##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 26, 2008
 or
 o
    
    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. 001-31744
 MENTOR CORPORATION
  Minnesota
    
    41-0950791(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)
 201 Mentor Drive, Santa Barbara, California 93111
 (805) 879-6000
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



MENTOR CORPORATION
 INDEX
 Part I. Financial InformationItem 1. Consolidated Financial Statements:Consolidated Balance Sheets (unaudited)  September 26, 2008 and March 31, 2008
    
    
    3Consolidated Statements of Income (unaudited)  Three and Six Months Ended September
26, 2008 and September 28, 2007
    
    
    5Consolidated Statements of Cash Flows (unaudited)  Six Months Ended September 26,
2008 and September 28, 2007
    
    
    7Notes to Consolidated Financial Statements  September 26, 2008
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 4. Controls and Procedures
    
    
    44Part II. Other InformationItem 1. Legal Proceedings
    
    
    44Item 1A. Risk Factors
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    55Item 3. Defaults Upon Senior Securities
    
    
    55Item 4. Submission of Matters to a Vote of Security Holders
    
    
    56Item 5. Other Information
    
    
    56Item 6. Exhibits
    
    
    57Exhibit 10.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements
  
   September 26,
    
    
    March 31,(in thousands)
    
    2008
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    69,135
    
    
    $
    79,697Marketable securities
    
    
    28,677
    
    
    
    30,218Accounts receivable, net
    
    
    77,111
    
    
    
    82,060Inventories
    
    
    52,011
    
    
    
    49,940Deferred income taxes
    
    
    29,389
    
    
    
    29,040Prepaid income taxes
    
    
    13,648
    
    
    
    8,074Prepaid expenses and other
    
    
    13,247
    
    
    
    11,233Total current assets
    
    
    283,218
    
    
    
    290,262Property and equipment, net
    
    
    68,804
    
    
    
    58,252Intangible assets, net
    
    
    36,430
    
    
    
    36,336Goodwill, net
    
    
    47,099
    
    
    
    49,707Other assets
    
    
    6,670
    
    
    
    6,022Total assets
    
    $
    442,221
    
    
    $
    440,579
   3




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##### Table of Contents



September 26,
    
    
    March 31,(in thousands, except share data)
    
    2008
    
    
    2008Liabilities and shareholders equityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    44,688
    
    
    $
    43,209Sales returns
    
    
    16,282
    
    
    
    17,344Accrued compensation
    
    
    13,113
    
    
    
    22,026Dividends payable
    
    
    6,757
    
    
    
    6,748Product liability reserves
    
    
    6,842
    
    
    
    6,945Deferred revenue
    
    
    3,263
    
    
    
    2,693Warranty reserve
    
    
    2,563
    
    
    
    2,534Short-term portion of long-term debt
    
    
    623
    
    
    
    935Other
    
    
    19,981
    
    
    
    15,955Total current liabilities
    
    
    114,112
    
    
    
    118,389Long-term accrued liabilities
    
    
    27,665
    
    
    
    27,536Long-term debt
    
    
    706
    
    
    
    1,620Convertible subordinated notes
    
    
    150,000
    
    
    
    150,000Commitments and contingenciesShareholders equity:Common stock, $.10 par value:Authorized
 150,000,000 shares; issued and outstanding
33,785,288 shares at September 26, 2008;
33,739,203 shares at March 31, 2008;
    
    
    3,379
    
    
    
    3,374Preferred stock, $.01 par
value:Authorized  25,000,000 shares; none issued
and outstanding
    
    
    
    
    
    
    Capital in excess of par value
    
    
    6,341
    
    
    
    Accumulated other comprehensive income
    
    
    21,335
    
    
    
    31,992Retained earnings
    
    
    118,683
    
    
    
    107,668Total shareholders equity
    
    
    149,738
    
    
    
    143,034Total liabilities and shareholders equity
    
    $
    442,221
    
    
    $
    440,579
   4




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Three Months EndedSeptember 26,
    
    
    September 28,(in thousands, except per share data)
    
    2008
    
    
    2007Net sales
    
    $
    84,488
    
    
    $
    85,390Cost of sales
    
    
    25,615
    
    
    
    25,480Gross profit
    
    
    58,873
    
    
    
    59,910Selling, general, and administrative
    
    
    38,033
    
    
    
    33,397Research and development
    
    
    10,871
    
    
    
    12,20348,904
    
    
    
    45,600Operating income from continuing operations
    
    
    9,969
    
    
    
    14,310Interest expense
    
    
    (1,327
    )
    
    
    (1,447
    )Interest income
    
    
    513
    
    
    
    1,373Other income (expense), net
    
    
    1,539
    
    
    
    (675
    )Income from continuing operations before income taxes
    
    
    10,694
    
    
    
    13,561Income taxes
    
    
    554
    
    
    
    3,532Income from continuing operations
    
    
    10,140
    
    
    
    10,029Loss from discontinued operations, net of tax benefit of $218 and $25,
respectively
    
    
    (334
    )
    
    
    (46
    )Loss on sale of discontinued operations, net of tax of $26
    
    
    
    
    
    
    (65
    )Net income
    
    $
    9,806
    
    
    $
    9,918Basic earnings (loss) per shareContinuing operations
    
    $
    0.30
    
    
    $
    0.29Discontinued operations
    
    $
    (0.01
    )
    
    $
    Basic earnings per share
    
    $
    0.29
    
    
    $
    0.29Diluted earnings (loss) per shareContinuing operations
    
    $
    0.28
    
    
    $
    0.27Discontinued operations
    
    $
    (0.01
    )
    
    $
    Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.26Dividends per share
    
    $
    0.20
    
    
    $
    0.20Weighted average shares outstandingBasic
    
    
    33,520
    
    
    
    34,044Diluted
    
    
    39,311
    
    
    
    40,683
   5




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##### Table of Contents



Six Months EndedSeptember 26,
    
    
    September 28,(in thousands, except per share data)
    
    2008
    
    
    2007Net sales
    
    $
    190,024
    
    
    $
    180,954Cost of sales
    
    
    55,010
    
    
    
    46,704Gross profit
    
    
    135,014
    
    
    
    134,250Selling, general, and administrative
    
    
    81,000
    
    
    
    69,442Research and development
    
    
    21,853
    
    
    
    22,517102,853
    
    
    
    91,959Operating income from continuing operations
    
    
    32,161
    
    
    
    42,291Interest expense
    
    
    (2,797
    )
    
    
    (2,911
    )Interest income
    
    
    1,107
    
    
    
    6,147Other income (expense), net
    
    
    1,573
    
    
    
    (969
    )Income from continuing operations before income taxes
    
    
    32,044
    
    
    
    44,558Income taxes
    
    
    6,802
    
    
    
    12,785Income from continuing operations
    
    
    25,242
    
    
    
    31,773Loss from discontinued operations, net of tax benefit of $431 and $58,
respectively
    
    
    (719
    )
    
    
    (105
    )Loss on sale of discontinued operations, net of tax of $5
    
    
    
    
    
    
    (12
    )Net income
    
    $
    24,523
    
    
    $
    31,656Basic earnings (loss) per shareContinuing operations
    
    $
    0.75
    
    
    $
    0.85Discontinued operations
    
    $
    (0.02
    )
    
    $
    Basic earnings per share
    
    $
    0.73
    
    
    $
    0.85Diluted earnings (loss) per shareContinuing operations
    
    $
    0.68
    
    
    $
    0.76Discontinued operations
    
    $
    (0.02
    )
    
    $
    Diluted earnings per share
    
    $
    0.66
    
    
    $
    0.76Dividends per share
    
    $
    0.40
    
    
    $
    0.40Weighted average shares outstandingBasic
    
    
    33,496
    
    
    
    37,237Diluted
    
    
    39,294
    
    
    
    43,803
   6




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##### Table of Contents



Six Months EndedSeptember 26,
    
    
    September 28,(in thousands)
    
    2008
    
    
    2007Net income:
    
    $
    24,523
    
    
    $
    31,656Less: loss from discontinued operations, net of income taxes
    
    
    719
    
    
    
    117Income from continuing operations
    
    $
    25,242
    
    
    $
    31,773Operating Activities:Adjustments to derive cash flows from continuing operating activities:Depreciation
    
    
    4,589
    
    
    
    3,822Amortization
    
    
    3,856
    
    
    
    2,326Deferred income taxes
    
    
    967
    
    
    
    (3,705
    )Non-cash compensation
    
    
    5,544
    
    
    
    5,877Tax benefit from exercise of stock options
    
    
    37
    
    
    
    1,949Excess tax benefits from equity compensation
    
    
    (164
    )
    
    
    (407
    )Gain on long-term marketable securities, net
    
    
    (44
    )
    
    
    (14
    )Loss on sale of assets
    
    
    28
    
    
    
    26Cash provided by (used in) changes in operating assets and liabilities:Accounts receivable
    
    
    3,117
    
    
    
    (1,719
    )Inventories
    
    
    (4,768
    )
    
    
    2,498Other current assets
    
    
    (9,895
    )
    
    
    (604
    )Accounts payable and accrued liabilities
    
    
    (3,239
    )
    
    
    2,417Net cash provided by continuing operating activities
    
    
    25,270
    
    
    
    44,239Net cash used for discontinued operating activities
    
    
    (719
    )
    
    
    (117
    )Net cash provided by operating activities
    
    
    24,551
    
    
    
    44,122Investing Activities:Purchases of property and equipment
    
    
    (17,258
    )
    
    
    (7,715
    )Purchases of intangibles
    
    
    (5,358
    )
    
    
    Purchases of marketable securities
    
    
    (26,081
    )
    
    
    (36,165
    )Sales of marketable securities
    
    
    27,881
    
    
    
    112,260Acquisitions, net of cash acquired
    
    
    (173
    )
    
    
    (53,407
    )Net cash (used for) provided by continuing investing activities
    
    
    (20,989
    )
    
    
    14,973Financing Activities:Repurchase of common stock
    
    
    (227
    )
    
    
    (357,771
    )Proceeds from exercise of stock options and ESPP
    
    
    996
    
    
    
    4,162Excess tax benefits from equity compensation
    
    
    164
    
    
    
    407Dividends paid
    
    
    (13,505
    )
    
    
    (15,995
    )Repayments of debt
    
    
    (1,229
    )
    
    
    (188
    )Net cash used for continuing financing activities
    
    
    (13,801
    )
    
    
    (369,385
    )Effect of currency exchange rates of continuing operations
    
    
    (323
    )
    
    
    978Decrease in cash and cash equivalents
    
    
    (10,562
    )
    
    
    (309,312
    )Cash and cash equivalents at beginning of year
    
    
    79,697
    
    
    
    371,525Cash and cash equivalents at end of period
    
    $
    69,135
    
    
    $
    62,213
   7




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MENTOR CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 September 26, 2008
 Note A  Business Activity
   Note B  Summary of Significant Accounting Policies
  Basis of Presentation
    Use of Estimates
  Revenue Recognition
   8




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Warranty Reserves
  Product Liability Reserves
  Employee Stock-Based Payments
  SFAS 123(R).
  9




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Effects of Recent Accounting Pronouncements
        10




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Note C  Cash Equivalents, Marketable Securities, and Long-Term Marketable Securities and
Investments
     Gross
    
    
    Gross
    
    
    EstimatedAdjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueCash balances
    
    $
    60,777
    
    
    $
    
    
    
    $
    
    
    
    $
    60,777Money market funds
    
    
    8,358
    
    
    
    
    
    
    
    
    
    
    
    8,358U.S. government and agency obligations
    
    
    14,229
    
    
    
    
    
    
    
    (38
    )
    
    
    14,191State and municipal agency obligations
    
    
    14,202
    
    
    
    2
    
    
    
    (1
    )
    
    
    14,203Corporate debt
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    283Total available-for-sale investments
    
    $
    97,849
    
    
    $
    2
    
    
    $
    (39
    )
    
    $
    97,812Included in cash and cash equivalents
    
    $
    69,135
    
    
    $
    
    
    
    $
    
    
    
    $
    69,135Included in current marketable securities
    
    
    28,714
    
    
    
    2
    
    
    
    (39
    )
    
    
    28,677Total available-for-sale investments
    
    $
    97,849
    
    
    $
    2
    
    
    $
    (39
    )
    
    $
    97,812
  11




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Gross
    
    
    Gross
    
    
    EstimatedAdjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueCash balances
    
    $
    71,756
    
    
    $
    
    
    
    $
    
    
    
    $
    71,756Money market funds
    
    
    7,941
    
    
    
    
    
    
    
    
    
    
    
    7,941U.S. government and agency obligations
    
    
    15,336
    
    
    
    16
    
    
    
    
    
    
    
    15,352State and municipal agency obligations
    
    
    14,582
    
    
    
    3
    
    
    
    
    
    
    
    14,585Corporate debt
    
    
    281
    
    
    
    
    
    
    
    
    
    
    
    281Total available-for-sale investments
    
    $
    109,896
    
    
    $
    19
    
    
    $
    
    
    
    $
    109,915Included in cash and cash equivalents
    
    $
    79,697
    
    
    $
    
    
    
    $
    
    
    
    $
    79,697Included in current marketable securities
    
    
    30,199
    
    
    
    19
    
    
    
    
    
    
    
    30,218Total available-for-sale investments
    
    $
    109,896
    
    
    $
    19
    
    
    $
    
    
    
    $
    109,915
  Fair Values of Financial Instruments
       12




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Quoted prices in
    
    
    Significant
    
    
    Significantactive markets for
    
    
    other observable
    
    
    unobservable
    
    
    Balance as ofidentical assets
    
    
    inputs
    
    
    inputs
    
    
    September 26,Assets (in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2008Money market funds
    
    $
    8,358
    
    
    $
    
    
    
    $
    
    
    
    $
    8,358U.S. government and agency obligations
    
    
    
    
    
    
    14,191
    
    
    
    
    
    
    
    14,191State and municipal agency obligations
    
    
    
    
    
    
    14,203
    
    
    
    
    
    
    
    14,203Corporate debt
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    283Total
    
    $
    8,358
    
    
    $
    28,677
    
    
    $
    
    
    
    $
    37,035
  Note D  Inventories
   (in thousands)
    

September
26, 2008
    
    

March
31, 2008Raw materials
    
    $
    9,133
    
    
    $
    7,327Work in process
    
    
    7,275
    
    
    
    6,950Finished goods on consignment
    
    
    17,741
    
    
    
    18,058Finished goods
    
    
    17,862
    
    
    
    17,605$
    52,011
    
    
    $
    49,940
 Note E  Long-Lived Assets
   13




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(in thousands)
    

September
26, 2008
    
    

March
31, 2008Land
    
    $
    259
    
    
    $
    276Buildings
    
    
    12,850
    
    
    
    13,909Leasehold improvements
    
    
    23,640
    
    
    
    23,747Furniture, fixtures and equipment
    
    
    72,142
    
    
    
    70,832Construction in progress
    
    
    32,576
    
    
    
    20,657141,467
    
    
    
    129,421Less accumulated depreciation and amortization
    
    
    (72,663
    )
    
    
    (71,169
    )$
    68,804
    
    
    $
    58,252
  Note F Warranty Reserves
   Six Months Ended(in thousands)
    

September
26, 2008
    
    

September
28, 2007Beginning warranty reserves
    
    $
    11,944
    
    
    $
    14,308Costs of warranty claims
    
    
    (1,303
    )
    
    
    (1,338
    )Accruals for product warranties
    
    
    1,586
    
    
    
    2,122Adjustments made to accruals related to pre-existing warranties
    
    
    
    
    
    
    (3,167
    )Ending warranty reserves
    
    $
    12,227
    
    
    $
    11,925
   14




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Note G  Comprehensive Income
   Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    9,806
    
    
    $
    9,918
    
    
    $
    24,523
    
    
    $
    31,656Foreign currency translation adjustment
    
    
    (10,883
    )
    
    
    6,234
    
    
    
    (10,613
    )
    
    
    7,908Unrealized gains/(losses) on marketable
securities and investment activities, net
    
    
    (3
    )
    
    
    26
    
    
    
    (44
    )
    
    
    (14
    )Comprehensive (loss) income
    
    $
    (1,080
    )
    
    $
    16,178
    
    
    $
    13,866
    
    
    $
    39,550
 Note H  Income Taxes
      15




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Note I  Earnings per Share
  Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net income from continuing operations: as reported
    
    $
    10,140
    
    
    $
    10,029
    
    
    $
    25,242
    
    
    $
    31,773Add back after tax interest expense on convertible
notes
    
    
    802
    
    
    
    802
    
    
    
    1,604
    
    
    
    1,604Net income from continuing operations for numerator
of diluted earnings per share
    
    $
    10,942
    
    
    $
    10,831
    
    
    $
    26,846
    
    
    $
    33,377
 Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss from discontinued operations
    
    $
    (334
    )
    
    $
    (111
    )
    
    $
    (719
    )
    
    $
    (117
    )Net income: as reported
    
    $
    9,806
    
    
    $
    9,918
    
    
    $
    24,523
    
    
    $
    31,656Add back after tax interest expense on convertible
notes
    
    
    802
    
    
    
    802
    
    
    
    1,604
    
    
    
    1,604Net income for numerator of diluted earnings per
share
    
    $
    10,608
    
    
    $
    10,720
    
    
    $
    26,127
    
    
    $
    33,260
  Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,(in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Weighted average outstanding shares: basic
    
    
    33,520
    
    
    
    34,044
    
    
    
    33,496
    
    
    
    37,237Unvested restricted grants
    
    
    362
    
    
    
    292
    
    
    
    350
    
    
    
    289Shares issuable through exercise of stock
options
    
    
    222
    
    
    
    659
    
    
    
    247
    
    
    
    669Shares issuable through convertible notes
    
    
    5,207
    
    
    
    5,170
    
    
    
    5,201
    
    
    
    5,167Shares issuable through warrants
    
    
    
    
    
    
    518
    
    
    
    
    
    
    
    441Weighted average outstanding shares: diluted
    
    
    39,311
    
    
    
    40,683
    
    
    
    39,294
    
    
    
    43,803Basic earnings (loss) per shareContinuing operations
    
    $
    0.30
    
    
    $
    0.29
    
    
    $
    0.75
    
    
    $
    0.85Discontinued operations
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.02
    )
    
    $
    Basic earnings per share
    
    $
    0.29
    
    
    $
    0.29
    
    
    $
    0.73
    
    
    $
    0.85Diluted earnings (loss) per shareContinuing operations
    
    $
    0.28
    
    
    $
    0.27
    
    
    $
    0.68
    
    
    $
    0.76Discontinued operations
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.02
    )
    
    $
    Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.26
    
    
    $
    0.66
    
    
    $
    0.76
  16




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##### Table of Contents



Employee stock options, restricted shares and performance stock units
  Convertible subordinated notes and warrants
    Note J  Stock Options, Restricted Stock and Employee Stock Purchase Plan
 Employee Stock Purchase Plan
   17




---



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Long-Term Incentive Plans
       Restricted Stock
   18




---



##### Table of Contents



Weighted-averageNonvested shares (in thousands, except per share amounts)
    
    Shares
    
    
    grant date fair valueNonvested at March 31, 2008
    
    
    287
    
    
    $
    46.03Restrictions lapsed
    
    
    (29
    )
    
    
    41.84Forfeited
    
    
    (7
    )
    
    
    48.90Nonvested at September 26, 2008
    
    
    251
    
    
    $
    46.44
 Options
    Weighted-Weighted-
    
    
    averageaverage
    
    
    remaining
    
    
    Aggregateexercise
    
    
    contractual
    
    
    intrinsic(in thousands, except per share amounts and years)
    
    Options
    
    
    price
    
    
    life (Yrs)
    
    
    valueBalance outstanding at March 31, 2008
    
    
    4,638
    
    
    $
    40.39Granted
    
    
    119
    
    
    
    25.84Exercised
    
    
    (59
    )
    
    
    15.92Forfeited/expired
    
    
    (32
    )
    
    
    38.69Balance outstanding at September 26, 2008
    
    
    4,666
    
    
    $
    40.34
    
    
    
    6.26
    
    
    $
    6,548Vested and Expected to Vest at September 26, 2008
    
    
    4,371
    
    
    $
    39.93
    
    
    
    6.22
    
    
    $
    6,540Exercisable at September 26, 2008
    
    
    1,594
    
    
    $
    28.15
    
    
    
    5.29
    
    
    $
    6,439
    19




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##### Table of Contents



September 26,
    
    
    September 28,2008
    
    
    2007Risk-free interest rate
    
    
    2.8
    %
    
    
    4.2
    %Expected life (in years)
    
    
    5.1
    
    
    
    5.1Expected volatility
    
    
    34
    %
    
    
    34
    %Expected dividend yield
    
    
    3.1
    %
    
    
    1.8
    %
 Performance Award Program
     Fair marketvalue at dateNonvested performance stock units (in thousands)
    
    Shares
    
    
    of grantNonvested at March 31, 2008
    
    
    302
    
    
    $
    6,411Forfeited
    
    
    
    
    
    
    (2
    )Nonvested at September 26, 2008
    
    
    302
    
    
    $
    6,409
  20




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##### Table of Contents



Compensation Expense
  Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    $
    1,187
    
    
    $
    775
    
    
    $
    2,651
    
    
    $
    1,736Restricted stock
    
    
    855
    
    
    
    1,305
    
    
    
    1,832
    
    
    
    3,003Performance units
    
    
    540
    
    
    
    555
    
    
    
    1,061
    
    
    
    1,138Total stock-based compensation expense, pre-tax
    
    
    2,582
    
    
    
    2,635
    
    
    
    5,544
    
    
    
    5,877Tax benefit from stock-based compensation expense
    
    
    (724
    )
    
    
    (875
    )
    
    
    (1,557
    )
    
    
    (1,978
    )Total stock-based compensation expense, net of tax
    
    $
    1,858
    
    
    $
    1,760
    
    
    $
    3,987
    
    
    $
    3,899
 Note K  Share Repurchase Program
       21




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Note L  Long Term Debt
 3 4
  
    
    during any fiscal quarter prior to January 1, 2019, if the closing price of the
Companys common stock for at least 20 trading days in the 30 consecutive trading day
period ending on the first trading day of such fiscal quarter is more than 120% of the
conversion price per share of the Companys common stock on such trading day;
    
    any business day on or after January 1, 2019, if the closing price of the Companys
common stock on the immediately preceding trading day is more than 120% of the conversion
price per share of the Companys common stock on such trading day;
    
    during the five business day period after any five consecutive trading day period if the
average of the trading prices of the notes for such five consecutive trading day period is
less than 98% of the average of the conversion values of the notes during such period,
subject to certain limitations;
    
    if the Company has called the notes for redemption; or
    
    if the Company makes certain significant distributions to holders of its common stock or
the Company enters into specified corporate transactions.
    22




---



##### Table of Contents



 
 Note M  Short Term Bank Borrowings
 Credit Agreement
   23




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24




---



##### Table of Contents



Other Financing
      
   
  Note N  Discontinued Operations
    25




---



##### Table of Contents



Note O  Postretirement Benefit Plan
  Note P  Contingencies
      26




---



##### Table of Contents



Note Q  Acquisitions
    (In thousands)Cash
    
    $
    436Accounts receivable
    
    
    3,508Inventory
    
    
    8,953Prepaid expenses and other current assets
    
    
    980Total current assets
    
    
    13,877Property, plant and equipment
    
    
    4,934Intangible assets
    
    
    18,423Goodwill
    
    
    32,268Other assets
    
    
    39Total assets acquired
    
    $
    69,541Liabilities associated with acquisition:Accounts payable and accrued liabilities
    
    $
    7,049Other long-term liabilities
    
    
    8,424Total liabilities assumed
    
    $
    15,473Net assets acquired
    
    $
    54,068
   Note R  Capital Lease Obligations
   27




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##### Table of Contents



Note S  Subsequent Event
  
 Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis should be read in conjunction with our Unaudited Consolidated
Financial Statements and related Notes thereto contained elsewhere in this Report. The information
contained in this Quarterly Report on Form 10-Q is not a complete description of our business or
the risks associated with an investment in our securities. We urge you to carefully review and
consider the various disclosures made by us in this Report and in our other reports filed with the
Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year
ended March 31, 2008, and subsequent reports on Form 8-K , both of which discuss our business in
greater detail.
 The section entitled Risk Factors set forth in Item 1A under Part II  Other Information, and
similar discussions in our other SEC filings, discuss some of the important risk factors that may
affect our business, results of operations and financial condition. These risks, in addition to
the other information in this Report and in our other filings with the SEC, should be carefully
considered before deciding to purchase, hold or sell our securities.
 Various statements in this Report, in future filings by us with the SEC, in our press releases and
in our oral statements made by or with the approval of authorized personnel, constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based on current expectations and are indicated by words or
phrases such as anticipate, estimate, expect, intend, project, plan, believe, will,
seek, and similar words or phrases and involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking
statements. Some of the factors that could affect our financial performance or cause actual
results to differ from our estimates in, or underlying, such forward-looking statements are set
forth in Part II under Item 1A -Risk Factors or elsewhere in this Report. Forward-looking
statements include statements regarding, among other things:
 
    
    our anticipated operating results for fiscal year 2009, including the impact of the
economy;
    
    our expectations regarding future developments in the markets in which we compete and
intend to compete;
    
    our anticipated growth strategies;
    
    our intention to introduce or seek approval for new products;
    
    our ability to continue to meet United States Food and Drug Administration (FDA) and
other regulatory requirements;
    
    our anticipated outcomes of regulatory reviews;
    
    our anticipated outcomes of litigation; and
    
    our ability to replace sources of supply without disruption and regulatory delay.
  28




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These forward-looking statements are based on our expectations and are subject to a number of risks
and uncertainties, many of which are beyond our control.  Actual results could differ materially
from these forward-looking statements as a result of the facts described in Part II under Item 1A
- Risk Factors or elsewhere including, among others, problems with suppliers, changes in the
competitive marketplace, significant product liability or other claims, product recalls,
difficulties with new product development, the introduction of new products by our competitors,
changes in the economy, FDA or other regulatory delay in approval or rejection of new or existing
products, changes in Medicare, Medicaid or third-party reimbursement policies, changes in
government regulations, use of hazardous or environmentally sensitive materials, inability to
implement new information technology systems, inability to integrate new acquisitions, and other
events.  We undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.  In light of these risks and
uncertainties, we cannot assure you that the forward-looking information contained in this Form
10-Q will, in fact, transpire.
 Company Overview
        29




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##### Table of Contents



Perouse Acquisition
  Important Factors
  
    
    The performance of the worldwide economy has impacted the demand for our products in
fiscal 2009, and continued weakness could put added pressure on our revenue growth,
profitability, levels of accounts receivable, inventory and financial position;
 
    
    We are in the midst of a transition in the U.S. from saline breast implants to MemoryGel
breast implants that we expect will continue over a several year period with potentially
uneven rates of change that could cause revenues and profits to fluctuate quarter to quarter;
and
 
    
    We are committed to investing in the i) marketing of existing products and ii) development
and marketing of new aesthetics products to expand our product portfolio, which may have the
effect in the short term of increasing our expenses faster than our revenues are anticipated
to increase.
  
    
    competing to grow U.S. breast aesthetics market share through targeted marketing programs;
 
    
    supporting the continued transition in the U.S. from saline breast implants to MemoryGel
breast implants;
 
    
    continuing our entry in the U.S. dermal filler market with Prevelle Silk;
 
    
    continuing our international breast aesthetics growth strategy by leveraging the Perouse
acquisition and leveraging our investment in management and marketing infrastructure; and
 
    
    investing in research and development programs to expand our product portfolio and create
incremental product bundling opportunities that will allow us to better serve customers.
  30




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Recent Events
 ®
   APPLICATION OF CRITICAL ACCOUNTING POLICIES
   Revenue Recognition
     31




---



##### Table of Contents



Accounts Receivable
  Inventories
  Warranty Reserves
    32




---



##### Table of Contents



Product Liability Reserves
  Goodwill and Intangible Asset Impairment
  Stock-Based Compensation Expense
    33




---



##### Table of Contents



Deferred Income Taxes
    34




---



##### Table of Contents



RESULTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedSeptember 26,
    
    
    September 28,
    
    
    September 26,
    
    
    September 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    30.3
    
    
    
    29.8
    
    
    
    28.9
    
    
    
    25.8Gross profit
    
    
    69.7
    
    
    
    70.2
    
    
    
    71.1
    
    
    
    74.2Selling, general and administrative expense
    
    
    45.0
    
    
    
    39.1
    
    
    
    42.6
    
    
    
    38.4Research and development expense
    
    
    12.9
    
    
    
    14.3
    
    
    
    11.5
    
    
    
    12.4Operating income
    
    
    11.8
    
    
    
    16.8
    
    
    
    17.0
    
    
    
    23.4Interest expense
    
    
    (1.6
    )
    
    
    (1.7
    )
    
    
    (1.5
    )
    
    
    (1.6
    )Interest income
    
    
    0.6
    
    
    
    1.6
    
    
    
    0.6
    
    
    
    3.4Other income (expense), net
    
    
    1.8
    
    
    
    (0.8
    )
    
    
    0.8
    
    
    
    (0.5
    )Income from continuing operations before
income taxes
    
    
    12.6
    
    
    
    15.9
    
    
    
    16.9
    
    
    
    24.7Income taxes
    
    
    0.6
    
    
    
    4.1
    
    
    
    3.6
    
    
    
    7.1Net income from continuing operations
    
    
    12.0
    
    
    
    11.8
    
    
    
    13.3
    
    
    
    17.6Loss from discontinued operations
    
    
    (0.4
    )
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (0.1
    )Loss on sale of discontinued operations
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    Net income
    
    
    11.6
    %
    
    
    11.6
    %
    
    
    12.9
    %
    
    
    17.5
    %
 For the three month period ended September 26, 2008 compared to the three month period ended
September 28, 2007
 Net Sales
   35




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##### Table of Contents



Cost of Sales and Gross Profit
  Selling, General and Administrative
  Research and Development
  Interest and Other Income (Expense)
 3 4
   Income Taxes
  Income Taxes
  36




---



##### Table of Contents



Income, Net of Income Taxes and Earnings per Share from Continuing Operations
  Loss from Discontinued Operations, Net of Income Taxes
  For the six month period ended September 26, 2008 compared to the six month period ended September
28, 2007
 Net Sales
  Cost of Sales and Gross Profit
   37




---



##### Table of Contents



Selling, General and Administrative
  Research and Development
  Interest and Other Income (Expense)
 3 4
   Income Taxes
  Income Taxes
 Income, Net of Income Taxes and Earnings per Share from Continuing Operations
   38




---



##### Table of Contents



Loss from Discontinued Operations, Net of Income Taxes
  FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
    (in thousands)
    

September 26, 2008
    
    
    March 31, 2008Cash and cash equivalents
    
    $
    69,135
    
    
    $
    79,697Marketable securities
    
    
    28,677
    
    
    
    30,218Total cash, cash equivalents and marketable securities
    
    $
    97,812
    
    
    $
    109,915Percentage of total assets
    
    
    22
    %
    
    
    25
    %
 Cash Flow Changes
  Six Months Ended(in thousands)
    
    September 26, 2008
    
    
    September 28, 2007Net cash provided by continuing operating activities
    
    $
    25,270
    
    
    $
    44,239Net cash (used for) provided by continuing
investing activities
    
    
    (20,989
    )
    
    
    14,973Net cash used for continuing financing activities
    
    
    (13,801
    )
    
    
    (369,385
    )Net cash used for discontinued operations
    
    
    (719
    )
    
    
    (117
    )Effect of currency exchange rates on cash and cash
equivalents
    
    
    (323
    )
    
    
    978Decrease in cash and cash equivalents
    
    $
    (10,562
    )
    
    $
    (309,312
    )
  39




---



##### Table of Contents



Cash Provided by Operating Activities of Continuing Operations
  Cash (Used for) Provided By Investing Activities of Continuing Operations
  Cash Used for Discontinued Operations
  Cash Used for Financing Activities of Continuing Operations
     40




---



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Financing Arrangements
 Senior Credit Facility
    41




---



##### Table of Contents



Other Financing
      
   
  42




---



##### Table of Contents



 
  Convertible Subordinated Notes
 3 4
       43




---



##### Table of Contents



Item 3.  Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.  Controls and Procedures
    
 PART II  OTHER INFORMATION
 
 Item 1.  Legal Proceedings
   
 Item 1A.  Risk Factors
   44




---



##### Table of Contents



The FDA approval of our MemoryGel breast implants in the U.S. is conditioned on our compliance
with several significant post-approval conditions, including conducting a large scale, 10-year
study of patients who receive the implants. These conditions may adversely affect the market
acceptance and usage rates of our MemoryGel implants, may impact our ability to compete, and may
cause us to incur significant unanticipated expenses. Our failure to comply with these
conditions in a timely manner may cause delay in market acceptance or result in our inability to
continue to sell our MemoryGel implants in the U.S.
 Ô
  ®
 If changes in the worldwide economy and consumer spending reduce consumer demand for our products,
our sales and profitability could suffer.
  Significant product liability or other claims or product recalls may force us to pay substantial
damage awards and other expenses that could exceed our accruals and insurance coverages.
Unexpected increases in the number of limited warranty claims for our products may surpass our
product warranty reserves.
   45




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##### Table of Contents



We are subject to substantial government regulation, which could have a material adverse effect on
our business. Any delay or failure to gain regulatory approval for our products, or the ability of
our competitors to get new products, which compete with our existing products, approved before us,
could also materially adversely affect our business.
   46




---



##### Table of Contents



® 
   If we are unable to continue to develop and commercialize new technologies and products, we may
experience a decrease in demand for our products, or our products could become obsolete.
    47




---



##### Table of Contents



If we are unable to compete effectively with existing or new competitors, we could experience price
reductions, reduced demand for our products, reduced margins and loss of market share, and our
business, results of operations, and financial condition would be adversely affected.
   
    
    developing and bringing new products to market before others or providing benefits
superior to those of existing products;
 
    
    developing new technologies to improve existing products;
 
    
    developing new products at a lower cost to provide the same benefits as existing
products at the same or lower price;
 
    
    creating or entering new markets with existing products;
 
    
    increasing or improving service-related programs;
 
    
    advertising in a manner that creates additional awareness and demand; and
 
    
    marketing and selling bundled products.
   If we suffer negative publicity concerning the safety of our products, our sales may be harmed and
we may be forced to withdraw products.
   48




---



##### Table of Contents



If we are unable to implement new information technology systems or upgrade existing systems, our
ability to manufacture and sell products, maintain regulatory compliance, and manage and report our
business activities may be impaired, delayed, or diminished, which would cause substantial business
interruption and loss of sales, customers, and profits.
  If we are unable to acquire companies, businesses or technologies as part of our growth strategy or
to successfully integrate past acquisitions, our growth, sales, and profitability could suffer.
   We depend upon our key personnel and our ability to attract, train, and retain employees.
  State legislatures and taxing authorities may create new laws or change their interpretation of
existing state and local tax laws that may affect future product demand or create unforeseen tax
liabilities.
   49




---



##### Table of Contents



If our intellectual property rights do not adequately protect our products or technologies, others
could compete against us more directly, which would hurt our profitability.
   If third parties claim we are infringing their intellectual property rights, we could suffer
significant litigation, indemnification, or licensing expenses or be prevented from marketing our
products.
  We depend on the continued use of our manufacturing plants and on single and sole source suppliers
for certain raw materials and licensed or manufactured products, and the loss of, or disruption to,
any plant or supplier could adversely affect our ability to manufacture or sell many of our
products.
   50




---



##### Table of Contents



Our international business exposes us to a number of risks.
  
    
    changes in the economy which may impact consumer demand for our products;
 
    
    foreign government regulation of medical products;
 
    
    product liability, intellectual property and other claims;
 
    
    new U.S. export or local market import license requirements;
 
    
    political or economic instability in our target markets;
 
    
    trade restrictions;
 
    
    changes in tax laws and tariffs;
 
    
    managing foreign distributors and manufacturers;
 
    
    managing foreign branch offices and staffing; and
 
    
    competition.
 Health care reimbursement or reform legislation could materially affect our business.
  If our use of hazardous materials results in contamination or injury, we could suffer significant
financial loss.
   51




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##### Table of Contents



Clostridium botulinum
   Changes in financial accounting standards may cause adverse unexpected revenue or expense
fluctuations and affect our reported results of operations.
  Our operating results may fluctuate substantially, and could precipitate unexpected movement in the
price of our common stock and convertible notes.
 3 4
  52




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Hedging transactions and other transactions may affect the value of the notes.
 3 4
 Our Restated Articles of Incorporation provide our Board of Directors with the authority to issue
blank check preferred stock.  The issuance of blank check preferred stock could adversely
affect the market price and the rights and powers, including voting rights, of our common stock,
and decrease the amount of earnings and assets allocable to or available for distribution to
holders of our common stock.
        53




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We may not obtain the expected benefits of our reorganization into a holding company structure.
   As a holding company, Mentor Holdings will depend in large part on dividends from its operating
subsidiaries to pay dividends to its stockholders and any other obligations.
  As a stockholder of a Delaware corporation, your rights after the reorganization will be different
from, and may be less favorable than, your current rights as a shareholder of a Minnesota
corporation.
  The proposed reorganization into a holding company structure may result in substantial direct and
indirect costs whether or not completed.
   54




---



##### Table of Contents



Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
   ISSUER PURCHASES OF EQUITY SECURITIES (1)Total Number
    
    
    Maximum Numberof Shares
    
    
    of Shares that MayTotal Number
    
    
    
    
    
    
    Purchased as
    
    
    Yet Be Purchased(in thousands
    
    of Shares
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Under the Plansexcept per share amounts)
    
    Purchased
    
    
    Paid per Share
    
    
    Announced Plans
    
    
    or Programs(2)July 2008
    
    
    1
    
    
    $
    26.62
    
    
    
    
    
    
    
    800August 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800September 2008
    
    
    
    
    
    
    25.10
    
    
    
    
    
    
    
    800Total
    
    
    1
    
    
    $
    26.20
 (1)
    
    On June 18, 2007, we entered into a Rule 10b5-1 stock purchase plan compliant with Rule 10b-18 (the
2007 10b5 Plan). The 2007 10b5 Plan terminated on June 17, 2008. No shares were purchased under the 2007
10b5 Plan during the period.(2)
    
    Reflects shares authorized for repurchase by our Board of Directors. We have not set a date for the
stock repurchase program to expire.(3)
    
    Balance includes approximately 1,000 shares repurchased for payment of withholding taxes upon the
vesting of certain restricted stock grants. 
 Item 3.  Defaults Upon Senior Securities
   55




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##### Table of Contents



Item 4.  Submission of Matters to a Vote of Security Holders
  
    
    A proposal, which the Company refers to as the
reorganization proposal, approving the Agreement and Plan of
Merger, dated as of July 9, 2008, by and among Mentor
Corporation, Mentor International Holdings, Inc. and MNT Merger
Sub, Inc., which permits the Company to reorganize into a
holding company structure. The results were 23,843,584 votes
for, 1,521,380 against, 30,637 abstained and 4,067,553 broker
non-votes.
 
    
    A proposal to elect the following seven individuals to
the Board of Directors of the Company to serve until the next
annual meeting, or until their successors are duly elected and
qualified, was approved as follows:
 Name of Director
    
    Votes For
    
    
    Votes WithheldJoseph E. Whitters
    
    
    27,013,553
    
    
    
    2,449,598Michael L. Emmons
    
    
    29,276,130
    
    
    
    187,021Walter W. Faster
    
    
    27,025,202
    
    
    
    2,437,949Margaret H. Jordan
    
    
    29,257,514
    
    
    
    205,637Joshua H. Levine
    
    
    29,248,273
    
    
    
    214,878Katherine S. Napier
    
    
    27,029,886
    
    
    
    2,433,265Burt E. Rosen
    
    
    29,265,695
    
    
    
    197,456
 
    
    A proposal to ratify the appointment of Ernst & Young
LLP to act as independent registered public accounting firm of
the Company for the fiscal year ending March 31, 2009 was
approved. The proposal received 29,367,924 votes for, and
69,950 against ratification. There were 25,277 abstentions.
  
    
    A proposal to approve the amendment and restatement of
the 2005 Long-Term Incentive Plan such that, among other things,
the aggregate number of shares of the Companys common stock
available for grant is increased by 2,500,000 shares. The
proposal received 14,615,231 votes for and 10,325,447 against
approval. There were 639,298 abstentions and 3,917,410 broker
non-votes.
 
 Item 5.  Other Information
   56




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##### Table of Contents



Item 6.  Exhibits
 3.1
    
    Composite Restated Articles of Incorporation of Mentor Corporation dated December 12, 2002
Incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10-K for the year ended March
31, 2003.3.2
    
    Amendment to Restated Articles of Incorporation of Mentor Corporation  Incorporated by reference to
Exhibit 3.1 of the Registrants Current Report on Form 8-K filed on October 3, 2007.3.3
    
    Amended and Restated Bylaws of Mentor Corporation dated September 17, 2007  Incorporated by reference
to Exhibit 3.2 of the Registrants Current Report on Form 8-K filed on September 21, 2007.4.1
    
    Indenture 2 3/4 % Convertible Subordinated Notes Due 2024, dated December 22, 2003  Incorporated by
reference to Exhibit 4.1 of the Registrants Quarterly Report on Form 10-Q for the quarter ended
December 31, 2003.10.1
    
    Third Amendment to Credit Agreement dated as of September 26, 2008 amending that certain Credit
Agreement, dated as of May 25, 2005, first amended May 31, 2006, and second amended March 30, 2007 by
and among Mentor Corporation, Bank of the West, as administrative agent, Union Bank of California,
N.A., as syndication agent, Wells Fargo Bank, National Association, as documentation agent, and the
lenders from time to time party thereto  Incorporated by reference to Exhibit 10.1 of the
Registrants Current Report on Form 8-K filed on September 26, 2008.10.2*
    
    Mentor Corporation 2005 Long-Term Incentive Plan as amended and restated as of September 29, 2008 
Incorporated by reference to Exhibit 10.2 of the Registrants Current Report on Form 8-K filed on
September 26, 2008.10.3*
    
    Relocation Agreement between Michael ONeill and Mentor
Corporation dated October 28, 2008.31.1
    
    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 2002.32.2
    
    CFO Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The
Sarbanes-Oxley Act of 2002.
 *
    
    Management contract or compensatory plan or arrangement  57




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##### Table of Contents



SIGNATURES
  MENTOR CORPORATION
(Registrant)DATE:  November 5, 2008
    By:
    /s/JOSHUA H. LEVINEJoshua H. LevinePresident and Chief Executive Officer(Principal Executive Officer)DATE:  November 5, 2008
    By:
    /s/MICHAEL ONEILLMichael ONeillVice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)  58




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Title or Description3.1
    
    
    Composite Restated Articles of Incorporation of Mentor
Corporation dated December 12, 2002 Incorporated by reference
to Exhibit 3.1 of the Annual Report on Form 10-K for the year
ended March 31, 2003.3.2
    
    
    Amendment to Restated Articles of Incorporation of Mentor
Corporation  Incorporated by reference to Exhibit 3.1 of the
Registrants Current Report on Form 8-K filed on October 3,
2007.3.3
    
    
    Amended and Restated Bylaws of Mentor Corporation dated
September 17, 2007  Incorporated by reference to Exhibit 3.2
of the Registrants Current Report on Form 8-K filed on
September 21, 2007.4.1
    
    
    Indenture 2 3/4 % Convertible Subordinated Notes Due 2024, dated
December 22, 2003  Incorporated by reference to Exhibit 4.1
of the Registrants Quarterly Report on Form 10-Q for the
quarter ended December 31, 2003.10.1
    
    
    Third Amendment to Credit Agreement dated as of September 26,
2008 amending that certain Credit Agreement, dated as of May
25, 2005, first amended May 31, 2006, and second amended March
30, 2007 by and among Mentor Corporation, Bank of the West, as
administrative agent, Union Bank of California, N.A., as
syndication agent, Wells Fargo Bank, National Association, as
documentation agent, and the lenders from time to time party
thereto  Incorporated by reference to Exhibit 10.1 of the
Registrants Current Report on Form 8-K filed on September 26,
2008.10.2
    *
    
    Mentor Corporation 2005 Long-Term Incentive Plan as amended
and restated as of September 29, 2008  Incorporated by
reference to Exhibit 10.2 of the Registrants Current Report
on Form 8-K filed on September 26, 2008.10.3
    *
    

Relocation
Agreement between Michael ONeill and Mentor Corporation dated
October 28, 2008.31.1
    
    
    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
2002.32.2
    
    
    CFO Certification Pursuant To 18 U.S.C. Section 1350, As
Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of
2002.
 *
    
    Management contract or compensatory plan or arrangement  59