              | **-**                                                              | **229**                             |
| **Included in long-term marketable      securities and investments** | **13,814**                          | **120**                                                            | **(67)**                                                           | **13,867**                          |
| **   Total available-for-sale investments**                          | **$  125,358**            | **$      120**                       | **$     (67)**                            | **$  125,411**            |

Available-for-sale investments atMarch 31, 2003 were as follows:
|                                                                            |                      |                                                           | Gross                                                                | Gross                           | Estimated |
|---------------------------------------------------------------------------------|---------------------------|----------------------------------------------------------------|----------------------------------------------------------------------|---------------------------------|-----------|
|                                                                            |                      | Adjusted                                                       | Unrealized                                                           | Unrealized                      | Fair      |
| (in thousands)                                                                  | Cost                      | Gains                                                          | Losses                                                               | Value                           |
| Cash balances                                                                   | $   16,733 | $          - | $          -       | $    16,733 |
| Bank time deposits                                                              | -                         | -                                                              | -                                                                    | -                               |
| Money market mutual funds                                                       | 89,107                    | -                                                              | -                                                                    | 89,107                          |
| Marketable equity securities                                                    | 3,493                     | 7                                                              | (2,040)                                                              | 1,460                           |
| U.S., State and Municipal agency      obligations                | 2,184                     | 3                                                              | -                                                                    | 2,187                           |
| Corporate debt securities                                                       | 278                       | -                                                              | -                                                                    | 278                             |
| Investment in Intracel                                                          | -                         | -                                                              | -                                                                    | -                               |
|    Total available-for-sale  investments                         | $ 111,795            | $       10                  | $ (2,040)                                                       | $  109,765            |
|                                                                                 |                      |                                                           |                                                                 |                            |
| Included in cash and cash equivalents                                           | $ 105,840            | $          - | $           - | $  105,840            |
| Included in current marketable securities                                       | 184                       | -                                                              | -                                                                    | 184                             |
| Included in long-term marketable      securities and investments | 5,771                     | 10                                                             | (2,040)                                                              | 3,741                           |
|    Total available-for-sale  investments                         | $ 111,795            | $       10                  | $ (2,040)                                                       | $  109,765            |

Inventoriesare stated at the lower of cost or market, cost determined by the first-in,first-out (FIFO) method.  The Companywrites down its inventory for estimated obsolescence or unmarketable inventoryequal to the difference between the cost of inventory and the estimated marketvalue based upon assumptions about future demand and market conditions.

Inventoriesat June 30, 2003 and March 31, 2003 consisted of:
| (in thousands)  | **June 30,**                              | March  31,                            |
|-----------------|-------------------------------------------|---------------------------------------|
| Raw materials   | **$     11,929** | $     12,175 |
| Work in process | **10,554**                                | 10,894                                |
| Finished goods  | **40,986**                                | 38,200                                |
|            | **$     63,469** | $     61,269 |

**Note F - Property and Equipment**

Property andequipment is stated at cost. Depreciation is based on the useful lives of the properties and computedusing the straight-line method. Buildings are depreciated over 30 years, furniture and equipment over 3to 10 years and leasehold improvements over the shorter of their estimatedremaining lives or lease term.  Significantimprovements and betterments are capitalized while maintenance and repairs arecharged to operations as incurred.

Property and equipment at June 30, 2003and March 31, 2003 consisted of:
| (in thousands)                     | **June 30,**                                                         | March  31,                                                       |
|------------------------------------|----------------------------------------------------------------------|------------------------------------------------------------------|
| Land                               | **$         549 ** | $         538  |
| Buildings                          | **22,975 **                                                     | 24,595                                                      |
| Leasehold improvements             | **23,070 **                                                     | 23,551                                                      |
| Furniture, fixtures and  equipment | **86,963 **                                                     | 79,032                                                      |
| Construction in progress           | **7,433 **                                                      | 6,620                                                       |
|                                    | **140,990 **                                                    | 134,336                                                     |
| Less accumulated  depreciation     | **(69,224)**                                                         |       (65,665)                          |
|                               | **$    71,766 **                            | $    68,671                             |

**NoteG - Other Comprehensive Income**

The components of comprehensive incomeare listed below:
|                                                                                      | Three Months Ended   June 30, |
|-------------------------------------------------------------------------------------------|-------------------------------|
| (in thousands)                                                                            | **2003**                      | 2002 |
| Net income                                                                                | **$  16,033**       | $  16,749  |
| Foreign currency translation adjustment                                                   | **5,032**                     | 7,519  |
| Unrealized (losses) on marketable  securities    and investment activities, net | **121**                       | (1,069) |
| Comprehensive income                                                                      | **$  21,186**       | $  23,199  |

## **Note H -Stock Options**

TheCompany has granted options to key employees and non-employee directors underits 2000 Plan and 1991 Plan.  Options granted under both plans areexercisable in four equal annual installments beginning one year from the dateof grant, and expire ten years from the date of grant.  Options aregranted at the fair market value as of the date of grant.  Options to purchase1,073,135 shares of common stock at $21.00 per share were granted during thequarter ended June 30, 2003. 

Stockoption exercise prices are set at the fair market value of the Company's commonstock on the date of grant and the related number of shares granted is fixed atthat point in time.  Therefore, under the principles of APB Opinion 25,the Company does not recognize compensation expense associated with the grantof stock options.  SFAS 123 "Accounting for Stock-Based Compensation,"requires the use of an option valuation model to provide supplementalinformation regarding options granted after fiscal 1995.  Pro formainformation regarding net income and earnings per share shown below weredetermined as if the Company had accounted for its employee stock options underthe fair value method of that statement. The estimated fair value of theoptions is amortized ratably over the option's vesting period.  Asrequired by SFAS No. 148, "Accounting for Stock-Based Compensation -Transition and Disclosure - an amendment of FASB Statement No. 123," thefollowing table shows the estimated effect on net income and earnings per shareif the Company had applied the fair value recognition provision of SFAS 123 tostock-based employee compensation.  TheCompany's pro forma information is as follows:
|                                                       | Quarter Ended June 30,                                               |
|-------------------------------------------------------|----------------------------------------------------------------------|
| (in thousands)                                        | **2003**                                                             | 2002 |
| Net income:  as reported                         | **$   16,033 **                                  | $   16,749  |
| Deduct:   compensation expense fair value method | **(1,717)**                                                          | (1,602) |
| Net income:  pro forma                           | **$   14,316 **                                  | $   15,147  |
|                                                       | ** **                                                           |   |
| Basic earnings per share:  as report             | **$         .35 ** | $         .36  |
| Basic earnings per share:  pro forma             | **.31 **                                                        | .33  |
|                                                       | ** **                                                           |   |
| Diluted earnings per share:  as reported         | **$         .33 ** | $         .34  |
| Diluted earnings per share:  pro forma           | **.30 **                                                        | .31  |

**Note I - Income Taxes**

The effective rate of corporate income taxes was 31.5%and 28.7% for the three-month periods ended June 30, 2003 and 2002respectively.  The effective tax rate forthe three-month period ended June 2002 reflects refunds received in the first quarterof fiscal 2003 related to the amendment of tax returns for the Company'sforeign sales corporation. 

**Note J - Earnings per Share**

A reconciliation of weighted averageshares outstanding, used to calculate basic earnings per share, to weightedaverage shares outstanding assuming dilution, used to calculate dilutedearnings per share, follows:
|                                               | Three Months Ended  June 30, |
|----------------------------------------------------|------------------------------|
| (in thousands)                                     | **2003**                     | 2002 |
| Weighted average outstanding shares:  basic   | **46,386**                   | 47,068 |
| Shares issuable through exercise of stock  options | **1,960**                    | 2,292 |
| Weighted average outstanding shares:  diluted | **48,346**                   | 49,360 |

Shares issuable through optionsare determined using the treasury stock method.

Certainemployee stock options were excluded from the computation of diluted earningsper share because their effect would have been anti-dilutive.

**Note K -Acquisitions**

**Portex Ltd.**

OnMay 6, 2002, the Company purchased the assets of the urology and ostomybusinesses of Portex Ltd., a subsidiary of Smiths Group plc.  The acquired businesses, now named MentorMedical, Ltd., manufactures and markets incontinence and ostomy productsprimarily for the home healthcare market. The products are sold mainly in the UK, Germany and the Netherlands.  The acquisition was valued at $11,232,000, ofwhich $10,603,000 was paid in cash, plus an acquired liability of$629,000.  The acquisition was accountedfor using SFAS No. 141, "Business Combinations," using the purchasemethod of accounting, and the purchase price was preliminarily allocated to thetangible and intangible net assets acquired on the basis of their respectivefair values on the acquisition date.  Thetotal purchase price was preliminarily allocated to inventory of $3,150,000,buildings of $739,000, production equipment of $1,185,000, leasehold improvementsof $621,000, patents, trademarks and licenses of $731,000 and goodwill andother intangibles with indefinite lives of $4,806,000. 

**Mills Biopharmaceuticals, Inc.**

On February 1, 2003, the Company completed the acquisitionof Mills Biopharmaceuticals, Inc., a manufacturer of iodine brachytherapy seedsfor the treatment of prostate cancer.  The acquisition will beaccounted for using SFAS No. 141, "Business Combinations," using thepurchase method of accounting, and the purchase price will be allocated to thetangible and intangible net assets acquired on the basis of their respectivefair values on the acquisition date.  Theacquisition was valued at $4,063,000, net of cashacquired, and was paid from existing cash balances.  The purchase price was preliminarilyallocated to accounts receivable $626,000, inventory of $322,000, other assetsof  $36,000, production equipment of $830,000, long-term investments of$1,100,000 net of acquired accrued liabilities of $261,000 and goodwill and otherintangibles with indefinite lives of $1,410,000. 

**Note L - Business Segment Information**

The Company'soperations are principally managed and reported on a product basis.  There are three reportable segments:  aesthetic and general surgery, surgicalurology, and clinical and consumer healthcare. The accounting policies of the reportable segments are the same as thosedescribed in the summary of significant accounting policies except that certainexpenses such as interest and certain corporate expenses are not allocated tothe segments.

The aestheticand general surgery products segment consists primarily of breast implants,tissue expanders and the Company's body contouring (liposuction) equipment anddisposables.  The surgical urologysegment includes penile implants, surgical incontinence products, andbrachytherapy seeds for the treatment of prostate cancer.  The clinical and consumer healthcare segmentincludes catheters and other disposable products for the management of urinaryincontinence and retention.

Selectedfinancial information for the Company's reportable segments for the three-monthperiods ended June 30, 2003 and 2002, and as of June30, 2003 and March 31, 2003 is as follows:
|                                         | Three Months Ended June 30,               |
|-----------------------------------------|-------------------------------------------|
| (in thousands)                          | **2003**                                  | 2002 |
| **Net Sales**                           | ** **                                |   |
| Aesthetic and General Surgery           | **$     55,503** | $    53,680 |
| Surgical Urology                        | **28,089**                                | 26,242 |
| Clinical and Consumer Healthcare        | **21,514**                                | 17,755 |
|   Total consolidated revenues | **$   105,106**            | $    97,677 |
|                                    | ** **                                |   |
|                                         | Three Months Ended   June 30,             |
| (in thousands)                          | **2003**                                  | 2002 |
| **Operating profit**                    | ** **                                |   |
| Aesthetic and General Surgery           | **$     19,791** | $   19,941 |
| Surgical Urology                        | **1,696**                                 | 2,245 |
| Clinical and Consumer Healthcare        | **3,161**                                 | 2,781 |
|   Total reportable segments   | **$     24,648** | $   24,967 |
|                                    |                                      |   |
|                                         | Three Months Ended   June 30,             |
| (in thousands)                          | **2003**                                  | 2002 |
| **Operating income**                    | ** **                                |   |
| Reportable segments                     | **$   24,648 **       | $  24,967  |
| Corporate operating loss                | **(2,137)**                               | (2,794) |
| Interest expense                        | **(161)**                                 | (301) |
| Interest income                         | **396 **                             | 560  |
| Other income                            | **676 **                             | 1,047  |
| Income before income taxes              | **$   23,422 **       | $  23,479  |
|                                    |                                      |   |
|                                    | As of                                     |
| (in thousands)                          | **June  30,   2003**                      | March 31,  2003 |
| **Identifiable assets**                 | ** **                                |   |
| Aesthetic and General Surgery           | **$  103,915**                  | $  102,570 |
| Surgical Urology                        | **112,125**                               | 105,415 |
| Clinical and Consumer Healthcare        | **67,196**                                | 62,155 |
|   Total reportable segments   | **$  283,236**                  | $  270,140 |
|                                    |                                      |   |

----

| **Item 2.** | **Management's Discussion and Analysis  of Results of Operations and Financial Condition** |
|-------------|--------------------------------------------------------------------------------------------|

Except for the historicalinformation contained herein, the matters discussed in this Management'sDiscussion contain certain "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicatedby words or phrases such as "anticipate," "estimate,""expect," "intend," "project," "plan," "webelieve," "will," "seek," and similar words or phrasesand involve known and unknown risks, uncertainties and other factors which maycause actual results, performance or achievements to be materially differentfrom any future results, performance or achievements expressed or implied bysuch forward-looking statements.  Some ofthe factors that could affect our financial performance or cause actual resultsto differ from our estimates in, or underlying, such forward-looking statementsare set forth under the heading of "Governmental Regulation," "Risk Factors," "Legal Proceedings," orelsewhere in our Form 10-K for the fiscal year ended March 31, 2003.  Forward-looking statements include statementsregarding, among other things:
- Our anticipated     growth strategies;
- Our intention to     introduce or seek approval for new products;
- Our ability to     continue to meet FDA and other regulatory requirements;
- Our anticipated     outcomes of litigation and regulatory reviews; and
- Our ability to     replace sources of supply without disruption and regulatory delay.

Theseforward-looking statements are based largely on our expectations and aresubject to a number of risks and uncertainties, many of which are beyond ourcontrol.  Actual results could differ materially from these forward-lookingstatements as a result of the facts described in "Risk Factors" orelsewhere in our annual report on Form 10-K, including, among others, problems with suppliers, changes in thecompetitive marketplace, significant product liability or other claims,difficulties with new product development, the introduction of new products byour competitors, changes in the economy, United States Food Drug andAdministration (FDA) delay in approval or rejection of new or existingproducts, changes in Medicare, Medicaid or third-party reimbursement policies,changes in government regulations, use of hazardous or environmentallysensitive materials, inability to implement new information technology systems,inability to integrate new acquisitions, and other events.  We undertakeno obligation to publicly update or revise any forward-looking statements,whether as a result of new information, future events or otherwise.  Inlight of these risks and uncertainties, we cannot assure that theforward-looking information contained in this Form 10-Q and our Form 10-K will,in fact, transpire.

**APPLICATION OFCRITICAL ACCOUNTING POLICIES**

Management's Discussion andAnalysis of Financial Condition and Results of Operations addresses ourconsolidated financial statements, which have been prepared in accordance withaccounting principles generally accepted in the UnitedStates.  The preparation of these financial statements requires us to makeestimates and assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period.  On an on-going basis, we evaluate ourestimates and judgments.  We base our estimates and judgments onhistorical experience and on various other factors that are believed to bereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources.  Actual results may differ fromthese estimates under different assumptions or conditions.  

Management has identified the critical accountingpolicies to be those related to revenue recognition, accounts receivable,inventories, warranties and related reserves, and goodwill and intangible assetimpairment.  These accounting polices arediscussed in the Management's Discussion and Analysis and notes to theconsolidated financial statements included in the Company's Annual Report onForm 10-K for the fiscal year ended March 31, 2003.

On December 12, 2002 the Board ofDirectors authorized a two-for-one stock split in the form of a 100% stockdividend distributed on or about January 17, 2003 to shareholders of record asof December 31, 2002.  All references tothe number of shares and per share amounts have been retroactively restated toreflect the increased number of common shares outstanding.   

**RESULTS OFOPERATIONSQuarters Ended June 30, 2003 and 2002Sales**Sales forthe three months ended June 30, 2003 increased to $105.1 million from $97.7million for the same quarter in 2002, an increase of 7.6%.  Included in fiscal 2004 sales are threemonths of clinical and consumer healthcare product sales relating to our May2002 acquisition of the urology and ostomy business of Portex Ltd. versus twomonths in fiscal 2003.  Sales of products acquired in the Portextransaction accounted for approximately one third of the year-to-year growth. Foreign exchange rate movements, primarily the stronger Euro, had a favorableyear-to-year impact of $6.3 million on international sales.

Sales ofaesthetic and general surgery products increased 3% to $55.5 million for thequarter ended June 30, 2003 from $53.7 million in the same quarter in the prioryear.  Total sales of breast implants products increased 3% to $50.1million for the quarter from $48.3 million in the same period of the prioryear.  Sales of body contouring products increased 8% to $3.6 million forthe quarter from $3.3 million, over the same period in the prioryear.  We believe that relatively low sales growth percentages over theprior year reflect the unusually strong sales in the same quarter of the prioryear.  The strength in sales in the samequarter of the prior year was attributed to a resurgence of demand includingsurgeries that were postponed after the events of September 11th.  The sales for this quarter also reflected thebenefit from the effect of the strong Euro.  Sales of aesthetic andgeneral surgery are expected to increase at a higher rate for the remainingthree quarters of fiscal 2004.

Sales ofsurgical urology products increased 7% to $28.1 million for the quarter endedJune 30, 2003 from $26.2 million in the prior year.  The growth primarily resulted fromstrong sales of disposable urinary care products acquired in our February 2001acquisition of Porges S.A., and the effect of a stronger Euro.  Penileimplant sales increased slightly over the same quarter in the prior year.  In the third quarter of 2003, we introducedthe TitanTM inflatable penile device.  Sales of pelvic floor reconstructionproducts increased $1.0 million, or 42%, due to continued momentum of newproduct introductions made late in fiscal 2002.  Brachytherapy salesdecreased by $2.9 million, or 45% from the same quarter in the prior year as aresult of interruption of our supply of palladium radioactive seeds after theexpiration of our exclusive distribution agreement with NASI and as competitivepressures decreased average selling prices. Due to difficulties in increasing manufacturing capacity in a short timeframe, we have been unable to secure sufficient new vendor supply to fulfillcustomer orders. This resulted in lost sales, and which may continue through most offiscal 2004.

Sales ofclinical and consumer healthcare products increased 21% to $21.5 million forthe quarter ended June 30, 2003 from $17.8 million in the same period in theprior year.  This growth primarily resulted from our May 2002 acquisitionof the urology and ostomy businesses of Portex Ltd., whose product sales areincluded for three months in fiscal 2004 versus two months in the comparablequarter of the prior year. Sales growth was generally aided by the effect ofthe stronger Euro, as approximately half of these product sales are invoiced incurrencies other than the U.S. Dollar.  In addition, strong sales ofurinary products acquired in the Porges acquisition were offset by a 6%decrease in sales of male external catheters.  Sales of intermittentself-catheters increased 5% following the introduction of the Self-Cath PlusTMlubricious catheter in fiscal 2002.   
|                                                                  | Sales by  Principal Product Line       |
|------------------------------------------------------------------|----------------------------------------|
|                                                                  | For the  Three Months Ended   June 30, |
|                                                                  | **2003**                               | 2002 | Percent  Change |
| Aesthetic  & General Surgery      Products    | **$   55,503**          | $   53,680 | 3.4% |
| Surgical  Urology Products                                       | **28,089**                             | 26,242 | 7.0% |
| Clinical  & Consumer      Healthcare Products | **21,514**                             | 17,755 | 21.2% |
| ** **                                                       | **$ 105,106**                     | $   97,677 | 7.6% |

**Cost of Sales**Cost ofsales was 37.5% of net sales for the quarter ended June 30, 2003, compared to39.2% in the comparable period in fiscal 2003.  Cost of sales for theaesthetic and general surgery products decreased to 28.3% of net sales for thequarter ended June 30, 2003 from 28.8% for the comparable quarter in fiscal2003, primarily due to efficiencies of scale and improved manufacturingefficiencies at our Texas facility, partially offset by startup costs at ournew manufacturing facility in the Netherlands.  Cost of sales for surgicalurology products decreased to 51.4% of net sales for the quarter ended June 30,2003 from 46.5% in the comparable quarter in the prior year primarily due tothe February 2003 acquisition of Mills Biopharmaceutical, Inc., to manufactureour own iodine brachytherapy seeds.  Inaddition, the interruption of supply of palladium seeds has shifted the productmix towards products which have lower cost of sales as a percent of sales.  Cost of sales for clinical and consumerhealthcare products decreased from 52.4% of net sales for the quarter endedJune 30, 2003 to 49.3% for the comparable period of the prior year, primarilydue to efficiencies of scale and improved manufacturing efficiencies at ourmanufacturing facilities.

**Selling, General and Administrative**Selling,general and administrative expenses increased to 33.9% of net sales for thequarter ended June 30, 2003, compared to 32.6% for the comparable quarter inthe prior year.  Improved efficiencies inselling expenses in the Aesthetics segment were offset by additional sellingexpenses in the Surgical urology segment, primarily inour international operations related to recent acquisitions and to currencyrates.  General and administrativeexpenses increased primarily due to additional  expenses associated with our recently acquired subsidiaries, MillsBiopharmaceuticals and the urology and ostomy businesses of Portex and currencyexchange rates.  In addition,non-capitalizable expenses related to the implementation of our new J.D.Edwards information technology system were offset by lower levels of expensesat our corporate headquarters. 

**Researchand Development**Research and development expenses as a percent of netsales for the three month periods ended June 30, 2003 were 7.2%, compared to5.5% for the same period a year ago. Spending increased as a percentage of net sales in all three segments,with the largest increase being in Aesthetic and General surgery segmentproducts due to increased activity in our breast implant studies as we prepareour filing of our gel implant PMA for the FDA. The Company is committed to a variety of clinical and laboratory studiesin connection with its gel-filled and saline filled mammary implants and otherproducts.  We expect the level ofspending on research and development activities to continue at the currentlevels for the remainder of fiscal 2004. 

**Interest and Other Income and Expense**Interest expense decreased to $161,000in the first quarter of fiscal 2004, compared to $301,000 in the same period ofthe prior year.  Interest expenseincludes interest our foreign lines of credit and imputed interest on long-termliabilities recorded at net present value related to the acquisitions of assetsof SouthBay Medical and ProSurg Inc. during fiscal 2001 and 2002, respectively.

Interest income decreased to $396,000 in the firstquarter of fiscal 2004 from $560,000 in the same period of the prior year.  The decrease is due to lower prevailinginterest rates on short-term investments offset by higher levels of cashbalances available for investment. 

Other income, net primarily includesgains or losses on sales of marketable securities, disposals of non-operatingassets, and foreign currency gains or losses related to our foreignoperations.  Other income, net for thethree-month ending June 30, 2003 decreased to $676,000 from $1.0 million in thecomparable quarter in the prior year.  Theprior year amount includes a one-time gain on the sale of an intangible assetof $500,000 and is the primary reason for the decrease from the prior year.

**Income Taxes**

The effective rate of corporate income taxes for thethree months ended June 30, 2003 was 31.5% as compared to 28.7% for thecomparable period in the prior year.  Theincrease in the effective tax rate from the comparable periods in the prioryear represents a return to our historic effective tax rate as the prior yearrates reflected refunds received in the first quarter of fiscal year 2003related to the amendment of tax returns for our foreign sales corporation.

**Net Income**

Net income for the three-month periodended June 30, 2003 decreased 4% to $16.0 million from $16.7 million in thecomparable period in the prior year. Diluted earnings per share decreased 3% to $0.33 for the three-monthperiod compared to $0.34 for the comparable period last year.  Increased sales and lower cost of goods soldwere offset by higher operating expenses which resulted in a slight increase inoperating income.  Although operatingincome increased from the comparable period in the prior year, net incomedecreased as the prior year results included the favorable effect of a gain onan asset sale and tax refunds which lowered income tax expense. 

##### Seasonality 

Ourquarterly results reflect slight seasonality, as the second fiscal quarterending September 30 tends to have the lowest revenue of all of thequarters.  This is primarily due to lowerlevels of sales of breast implants for augmentation, an elective procedure, assurgeons and patients tend to take vacation, particularly in Europe, duringthis quarter.   

**LIQUIDITY AND CAPITAL RESOURCES**We had cash, cash equivalents andshort-term marketable securities of $112 million at June 30, 2003, compared to$106 million at March 31, 2003.  Cashprovided by operating activities has been and is expected to continue to be ourprimary recurring source of funds.  Ourworking capital was $180 million at June 30, 2003, compared to $168 million atMarch 31, 2003.  We generated $17 millionof cash from operating activities during the three months ended June 30, 2003,compared to $27 million the same period the previous year.  Decreased cash flow from operating activitieswas primarily the result of decreased net income, larger increases in inventoryand accounts receivable, and decreases in accounts payable and accruedliabilities. 

During the three months ended June 30,2003, we invested $4 million in property and equipment, primarily in productionequipment at our new facility in Oklahoma and in information technologysystems.  We anticipate investingapproximately $20 million in fiscal 2004 to expand production equipment and facilitiesfor brachytherapy seed production, purchase other production equipment andupgrade and replace information technology systems.  

Wereceived cash from the exercise of employee stock options.  Employee stock option exercises provided $3.9million during the three months ended June 30, 2003 compared to $2.7 million inthe same period the previous year. Proceeds from the exercise of employee stock options will vary fromperiod to period based upon, among other factors, fluctuations in the market valueof our common shares relative to the exercise price of such options. 

Our Board of Directors has authorizedan ongoing stock repurchase program under which we repurchased 1.4 millionshares in fiscal 2003.  On July 31, 2003 the Board of Directors increasedthe authorized number of shares to be repurchased from 1.8 million to 4 millionshares.  The objectives of the programare, among others, to offset the dilutive effect ofour employee stock option program, provide liquidity to the market and toreduce the overall number of shares outstanding.  Repurchases are subjectto market conditions and cash availability.  Since the increasedauthorization, we have repurchased 363,000 shares for consideration of $7.5million.  We intend to continue the share repurchase program during theremainder of fiscal 2004 and 3.6 million shares remain authorized forrepurchase.  

In January2001, we completed the acquisition of South Bay Medical, a development stagecompany focused on the development of a new technology for a computer-basedworkstation and automated cartridge-based needle loading system for use inbrachytherapy procedures.  The total consideration included $2 million incash, 470,586 restricted shares of our common stock having a fair market valueof $4 million, and $13.6 million to be paid in cash or our common stock overthe next several years.  These future payments have been recorded as anacquisition obligation liability at net present value ($12.6 million at June30, 2003), and will continue to increase as imputed interest is recorded. Approximately $5.9 million of the acquisition obligation liability is to bepaid in shares of our common stock valued at fair market value on the date ofissuance. 

In December 2001, we entered intoseveral agreements with ProSurg, Inc. to purchase certain patent rights and asupply of a bio-absorbable co-polymer product to be used in the surgicaltreatment of female incontinence.  Thetotal consideration included $2.0 million in cash and $2.7 million in short andlong-term payments due over the next several years.  The future payments have been recorded as anacquisition obligation liability at net present value and will increase withimputed interest to $3.0 million due in fiscal 2004 and over the next severalyears.  

We secured line of credit ("$25MCredit Agreement") for borrowings of up to $25 million, which accrueinterest at the prevailing prime rate or at a mark-up over LIBOR at ourdiscretion.  The $25M Credit Agreementincludes certain covenants that, among other things, limit the dividends we maypay and requires maintenance of certain levels of tangible net worth and debtservice ratios.  We use the $25M CreditAgreement to guarantee three commercial letters of credit totaling $3.8million.  Accordingly, although therewere no borrowings outstanding under the $25M Credit Agreement at June 30,2003, only $21.2 million was available for additional borrowings.

In addition,several lines of credit were established with local foreign lenders tofacilitate operating cash flow needs at our foreign subsidiaries.  These lines are at market rates of interest,are unsecured and guaranteed by Mentor Corporation, and total $5.9 million, ofwhich $5.5 million was outstanding, and $0.4 million additional borrowingswere available at June 30, 2003.  

In fiscal 2002,a line of credit of $7.0 million was established to finance the construction ofa new facility in Leiden, the Netherlands. The borrowings accrue interest at EURIBOR plus 0.75% and are secured bythe new facility and other assets in the Netherlands.  At June 30, 2003, $5.1 million wasoutstanding and $1.9 million was available under this line.  

At June 30,2003, the total of short-term borrowings under all lines of credit was $10.6million and the weighted-average interest rate was 3.77%.  The total amount of additional borrowingsavailable to the Company under all lines of credit was $23.5 million as of June30, 2003.

For the first and second quarters of fiscal 2003,we paid a quarterly cash dividend of $.03 per share.  In December 2002, our Board of Directorsauthorized a 2-for-1 stock split in the form of a 100% stock dividend andincreased the quarterly dividend on a post-split basis from $.015 per share to$.02 per share.  In July 2003, the Boardof Directors declared another increase in the dividend rate from $.02 per shareto $.15 per share.  At the new indicatedannual rate of $.60 per share, the aggregate annual dividend would equalapproximately $28 million.  It is theCompany's intent to continue to pay dividends for the foreseeable futuresubject to, among other things, Board approval, cash availability andalternative cash needs.  The $25M CreditAgreement limits the aggregate amount of dividends payable in any year toone-half of the net income of the preceding year. 

The following table summarizescontractual cash and other commercial commitments at June 30, 2003:
| (in thousands)                                        |          | Less Than          | 1-3                                                      | 4-5                                                | After 5                                                  |
|-------------------------------------------------------|---------------|--------------------|----------------------------------------------------------|----------------------------------------------------|----------------------------------------------------------|
| **Contractual  Cash Obligations**                     | Total         | 1 Year             | Years                                                    | Years                                              | Years                                                    |
| Operating leases                                      | $ 44,499 | $  4,797 | $14,410                                                  | $ 9,022                                       | $16,270                                                  |
|    Total Contractual  Cash Obligations | $ 44,499 | $  4,797 | $14,410                                                  | $ 9,022                                       | $16,270                                                  |
|                                                       |          |               |                                                     |                                               |                                                     |
| **Commercial  Commitments**                           |          |               |                                                     |                                               |                                                     |
| Lines of credit                                       | $ 10,595 | $ 10,595      | $         - | $        - | $         - |
| Other commercial commitments                          | 20,230        | 6,086              | 9,542                                                    | 1,370                                              | 3,232                                                    |
|    Total Commercial  Commitments       | $30,825       | $16,681            | $9,542                                                   | $ 1,370                                       | $ 3,232                                             |

In addition, we have, at any one time,purchase orders in the ordinary course of business for raw materials and othersupplies, which may in aggregate be significant but for which usage does notexceed one year.   

Ourprincipal source of liquidity at June 30, 2003 consisted of $112 million incash, cash equivalents and short-term marketable securities, plus $26 millionavailable under our existing lines of credit.  We believe that fundsgenerated from operations, our cash, cash equivalents and marketable securitiesand funds available under our line of credit agreements will be adequate tomeet our working capital needs and capital expenditure investment requirementsand commitments for the foreseeable future.  However, it is possible thatwe may need to raise additional funds to finance our unforeseen requirements orto consummate acquisitions of other business, products or technologies. Additional funds could be raised by selling equity or debt securities to thepublic or to selected investors, or by borrowing money from financialinstitutions.  In addition, even though we may not need additional funds,we may still elect to sell additional equity or debt securities or obtaincredit facilities for other reasons.  We may not be able to obtainadditional funds on terms that would be favorable to us, or at all.  Iffunds are raised by issuing additional equity securities or convertible debtsecurities, the ownership percentage of existing shareholders would bereduced.  In addition, the equity or debt securities issued by us may haverights, preferences or privileges senior to those of our common stock. 

**FACTORS THAT MAY AFFECT FUTURE RESULTSOF OPERATIONS**

**Forward-LookingInformation Under the Private Securities LitigationReform Action of 1995**

The Private Securities LitigationReform Act of 1995 provides a "safe harbor" for forward-lookingstatements.  The Act was designed toencourage companies to provide prospective information about them without fearof litigation.  The prospective informationmust be identified as forward-looking and must be accompanied by meaningfulcautionary statements identifying important factors that could cause actualresults to differ materially from those projected in the statements.  The statements about the Company, plans,strategies, intentions, expectations and prospects contained throughout thisdocument are based on current expectations. These statements are forward-looking and actual results may differmaterially from those predicted as of the date of this report in theforward-looking statements, which involve risks and uncertainties.  In addition, past financial performance isnot necessarily a reliable indicator of future performance and investors shouldnot use historical performance to anticipate results or future periodtrends.  The Company does not undertaketo update publicly any forward-looking statements for any reason, even if newinformation becomes available or other events occur in the future.

**Brachytherapy Seed Supply**

On November 4, 2002, we announced wehad reached an agreement to purchase Mills Biopharmaceutical Inc. (Mills), amanufacturer of iodine brachytherapy seeds. The purchase was completed February 1, 2003 after the expiration of theagreement with NASI and we have begun to supply customers with seeds manufacturedby Mills.  In addition, on January 8,2003, we announced that we had reached a nonexclusive agreement to distributeBest TM Palladium-103 brachytherapy seeds. In addition, we are seeking other  sources for similarradioactive seeds.  There is noassurance that such seeds can be manufactured or obtained on terms satisfactoryto us, without interruption or regulatory delay, or that such additional seedswill ultimately be acceptable to customers. Interruption of the supply of seeds, additional competition, regulatorydelay, additional costs to procure seeds, or loss of customers and market sharemay have a negative effect on revenues and the results of operations. 

----

| **Item  3.** | **Quantitative  And Qualitative Disclosures About Market Risk** |
|--------------|-----------------------------------------------------------------|

There have been no material changes inour exposure to market risk as reported in Item 7A in the annual report on Form10-K for the fiscal year ended March 31, 2003.
| **Item  4.** | **Controls  and Procedures** |
|--------------|------------------------------|

Based on anevaluation of the effectiveness of our disclosure controls and procedures (asdefined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, asamended), our Chief Executive Officer and our Chief Financial Officer haveconcluded that such controls and procedures were effective as of the end of theperiod covered by this report.  Inconnection with such evaluation, no change in our internal control overfinancial reporting was identified that occurred during the period covered bythis report and that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

----

**PART II -OTHER INFORMATION**
| **Item 1.** | **Legal Proceedings**

Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Item 2.** | **Changes in  Securities**

None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Item 3.** | **Defaults  Upon Senior Securities**

Not applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Item 4.** | **Submission  of Matters to a Vote of Security Holders**

None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **Item 5.** | **Other  Information**EffectiveAugust 5, 2003 the Company's shares began trading on the New York StockExchange under the symbol MNT.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Item 6.** | **Exhibits and  Reports on Form 8-K**

**(a) Exhibits**3.2   Amended and Restated Bylaws of Mentor Corporation  dated July 15, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|             | 10.1 Employment agreement, between Mentor  Corporation and Joshua Levine.   10.2 Incentive Bonus Plans

31.1 Certification of Principal Executive Officer Pursuant To   Section 302 of The Sarbanes-Oxley Act of 2002.  31.2 Certification of Principal Financial Officer Pursuant To   Section 302 of The Sarbanes-Oxley Act of 2002.

32.1 CEO Certification Pursuant To 18 U.S.C. Section 1350,  As Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002,  filed herewith.  32.2 CFO Certification Pursuant To 18 U.S.C. Section 1350,  As Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002,  filed herewith.

**(b) Reports  on Form 8-K**
The following reports on Form 8-K were filed during the three months ended June 30, 2003.
1.  On May 13, 2003, a report was filed which  furnished, under Item 12, a press release in connection with the fiscal 2003  fourth quarter and year-end results of operation issued by Mentor  Corporation. |

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**   SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

**MENTORCORPORATION**

(Registrant)
| Date: | August  14, 2003 | By: | /S/CHRISTOPHER; J. CONWAY  Christopher J. Conway  President and Chief Executive Officer |
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|       |                  |     |                                                                                    |
| Date: | August  14, 2003 | By: | /S/ADEL MICHAEL  Adel Michael  Executive Vice President  Chief Financial Officer        |